Who Holds the Cards continued from page 43 bankruptcy filings and other conflicted transactions. Germany was described as taking a more fragmented approach, with authority divided among management, insolvency administrators, creditors, and courts depending on the procedure employed. Under a traditional insolvency proceeding, control shifts significantly away from shareholders, while debtor-in-possession and preventive restructuring proceedings allow management to retain a greater role. Historically, Brazilian debtors have enjoyed substantial procedural control, although recent reforms have begun to increase creditor participation through mechanisms such as creditor-sponsored competing plans.
The next discussion focused on plan confirmation and shareholder treatment. The United States continues to apply the absolute priority rule, under which shareholders generally cannot retain value unless creditors are paid in full or equity contributes new value. Germany has largely adopted a similar approach, while permitting limited exceptions within its preventive restructuring framework. The United Kingdom’ s restructuring plan regime does not incorporate a strict absolute priority rule, a feature that continues to play an important role in shaping negotiations between shareholders and creditors. In Brazil, recent reforms have introduced greater opportunities for creditors to influence restructuring outcomes, reducing the leverage historically enjoyed by shareholders.
The panel concluded that shareholder influence is often strongest before formal proceedings commence, but that control tends to shift as restructuring progresses. The extent and durability of shareholder power ultimately depend on the design of the applicable restructuring regime, including filing obligations, governance rules, and plan confirmation requirements. As cross-border restructurings continue to evolve, understanding these differences remains essential for practitioners navigating increasingly complex international restructurings.
Funding the Fight continued from page 45 aversion to litigation itself, with a strong preference for parties to resolve disputes private-
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ly. Litigation is often viewed as greedy and unethical. Because of confidentiality and lack of market data, it is difficult to comprehensively assess the funding market. There is no specific legal prohibition on champerty in Japanese law; however, the Attorneys Act prohibits the assignment of claims and prevents non-lawyers from providing legal services. Furthermore, parties typically pay their own fees, and there are usually no cost orders. The most prominent publicly confirmed example of litigation funding in Japan is the Toshiba case, where a European funder supported the legal costs of an institutional investor group in a damages suit arising from a 2017 accounting fraud.
It is also unique in that there are no restrictions on contingency fees and lawyers can operate on a 100 % success-based model, though it is not widely popular as court approval is expected similarly to the other regions discussed.
Whereas the ethical considerations surrounding litigation funding was not the subject for debate at this panel, it was nevertheless clear from the discourse how truly difficult it is to balance the interests in civil and commercial proceedings. Insolvency, being a proceeding in rem, is considered an exception, and the Courts have the enviable task of determining whether and in which cases funding ought to be permitted. In summary, litigation funding exists on a broad spectrum across the Asia-Pacific region. From Australia’ s proactive government involvement to Japan’ s cultural aversion and the cautious liberalisation in Hong Kong and Singapore, navigating this space requires a nuanced understanding of both local laws and entrenched cultural norms.
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