Maximisation of the value of assets as the principle of cross-border insolvency proceedings

Abstract

Maximisation of the value of assets is one of the general principles of insolvency law, though its application in cross-border insolvency proceedings remains obscure. This article focuses on the importance of this principle and its effects when main and secondary insolvency proceedings are opened. Since insolvency law should not only establish the legal framework of debt enforcement but also provide effective mechanisms to maximise creditors’ returns, the question arises of how value maximisation should be attained when the assets of a debtor are located in different jurisdictions. This article analyses how the existing European legal framework of cross-border insolvency proceedings addresses the questions of treatment of assets, and whether it allows effective administration and realisation of the assets. In addition, it deals with challenges in the formation of insolvency estates when both main and secondary insolvency proceedings are opened; in particular, the powers of insolvency practitioners to recover assets that are removed from the respective insolvency estates of such proceedings. The research revealed that maximisation of the value of assets guides cross-border insolvency proceedings, and is important in resolving the questions pertaining to the treatment of assets which arise in these proceedings.