Worldwide: Legislative/Regulatory Developments

United States—Commission to Study Proposed Changes to Chapter 11. On April 19, 2012, a commission established by the American Bankruptcy Institute (the "ABI Commission") to study the reform of chapter 11 of the Bankruptcy Code convened its first public meeting in Washington, D.C. The ABI Commission, which comprises nearly 130 corporate restructuring experts serving on 13 advisory committees, conducted 11 public field hearings during 2013. The wide range of testimony addressed proposals to: (i) change bankruptcy venue rules; (ii) abolish the hard deadline on chapter 11 plan exclusivity; (iii) reduce reorganization costs in small- to middle-market cases; (iv) establish a uniform structure and process for section 363 sales; (v) recognize the new value corollary to the absolute priority rule; (vi) adopt uniform procedures for filing section 503(b)(9) claims for administrative expenses; (vii) change the rules governing section 524(g) asbestos trusts; (viii) amend rules governing pensions and retiree benefits; (ix) change rules governing claims trading; (x) alter rules governing nonresidential real property leases, intellectual property licenses, trademarks, and patents; and (xi) revise the safe-harbor provisions for financial contracts.

The ABI Commission expects to issue a written report of its recommendations during ABI's Winter Leadership Conference in December 2014.

United States—Proposed Chapter 14 of the Bankruptcy Code for Failing Banks. On December 19, 2013, Senators John Cornyn (R-Texas) and Pat Toomey (R-Pennsylvania) introduced legislation that would eliminate a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act" or "Dodd-Frank") and create "chapter 14" of the Bankruptcy Code to prevent any systemically important financial institution ("SIFI") from being bailed out with taxpayer funds. The bill, denominated the "Taxpayer Protection and Responsible Resolution Act" ("TPRRA"), would create the new chapter 14 as a vehicle for resolving failing SIFIs in lieu of Title II of the Dodd-Frank Act, also known as the Orderly Liquidation Authority (OLA) provision, which would be repealed. TPRRA would authorize the Federal Deposit Insurance Corporation ("FDIC") to be appointed as a receiver to carry out the liquidation of a failing financial institution. A bank could file for chapter 14 protection if it were insolvent, unable to pay its debts as they mature, or left with depleted capital, or if one of these circumstances were likely "sufficiently soon," such that filing for bankruptcy would prevent substantial harm to the financial stability of the U.S. Failed banks' risky assets would be transferred to bridge companies, which would operate as new, solvent companies that could continue to meet the failed banks' financial obligations. Shareholders of the banks and long-term creditors would bear responsibility for the banks' "bad decisions." The U.S. government would be prohibited from providing bailout financing to a chapter 14 debtor.

United States—Proposed Changes to Bankruptcy Asbestos Trust Rules to Promote Transparency. On November 13, 2013, the U.S. House of Representatives approved H.R. 982, the Furthering Asbestos Claim Transparency Act of 2013 (the "FACT Act"). If enacted, the Fact Act would amend the Bankruptcy Code to require all trusts established under section 524(g) of the Bankruptcy Code in order to deal with asbestos claims against chapter 11 debtors to file publicly available reports on a quarterly basis, disclosing the details of payment demands and disbursements, including the names and exposure histories of claimants, except as provided in a protective order or as necessary to prevent disclosure of confidential medical records or protect against identity theft. As proposed, the FACT Act would apply retroactively to bankruptcy cases commenced and bankruptcy trusts established before its passage.

United States—Final Bankruptcy-Fee Guidelines Issued. Following the culmination of two public comment periods spanning more than a year, the Office of the United States Trustee, a unit of the U.S. Department of Justice ("DOJ") assigned to oversee bankruptcy cases, issued final guidelines on June 11, 2013, governing the payment of attorneys' fees and expenses in large chapter 11 cases—those with $50 million or more in assets and $50 million or more in liabilities. The guidelines, which apply to cases filed on or after November 1, 2013, are intended to "enhance disclosure and transparency in the compensation process and to help ensure that attorneys' fees and expenses are based on market rates," according to a June 11 press release from the DOJ. According to the DOJ, the new guidelines reflect "significant changes that have occurred in the legal industry as well as the increasing complexity of business bankruptcy reorganization cases."

