School of Law

Research Student: Dennis Cardinaels

Companies’ and creditors’ distress: how to untie the Gordian knot in the unsecured minority creditors’ interests?

Photo of Dennis Cardinaels

Having a sound corporate insolvency law is important for an open and thriving entrepreneurial society as it can protect and sustain businesses, companies, economic growth and people’s jobs and welfare while trying to tackle the issues as orderly and fairly as possible encountered by the corporate debtor itself, its creditors and its stakeholders which arise when a company-debtor becomes, or is likely to become, unable to pay its debts.

In practice, however, many market participants risk losing (a lot of, if not all of) the money owed to them once a company-debtor enters into insolvency. One particular group, the unsecured creditors, are often being referred to as ‘the’ one and indivisible most vulnerable group as they are all, the argument goes, the residual risk-bearers.

Nonetheless, this ‘one’ group of unsecured creditors also consists of a wide range of different creditors with differing commercial powers and interests. For example, a consumer or a small trade creditor can hardly be argued to be in the same position as a large bank or the government, although both can equally be in the same (unsecured) group. This observation inevitably leads to the question whether the current rules largely determined by a “one size fits all” approach are actually appropriate enough to guarantee a Corporate Insolvency Law that works for everyone, hereby effectively taking into consideration the (different) legitimate commercial interests of weaker parties within this, arguably, already weak group of unsecured creditors.

Consequently, this research will embark on the question

  • (i) who the vulnerable unsecured creditors are and
  • (ii) whether and how the current Corporate Insolvency Framework could be improved to take the commercial interests of these more vulnerable factions of unsecured creditors more at heart,
  • (iii) without willing to create new commercial impediments which could have a negative impact on trade in general.

Background

I studied for six years at the Catholic University of Leuven (KU Leuven) in Belgium where I obtained my undergraduate degree in Law and a postgraduate degree with specialisation in Commercial and Economic Law (after five years at the Leuven Campus) alongside an additional postgraduate degree with specialisation in Corporate Law (after one year at the Brussels Campus).

After having successfully completed these courses in Belgium, I commenced an LLM in International Business Law at the University of Leeds where my modules primarily focused on Corporate and Insolvency Law.

Having obtained my LLM degree in Leeds, I started working in practice as a Corporate Lawyer in Belgium where I obtained some very valuable insights about the corporate world in practice which are going to be helpful while drafting my doctorate.

What motivated me to undertake PhD study?

A PhD grants the possibility to gain in depth knowledge about a topic you’re very much interested in while also gaining important research, academic and presentation skills. Furthermore, it also creates the opportunity to try to find solutions for actual problems which may improve the current regulatory framework. Embarking on a PhD is, therefore, not only intellectually challenging but also provides a comparative advantage for future legal, academic and/or political professions.

What makes me passionate about my subject?

Corporate insolvency law is very important for entrepreneurs, businesses and also other stakeholders trading or having traded with financially distressed debtors as it deals with corporate debtors who are not able to pay their debts anymore.  

Despite the importance of insolvency law, far too often, only scant attention is given to the vulnerability of certain groups of unsecured creditors, thereby failing to adopt an adequate and appropriate insolvency governance system akin to an often more developed corporate governance system.

It’s this importance of corporate insolvency law alongside the scant attention given to the actual problems underpinning the current regulatory framework and the opportunity to provide appropriate answers for these commercial issues which makes me passionate about this area of study.

What are my plans once I have completed my PhD?

My plans are to continue working in academia doing academic research, perhaps embarking on a post-doctoral research project, whilst combining a future academic career with a job in legal practice as a corporate and insolvency lawyer.  

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