Security Rights and the European Insolvency Regulation

A comparative analysis of security rights in insolvency proceedings under the main legal traditions of the European Union (common law, Germanic, Napoleonic Code and East European) in the context of Articles 5 and 13 of the European Insolvency Regulation Regulation 1346/2000.

Security rights are of fundamental importance to the granting of credit. They are generally considered to increase the availability and lower the cost of credit, but there appear to be divergent views across Europe and elsewhere on the extent to which it should be possible to create security rights over assets. Moreover, laws in many countries, such as avoidance laws, strike at advantage-gaining by creditors in the period immediately before formal insolvency proceedings are instituted. It is seen as potentially unfair to other creditors who may be forced into taking enforcement proceedings against the debtor, which may precipitate the premature liquidation of the debtor with an overall loss of economic value. This book assesses the conception of security rights according to the different European legal traditions. It also evaluates the appropriateness of the protection given to security rights in light of: developments in those European legal traditions; the objective of the Insolvency Regulation to facilitate the more effective administration of cross-border insolvency cases; the need for security in the context of the financial crisis; the basic principles of ensuring fairness between creditors; forestalling premature liquidation; and reinforcing the collective nature of the insolvency process. [Subject: Finance Law, European Law]