Towards an optimal model of directors' duties in the zone of insolvency: A comparative assessment

• Main Author: Aurelio GURREA-MARTINEZ
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Corporate insolvency; Directors' duties; Ownership structure; Commercial Law
• Online Access: https://ink.library.smu.edu.sg/sol_research/3646; https://ink.library.smu.edu.sg/context/sol_research/article/5604/viewcontent/ZoneofInsolvency_blog_Oxford_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 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 a 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 value of the firm, as it exists in Canada and the United States. Moreover, it should be taking into that, in addition to these special duties generally imposed in the zone of insolvency, corporate directors can be subject to other creditor-related duties.