Rescuing Corporate Reorganisation: a transatlantic evaulation

My research will compare and contrast corporate rescue procedures in England and the United States. A dedicated corporate rescue procedure exists in England from the 1980s following the recommendations of the Cork Committee Report on Insolvency Law and Practice (Cmnd 8558, 1982) essentially implemented in the Insolvency Act 1986 with the introduction of 'administration orders'. The making of an administration order entailed the court handing over responsibility for the running of company to an outside insolvency practitioner / the administrator. A particular type of secured creditor - the floating chargeholder - enjoyed a veto on the making of an appointment. Following the White Paper 'Insolvency: A Second Chance' (July 2001) the procedure was changed significantly by the Enterprise Act 2002 with floating chargeholders losing their veto on companies entering the administration process though they still have an effective veto on the identity of the person appointed as administrator. There are now a variety of ways in which an administrator may be appointed. Whatever the method of appointment, an administration has the overriding objective of rescuing the company as a going concern or, if this is not reasonably practical and/or it is not in the interests of creditors as a whole, then to achieve a better result for company creditors that would be likely if the company were wound up, or, if neither of the above is reasonably practical, then to make a distribution to secured or preferential creditors. An administrator is subject to an overarching duty to exercise her functions in the interests of creditors as a whole and, in realising the property secured, not unnecessarily to harm the interests of creditors as a whole.

An administrator may do all things necessary for the management of the company and also to formulate proposals to achieve the statutory objectives. During the process creditors etc. are barred from enforcing their claims. A 'successful' administration normally involves the company entering into an agreement with its creditors for 'debt forgiveness' or else the conversion of debt into shares in the company but not all creditors have to agree before the proposals become binding on the remainder.

The new Act moves English law somewhat in the direction of the US position which has traditionally been seen as very 'pro-debtor' compared with the UK - seen as 'pro-creditor'. The US law set, out in Chapter 11 of the Bankruptcy Code 1978, is classed as pro-debtor for it allows a company freely to initiate the reorganisation process and for the company's board to remain in control.
The research will ask:
1. What values and purposes are served by the reorganisation procedures and is the law merely concerned about respecting pre-insolvency legal entitlements?
2. Why are the mechanisms for entering the procedures different in England and the US and why does the secured creditor have such a central role in the procedure in England but not formally at least in the US?
3. Why do solvency requirements before a company can enter the procedure differ in England and the US?
4. What are the reasons for allowing the incumbent management to remain in control in the US whereas in England responsibility is entrusted to an outside insolvency practitioner?
5. To what extent does the stay on creditor enforcement actions differ
and what are the conditions for getting the stay lifted in the two countries?
6. How different are the procedures for obtaining creditor approval of a reorganisation plan and whether secured creditors have a 'veto.'
7. What about funding for companies undergoing a reorganisation process? How does debtor-in-possession (DIP) financing work in the US and why was the opportunity to introduce a similar dedicated procedure in the UK rejected in the debates on the Enterprise Act 2002?