Bronze Medal Winner Alexander Völker, Martin-Luther-University Halle Wittenberg A Breathing Spell in Turbulent Times
It is the year 1773 in the German city of Frankfurt am Main. A young lawyer writes a letter on behalf of his client to the client ' s creditors:“[...] I therefore ask you to grant me the well-deserved Beneficium Moratorii for five years, so that I can put myself in a position to work on the successive repayment of my creditors during this time;” Just one year after writing this client letter, the young lawyer writes a novel, as he has done several times before. The novel will be titled“ The Sorrows of Young Werther”. The young lawyer ' s name is Johann Wolfgang von Goethe.
This short story exemplifies that the idea of granting the debtor a temporary breathing spell to facilitate his restructuring is not new. In fact, its first beginnings can be traced back to the Roman Empire. Although dealing with
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physical( and violent), examples of statutes and laws granting debtors a temporary respite can be found throughout the centuries.
Nowadays, almost all modern legal systems have such instruments( hereinafter referred to as“ restructuring moratoria”) in their respective insolvency or restructuring laws.
Although these restructuring moratoria have a wide variety of names nowadays( e. g. " stay " in the US, " moratorium " in the UK and Singapore, " Stabilisierungsanordnung”( stabilization order) in Germany, " afkoelingsperiode "( cooling-off period) in the Netherlands), they all have the same purpose. They are intended
to temporarily protect the debtor from certain actions by its creditors that could hinder an effective restructuring. In the case of unsecured creditors, these obstructive creditor actions include the termination of contracts, the acceleration of outstanding loans, certain other contractual rights, enforcement actions against the debtor and applications to open insolvency proceedings over the debtor ' s assets. In the case of secured creditors and subject to the respective collateral, there are additional options to disrupt the restructuring process, such as the forfeiture and realization of the collateral.
It is therefore no surprise that such creditor actions are suspended by most restructuring moratoria. This suspension, in turn, entails a restriction of creditors’ contractual and statutory rights. Particular attention must therefore be paid to the procedure in which the restructuring moratoria are embedded. A comparison of several legal systems with well-known restructuring frameworks— such as those of the United States, the United Kingdom, Germany, France, and Singapore— reveals that two categories can be identified: on the one hand, moratoria that take effect automatically by operation of law and apply collectively( i. e., to all creditors of the debtor); and on the other hand, moratoria that require a court order and apply only to individual dissenting creditors.
Further differences and similarities among modern restructuring moratoria, as well as the conclusions that can be drawn from them, are discussed in the article " A Breathing Spell in Turbulent Times ". Interested readers are warmly invited to take a look at the article on the website of the International Insolvency Institute( III).
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