United States—Proposed Changes to Treatment of Collective Bargaining Agreements and Retiree Benefits in Bankruptcy. On January 3, 2013, the Protecting Employees and Retirees in Business Bankruptcies Act of 2013 (H.R. 100) was introduced by Representative John Conyers (D-Michigan). The proposed legislation would amend sections 1 113 and 1114 and various other provisions of the Bankruptcy Code to improve employee and retiree recoveries for unpaid wages, severance pay, stock losses, and Worker Adjustment and Retraining Notification Act damage; would promote good-faith bargaining in connection with motions to reject or revise collective bargaining agreements; and would revise the standards for court approval of executive and management retention, incentive, and other bonus programs. Among other things, the bill proposed that collective bargaining agreements could be modified only to create the "minimum savings essential to permit the debtor to exit bankruptcy, such that confirmation of a chapter 11 plan would not be likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor (or any successor to the debtor) in the short-term." The bill is identical to bills proposed in the House of Representatives and the Senate in 2012.

United States—Proposed Student Loan Relief. On January 24, 2013, Senator Richard Durbin (D-Illinois) introduced the Fairness for Struggling Students Act of 2013 to address the growing student loan crisis. The bill is intended to restore fairness in student lending by treating privately issued student loans the same as other types of private debt for purposes of discharge in bankruptcy. Since 1978, government-issued or guaranteed student loans have been nondischargeable under the Bankruptcy Code. In 2005, the law was changed to give private student loans the same status in bankruptcy as government student loans. A companion bill, the Know Before You Owe Private Student Loan Act of 2013 (H.R. 3612), would require schools to counsel students before they incur expensive private student loan debt and to inform them if they have any untapped eligibility for federal student aid. It would also require the prospective borrower's school to confirm the student's enrollment status, cost of attendance, and estimated federal financial aid assistance before a private student loan is approved.

Spain—Bank Restructuring Progresses. The capital structure of the Asset Management Company for Assets Arising from Bank Restructuring ("SAREB") established in late November 2012 by the Fund for Orderly Bank Restructuring (Fondo de Reestructuración Ordenada Bancaria ("FROB")) in connection with the Spanish banking sector's recapitalization and restructuring process was completed in 2013. The exclusive purpose of SAREB is the ownership, management, and administration (whether direct or indirect), as well as the acquisition and sale, of distressed assets that have been transferred to it by: (i) financial institutions that required public assistance from FROB; and (ii) institutions that require public funds, according to the Bank of Spain's judgment and independent analysis of the capital needs and the quality of the assets of the Spanish financial system. SAREB will be managing total assets of more than €50 billion.

Germany—Coordination of Affiliated Insolvency Cases. On January 3, 2013, the German Ministry of Justice circulated draft legislation that would establish procedures to govern the coordination of insolvency proceedings of affiliated companies. Existing German law does not provide for a joint approach to such insolvencies, but is instead structured to accommodate companies on an individual basis. The proposed legislation is intended to change this, consistent with broader EU legislative activity promoting closer cooperation between courts and officeholders in the insolvency proceedings of group companies engaged in economic activity in different EU member states. Among other things, it provides for a single insolvency court to have jurisdiction over all members of an affiliated group.

France—New Law Governing Systemically Important Financial Institutions. On July 26, 2013, Law No. 2013-672 was enacted to regulate banking activities in response to lessons learned from the 2007–2008 financial crisis, which highlighted the limited number of tools available to supervisory authorities to limit the risks created in the financial system by systemically important financial institutions. The provisions of the law extend over a broad array of issues, such as the ring-fencing of certain proprietary trading activities, anti–tax haven rules, money laundering, high-frequency trading, mandatory clearing, and central supervision of counterparties. The law creates a new banking resolution regime that applies to most financial institutions. Among other powers, the French Prudential Control and Resolution Authority (Autorité de contrôle prudentiel et de résolution) now has the ability to implement a number of resolution measures with respect to a failing institution, including changing governance, recapitalizing, and suspending or prohibiting certain business operations.

The Netherlands—Proposal for Prospective Insolvency Trustees. The Minister of Justice proposed legislation in 2013 that would authorize the court appointment of a prospective trustee (beoogd curator) for a company prior to the commencement of formal insolvency proceedings for the purpose of exploring potential restructuring and/or sale opportunities. The proposal is part of a broader legislative initiative that includes a proposal for compulsory extrajudicial compositions and various measures designed to encourage the continuation and reorganization of insolvent companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Mark G. Douglas
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.