Courts in insolvency, collateral, and creditor coordination disputes

Abstract

Abstract This chapter analyses the disputes over insolvency and property in a financial context, but also, more generally, inter-creditor coordination disputes under contract, and it complements, in that way, Chapter 10. First, the chapter analyses insolvency’s ‘claw-back risk’ where assets are transferred to a special purpose vehicles (SPVs), including avoidance, recharacterization, or substantive consolidation. Secondly, it analyses insolvency disputes over derivatives, and their collateralization. Thirdly, it analyses more generally insolvency disputes over financial collateral, and the challenges of segregating money and instruments, and of characterizing the proprietary or security interest. Fourthly, the chapter analyses inter-creditor disputes, and the enforcement of clauses that seek to ensure the bankruptcy-remoteness of an SPV, used to shield assets or cash flows. Fifthly, it analyses inter-creditor coordination disputes over enforcement ‘triggers‘, and restructuring disputes, where creditors allege disenfranchisement or oppression. Finally, the chapter analyses the role, in creditor coordination disputes of agent banks and trustees, including their duties and responsibilities, and the clauses used to shape their discretion and liability.