Creditors of a corporation cannot recover debts from a shareholder.

Millions of American homes that were purchased with subprime mortgages have been foreclosed in recent years, forcing their owners, unable to service their debt, to leave. But, as a result of no recourse mortgages in many US states, the entire mortgage debt was then extinguished, even if the value of the home was too low to cover the balance still due.

(7)Any seriously disadvantageous change has occurred to technical, market, economic or legal environment, etc. wherein the debtor operates its business, which makes the investor of an equity instrument unable to take back its investment

One method is for the court to prevent current or future use of those proceeds by the insolvency representative.

In Denmark, a judge was not required to report any debt or liability.

19. Invites creditors and debtors to continue to use, where appropriate and on a case by case basis, mechanisms such as debt swaps for alleviating the debt burden of low and middle income developing countries with an unsustainable debt burden that are not eligible for the Heavily Indebted Poor Countries Initiative, and takes note of the discussions and assessment by the Paris Club of the proposal for Debt for Equity in Millennium Development Goal Projects

Could not rollback transaction

The Board was therefore unable to determine the validity of those obligations or to confirm whether any financial liability had been incurred at the time that the obligations were created.

Accordingly, the Panel recommends a 100 per cent debt cancellation for all low income countries, including those not eligible for debt relief under the HIPC initiative, and significant relief for middle income countries.

Unable to rollback transaction

Other laws grant secured creditors relief from the stay to pursue individual remedies regarding such proceeds or, where use of the proceeds is not authorized by either the secured creditor or the court, hold the debtor, its management or the insolvency representative personally liable for the amount of the proceeds or make such debt non dischargeable.

The insolvency law should clearly specify the balance of the rights and obligations between the debtor and any insolvency representative appointed as a provisional measure.

Although the Administration made adjustments to match receivables and payables, debtor creditor identity was not available in a large number of cases.

The power to tax is thought to make government debt safer private borrowers have no right to the profits or wages that they need to satisfy their obligations. But the power to tax has practical limits, and governments moral or legal right to bind future generations of citizens to repay foreign creditors is questionable.

The Seven Year Ditch

The file is too large to be trashed.

Could not move these files to the Trash

Provision is made for accounts receivable for which no reasonable expectation of recovery exists.

For many countries in the region with severe debt burdens, the large share of multilateral debt continues to represent an obstacle to improving their debt profile.

As a result, these countries have condemned themselves to continued austerity, low growth, and high debt, while diminishing any future incentive for private lenders to impose fiscal discipline on sovereign borrowers. Only by shifting the burden of responsibility back onto private lenders can debtor countries escape this quagmire.

In the insolvency of a non grantor debtor, the creditor is an unsecured creditor with an unsecured claim against the non grantor debtor.

The law should provide that failure of the assignor to perform the original contract does not entitle the account debtor to recover from the assignee a sum paid by the account debtor to the assignor or the assignee.

Equally worrying is Africa's unsustainable debt burden.

Provision is made for account receivables for which no reasonable expectation of recovery exists.

While the Group of Eight committed itself to cancelling all debts of eligible heavily indebted poor countries, countries that are euphemistically described as middle income countries teeter on the brink of disaster as they struggle with unsustainable debts.

Debt buy back and Brady bonds11

A number of insolvency laws permit the insolvency representative (or a debtor in possession where that approach is followed) to determine that new money is required for the continued operation or survival of the business or the preservation or enhancement of the value of the estate and obtain unsecured credit without approval by the court or by creditors.

Some insolvency laws require such borrowing or credit to be approved by the court or by creditors, while other laws provide that the insolvency representative may obtain the necessary credit or finance without approval.

In Niger, no provisions existed concerning the debts and liabilities of judges, irrespective of the amount involved.

The debt burden of most countries in the region became unsustainable.

Failure of the assignor to perform the original contract does not entitle the debtor to recover from the assignee a sum paid by the debtor to the assignor or the assignee.

In addition, in Australia, the insolvency legislation provides for the liability of a holding (parent) company for the debts of a subsidiary company that became insolvent if it is established that the subsidiary was permitted by the parent to engage in insolvent trading.

One approach is for the valuation, at least in the first instance, to be determined through agreement by the parties (being the debtor, or insolvency representative, and the secured creditor).

Sovereign Debt at Square One

For the lower middle income countries, the Paris Club also allowed some debt reductions through debt conversions.

The insolvency law should specify that the court, at its own motion or at the request of the insolvency representative, the debtor, a creditor or any other person affected by the provisional measures, may review and modify or terminate those measures.

(a) The responsibility of any other company in the group for the external debts of the insolvent company (being all debts owed by the insolvent company except for those owed to related group companies, i.e. intra group debts )

Regardless of how the current impasse is resolved, the ruling raises many questions for issuers and holders of sovereign debt. If creditors now believe that holding out makes it more likely that they will receive full value at a later date, restructuring sovereign debt and restoring a debtor economy s normal functioning will be more difficult.

quot With the exception of matters which are settled in this Convention, the assignability of a receivable, the right of the assignee to request payment, the debtor apos s obligation to pay as instructed in the notification of the assignment, the discharge of the debtor and the debtor apos s defences are governed by the law governing the receivable to which the assignment relates of the country in which the debtor is located . quot

The insolvency law should facilitate and provide incentives for post commencement finance to be obtained by the insolvency representative where the insolvency representative determines it to be necessary for the continued operation or survival of the business of the debtor or the preservation or enhancement of the value of the estate.

It is important to note that indebted governments are both more and less vulnerable than private debtors. Sovereign borrowers cannot seek the protection of bankruptcy laws to delay and restructure payments at the same time, their creditors cannot seize non commercial public assets in compensation for unpaid debts.

Trade credit or indebtedness incurred in the ordinary course of business by an insolvency representative (or a debtor in possession) may be treated automatically as an administrative expense.

4. Bearing in mind the joint responsibility of both debtors and creditors in the accumulation of African debt, innovative approaches involving the affected countries are required.

15. Encourages the Paris Club, in dealing with the debt of low and middle income debtor countries that are not part of the Heavily Indebted Poor Countries Initiative to take into account their medium term debt sustainability in addition to their financing gaps, and takes note with appreciation of the Evian approach of the Paris Club in providing terms of debt relief tailored to the specific needs of debtor countries while preserving debt cancellation for heavily indebted poor countries

When obtaining credit or incurring indebtedness is essential to maximizing the value of assets, and the credit or finance is not otherwise available as an administrative expense or is to be incurred outside the ordinary course of business, the court may authorize that credit or debt to be incurred as an administrative expense, to be afforded super priority ahead of other administrative expenses or to be supported by the provision of security on unencumbered or partially encumbered assets.