Context of Preventive Restructuring in the European Union
Chapter 4 explores the evolution of preventive restructuring in the EU, as it has emerged out of normal insolvency frameworks. This will include an analysis of the underlying insolvency law theories. As the idea of a collective procedure occurring prior to insolvency is fundamentally contrary to traditional insolvency law principles, there are many debates and controversies among academics. These will be discussed in detail. The more controversial provisions include the stay or moratorium, aspects of majority decision-making, and cross-class cram-down. Apart from the obvious impairment of creditors rights and whether that is indeed fair, the justification of compelling dissenting classes of creditors (cram-down) has created a tremendous amount of controversy. This may also cause significant differences in the frameworks implementing the Preventive Restructuring Directive which must be introduced by the end of 2021.