Towards an optimal model of directors’ duties in the zone of insolvency: An economic and comparative approach

• Main Author: Aurelio GURREA-MARTINEZ
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Corporate insolvency; Directors' duties; Ownership structure; Commercial Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/3645; https://ink.library.smu.edu.sg/context/sol_research/article/5603/viewcontent/ZoneofInsolvency_blog_Harvard_av.pdf
• Institution: Singapore Management University

In a recent article, I analyse the primary regulatory models of directors’ duties in the zone of insolvency observed internationally. From a sample of more than 20 countries from Asia, Australia, Europe, Latin America, Africa, and North America, I distinguish six primary regulatory models: (i) the imposition of a duty to initiate insolvency proceedings, generally found in Europe; (ii) the imposition of a duty to recapitalise or liquidate the company, typically existing in Europe and Latin America; (iii) the imposition of duties towards the company’s creditors, including the duty to minimise losses for the creditors existing in the United Kingdom; (iv) the imposition of a duty to prevent the company from incurring new debts, existing in countries like Australia and South Africa; (v) the imposition of a duty to prevent the company from incurring new debts that cannot be paid in full, existing in Singapore and New Zealand; and (vi) the imposition of a duty to keep maximising the interest of the corporation, as it exists in Canada and the United States.