National Report for Spain

The current insolvency legislation is the result of a long and cumbersome evolution. It was approved on 7 July 2003 (Ley 22/2003, the Insolvency Act 2003 (‘IA’)) and came into force on 1 September 2004, putting an end to one of the most embarrassing situations that the Spanish legal system has ever had to endure: coming into the 21st century with an insolvency legislation dating back to the beginning of the 19th century. The previous insolvency system was composed of as many as five different legal instruments: the Commercial Codes (Codigo de Comercio) of 1885 and 1829 (only partially in force) and the Law on Suspension of Payments of 1922 (Ley de Suspension de Pagos), which regulated some procedural aspects and all material aspects of commercial insolvency; the Civil Code of 1889, which regulated the insolvency of the general—non-commercial—debtor; and the Civil Procedural Law, dating from 1881 (Ley de Enjuiciamiento civil ). It can then be said that the insolvency of a large business in a developed European economy (the fifth largest in the EU) had to be solved with laws that dated from two centuries before. The reform has been a relief and it has greatly modernised Spain’s economic legal legal framework. However, this process was neither easy nor did it produce a fully satisfactory result.

National Report for the Republic of Korea (South Korea)

The legislative framework for insolvency, namely the Corporate Reorganisation Act, the Composition Act, and the Bankruptcy Act, was introduced in 1962. Until the financial crisis struck Korea and other Asian countries in 1997, however, for several reasons, insolvency proceedings were hardly used by debtors. Cases were mostly settled through private arrangements between the debtor and the creditor, and only a handful of cases went to court.

National Report for Brazil

The first Brazilian insolvency legislation was part of the Commercial Code of 1850; before then, Portuguese Law had applied. The insolvency procedure was inspired by the French Commercial Code of 1807 (the so-called Napoleonic Code), and by the Portuguese Law of 1756. A cessation of payments was regarded as the sole basis for a declaration of bankruptcy.

National Report for Israel

Ever since its declaration of independence in May 1948, Israel’s insolvency law has been predicated on a pair of ordinances that were enacted during the British Mandate over Palestine, which preceded the statehood of Israel. The Bankruptcy Ordinance, which deals primarily with the insolvency of individuals, was enacted in 1936. The Companies Ordinance was enacted even earlier, in 1929, and handles corporate liquidations and receiverships. Originally, the ordinances were enacted in English, with a secondary Hebrew version accompanying the formal English version. After a few decades, the two ordinances underwent a semi-legislative procedure, pursuant to which the Constitution, Law and Justice Committee approves an official Hebrew version of the Ordinances as the formal version of this legislation. The formal Hebrew version of the Bankruptcy Ordinance (Pkudat Pshitat Ha-Regel) was approved in 1980 and that of the Companies Ordinance (Pkudat Ha-Havarot) in 1983. Thereupon, the Hebrew versions are the official versions of the legislations to be interpreted by the courts.

National Report for the United States

The ‘New World’ on the North American continent was founded in the 1600s on colonists’ willingness to take substantial risks. The notion of relieving at least some of the burdens of inevitable failure, in order to encourage productive risk-taking, has been part of the fabric of US law almost from the very beginning. After discovering that jailing debtors did very little to encourage fulfilment of debts, and it in fact depressed the economic productivity on which the colonies’ survival depended, several of the colonies experimented with limited insolvency and bankruptcy laws in the mid-1700s. After the Revolution, the issue of providing uniform and nationwide bankruptcy relief was enshrined in the US Constitution as part of the very foundation of the new nation. While the new US Congress was granted only limited rights to regulate general economic matters (the most significant such rights being reserved to the state and local legislative bodies), Article I, section 8, clause 4 of the US Constitution explicitly vested the federal Congress with the power to regulate bankruptcy.

National Report for Cameroon

Cameroon is a developing country with an extensive informal sector and a population of approximately 20 million people. There is a common misunderstanding about the location of Cameroon. While many think it is located on the west coast of Africa, it is rather located in central Africa bordered by Nigeria to the west, Chad and the Central African Republic to the east, Lake Chad to the north and the Republic of Congo, Equatorial Guinea and Gabon to the south.

National Report for England

The first bankruptcy statute in England dates from 1542. The statute was designed to prevent debtors from escaping the country; to ensure that all of a debtor’s assets were available for distribution among creditors and to ensure fair and rateable division of assets—the pari passu principle. A number of bankruptcy statutes were enacted between 1542 and 1914. These statutes applied to the bankruptcy of individuals but a number of provisions in the later statutes were incorporated by reference into the companies legislation. The Winding-Up Act 1844 was the first enactment applying directly to companies. The Act limited the remedies of company creditors to company property. From the Companies act 1862 onwards, winding-up provisions were included in the Companies Acts and these Acts also applied certain provisions of the Bankruptcy Acts in the corporate sphere. The result was a form of ‘scissors and paste’ legislation. In 1976 the then Department of Trade and Industry asked a committee chaired by the distinguished insolvency practitioner, Sir Kenneth Cork, to address the need for unification and modernisation of insolvency legislation. The committee reported in 1982 and the report led ultimately to the Insolvency Act 1986, which brings together personal and corporate insolvency law in

National Report for the Czech Republic

The extent to which history is determinative of, or even relevant to, the present is of course subject to an old and inconclusive debate. There seems to be no guarantee that great social traditions and achievements of the past will be preserved to the present day, no matter what the effort. Conversely, however, if a society works hard at destroying its institutions and persists with this programme for decades, it is quite likely to succeed, as evidenced by the sad story of private law in several jurisdictions in central Europe in the second half of the 20th century.

National Report for Sweden

Swedish bankruptcy law has its roots in the Italian Middle Ages and thus in Roman law, which had a form of personal execution whereby a debtor who could not pay his debts found himself in thraldom to his creditors. In 326, however, slavery was superseded by a procedure whereby the debtor’s property was seized by the praetor. The old Swedish bankruptcy law was very sketchy. Provincial laws contained only a hint of anything that can be termed a bankruptcy procedure, as the need for a bankruptcy law emerged only when credit conditions were developed.

National Report for Australia

The English Bankruptcy Act of 1542 and subsequent 17th century legislation served as the model for early personal insolvency laws upon white settlement in Australia. In 1840 the colony of New South Wales, Australia’s first colony, passed an Absent Debtors Act and the following year an Act for Giving Relief of Insolvent Debtors. A number of the colonies passed insolvency legislation in the period leading up to Federation in 1901. Under the Australian Constitution from 1901 the Federal Parliament has had power to ‘make laws for the peace, order and good government’ with respect to bankruptcy and insolvency. The Federal Parliament used this power in 1914 to create its first Bankruptcy Act and there were new Acts in 1924 and 1966. The present legislation is the Bankruptcy Act 1966 (Cth) which had major amendments in 2002 and 2004.