National Report for Tanzania

The law relating to the treatment of contracts in insolvency in Tanzania—as is true for the general law on insolvency in Tanzania—is neither well developed in theory and practice nor quite explicit in a number of aspects. The lack of extensive application of the law is due to lack of material circumstances in which the law could apply and systematically evolve and develop. Recently, the law has tended to develop through other laws that address specific matters that have implications for insolvency. The statutory law as it exists to date has some general rules that govern the treatment of contracts in insolvency, although the case law is almost non-existent.

National Report for Israel

Israel’s insolvency law is trifurcated and is comprised of the Bankruptcy Ordinance, the Companies Ordinance, and the Companies Act. The first of these regulates insolvency proceedings pertaining to individuals, and the other two regulate proceedings pertaining to corporations. The Companies Ordinance deals with corporate liquidation and receivership, and the Companies Act handles corporate reorganization. While certain provisions appear in all three Acts, other provisions appear only in one or two of them. The subject of executory contracts is one of the main matters with respect to which the three Acts differ. The Bankruptcy Ordinance (Pkudat Pshitat Ha-Regel) and the Companies Ordinance (Pkudat Ha-Havarot) address the issue of executory contracts within the context of onerous property. As a result, this legislation covers only the ability of the trustee to release the estate from burdensome, unprofitable contracts.

National Report for England

In Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd & Anor, one of the most important cases in English insolvency law in recent years, Lord Collins summarized and differentiated between two fundamental principles of English insolvency law, the anti-deprivation principle and the principle of pari passu distribution.

National Report for Spain

In Spain, the insolvency legislation in force before 2003 did not include a general regulation of the effects of insolvency on contracts. It was an outdated, fragmented regulation, which either considered the insolvency process exclusively as a mere instrument to liquidate the business/debtor’s assets (essentially in a piecemeal manner, so why bother to regulate contracts beyond their termination: quiebra, concurso de acreedores) or provided insufficient regulation (suspensión de pagos, quita y espera). The old system was embodied in different codes and laws, and only included rules concerning the effects of the opening of the different procedures on specific contracts (civil and commercial agency, sale of goods, insurance, etc).

National Report for Sweden

When a party to a mutual contractual relationship opens insolvency proceedings, the question arises of how to handle the debtor’s agreements, ie contracts which at the commencement of the proceedings have not been fully performed by both the insolvent debtor and the counterparty. Both in a bankruptcy and in a company reorganization, a debtor’s contracts are usually one of the main assets, and so usually the debtor is greatly in need of the counterparty fulfilling his obligations despite the commencement of insolvency proceedings.

National Report for the People’s Republic of China

The 2006 Enterprise Bankruptcy Law (hereafter referred to as ‘EBL’) establishes some rules dealing with executory contracts. This is a new achievement which fills a vacancy in the EBL’s predecessor, the 1986 bankruptcy legislation.

National Report for the Netherlands

The origin of the current statutory regime dealing with contracts in insolvency dates back to the enactment of the Bankruptcy Code in 1893. The Bankruptcy Code entered into force on 1 September 1896 (and still applies today). Limited changes have subsequently been implemented to improve the statutory treatment of contracts in insolvency. Various proposals submitted in (draft) bills and in legal literature to modernize the existing legal framework have largely been disregarded by the legislator.

National Report for the United States

The way the US Bankruptcy Code treats executory contracts is broadly reflective of three major themes that characterize US insolvency policy generally, including in its evolution over time. First, the Code vests the estate administrator with wide-ranging power to reject and minimize the burden of unfavourable contracts, select and enjoy the advantages of favourable contracts, and even assign the advantages of favourable contracts to third parties for the benefit of the estate. This approach prevails in both liquidation and reorganization cases. In reorganization cases, the appearance usually is that the debtor is allowed to take ‘unfair’ advantage of contract counterparties, since the debtor itself, as debtor-in-possession (‘DIP’), seems to be reaping the benefits while externalizing the burdens onto individual contract counterparties. While the Code refers to the ‘trustee’ as the entity empowered to administer contracts in insolvency, the Code makes it clear that the references to ‘trustee’ are largely confined to liquidation cases, and the DIP exercises the trustee’s powers in reorganization cases.

National Report for Australia

Australia’s contract law is an amalgam of common law rules, equitable principles, and statute law. Its genesis lay in centuries of development of these three branches of English law. Principles of modern contract law had their roots in the rise of English maritime law during the sixteenth century. In 1788, England established a penal colony at Sydney Cove, seeding the colony of New South Wales. At that moment, all existing English contract law simply flowed into this ‘new’ land as intellectual baggage. Slowly Anglo Australia’s legal and legislative framework evolved from a patchwork of distinct English colonies into a commonwealth of Federal, State, and Territory Governments. The gloss of contract law took on an increasingly antipodean sheen. This resultant ‘system’ of law is a complex relationship between common law, equity, and Federal, State, and Territory legislation. Throughout this chapter we shall use the term ‘general law’ to mean the principles and rules of common law and equity.

National Report for Belgium

In contrast to other legal systems, Belgium does not have a comprehensive insolvency code that deals with all kinds of insolvency proceedings. Instead, separate legislation exists for each type of insolvency procedure: bankruptcy (Bankruptcy Law of 8 August 1997, hereafter the ‘Bankruptcy Law’), judicial reorganization (Law on the continuity of enterprises of 31 January 2009, hereafter the ‘Business Continuity Law’), debt reorganization for natural persons (articles 1675/2–17 of the Judicial Code), and voluntary winding up of companies (articles 181–196 of the Companies Code).