Statutory loans insolvency frameworks
Statutory insolvency frameworks provide the rules and mechanisms for the realisation and distribution among stakeholders of the assets of insolvent companies. If the value of a company as a going concern is greater than if it were to be liquidated, such frameworks also enable the preservation of the enterprise of the company so that, if appropriate, it can be rehabilitated. If necessary, this can be under a different ownership. Also, the procedures provide for changes in control once insolvency is established or expected. Statutory insolvency frameworks aimed at the recovery of assets from a non-viable business are prevalent in all countries around the world, although they vary considerably in their effectiveness. They generally provide for a trustee or other official appointed by a court (or other body empowered by legislation) to realise the assets of an enterprise and distribute them to the various stakeholders of the company in accordance with priority rules. In many jurisdictions, they also provide for the prevention of preferential treatment of a party or interest group in the period leading up to a financial crisis.
Insolvency procedures aimed at rehabilitation are also common, providing for the stabilisation and, usually, sale of the business to new owners, under the supervision of a specialist appointed under the provisions of a statute.