Dr. Eugenio Vaccari, Lecturer in Law, University of Essex recently published an article in the Journal of International Banking Law and Regulation (Volume 35, Issue 4, pp. 135-147).
The publication, titled ‘Broken companies or broken system? Charting the English insolvency valuation framework in search for fairness’, adopts a normative approach to investigate the measurement of value in English insolvency and bankruptcy cases.
In the article, the most commonly used (by courts and practitioners alike) valuation techniques are assessed against a revised communitarian, fairness-orientated framework. Such framework is based on a modified version of Rawls, Finch and Radin’s social justice concepts of fairness.
Asking questions about fairness and fair value in insolvency is particularly important due to a variety of factors. These include the increased complexity of valuation cases, where intangible assets such as cryptocurrencies and intellectual property rights feature with increasing prominence and frequency. They also include the need to counteract the increasing risks of conflict of interests with some of the parties involved in these procedures, particularly in rescue proceedings.
Answering questions about fairness in valuation cases can no longer be avoided due to the public outcry associated with the use of certain corporate insolvency procedures such as pre-packaged administrations to connected parties or company voluntary arrangements by large retailers to avoid or significantly reduce rents.
Dr. Vaccari’s article investigates the structural components of the notion of fairness, explains the need for a revised communitarian, fairness-orientated framework to measure value in insolvency, and suggests how this could be implemented in practice.