What is an Insolvency Proceeding?

Entry in Oxford Business Law Blog.

04.01.2017

Across the globe, procedures to restructure financially distressed businesses are increasing in importance. Prima facie, many of these procedures are very different from ‘classical’ insolvency proceedings. Unlike classical insolvency proceedings, restructuring procedures are now, usually, initiated pre-insolvency (as measured on a cash flow or balance sheet test), are conducted by the debtor in possession (‘DIP’) without the appointment of an insolvency administrator, and often only affect certain creditors or groups of creditors. Thus, should such procedures nevertheless be characterised as insolvency proceedings?