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European Business Organization Law Review 5: 293-319 2004 T.M.C.ASSER PRESS DOI10.1017/S1566752904002939
293
Thomas Bachner*
1. Introduction the story of an idea ................................. 294
2. The problem to be solved........................................ 297
3. The statutory provisions in Great Britain and Germany . ............... 297
4. The moment of truth when do wrongful trading and
Insolvenzverschleppung commence? ............................... 300
4.1 Two different approaches........................................ 3004.2 The situation prior to insolvency .................................. 3014.3 Continuing trading beyond insolvency ............................. 3034.4 Rescue efforts after the discovery of insolvency ...................... 3064.5 Summary .................................................... 309
5. Compensating creditors for the depletion of company assets ............ 3105.1 Principles .................................................... 3105.2 Discretion of the court .......................................... 313
6. The special case of the new creditors ............................. 316
7. Conclusions .................................................. 318
Abstract The European Commissions May 2003 Action Plan Modernising Company Law and Enhancing Corporate Governance in the European Union A Plan to Move Forward includes a proposal for new legislation on wrongful trading with a view to strengthening the personal accountability of directors in the case of a companys failure. The proposal builds on expert opinions that the existing law on wrongful trading in Great Britain is better capable of activating an early managerial response to a financial crisis than the German Insolvenzverschlep-
* Mag. et Dr. iur. (Wien), Mag. rer. soc. oec. (WU Wien), LL.M. (Cambridge), University Assistant at the Vienna University of Economics and Business Administration (WU Wien), currently studying for a Ph.D. at Cambridge University. This article is based in part on a paper previously submitted at Cambridge University in June 2002. I am grateful to Eils Ferran for her comments on several earlier versions of the paper and to Tony Weir for attending to its language and style. Sabine Schmidt and Eva Micheler have also made helpful suggestions. All errors remain my responsibility.
Wrongful Trading A New European Model for Creditor Protection?
294 Thomas Bachner EBOR 5 (2004)
pungshaftung (liability for delaying insolvency). This article challenges the alleged superiority of wrongful trading over Insolvenzverschleppungshaftung. It provides a detailed analysis of the case law under section 214 of the British Insolvency Act, which does not support the fundamental assumption underpinning the European endeavour, namely, that wrongful trading routinely imposes duties on the directors ahead of the onset of insolvency. Furthermore, the...