Business Rehabilitation

Even though the rehabilitation schemes of Australia, Germany and New Zealand trace back to Chapter 11 of the American Bankruptcy Code, they vary in their objects. The law of Australia and NZ gives priority to the rescuing of the business, the German proceeding aims for the best return for the creditors. There are major differences between the schemes: In Germany, there is only one uniform insolvency procedure whereas Australia and NZ have separate liquidation procedures; this variety gives room for abuse. Secondly, the involvement of the German insolvency court is mandatory. In Australia and NZ, on the contrary, the company's administrator can be appointed directly by the company, the secured creditors, or the (interim) liquidator; this is more cost and time-efficient but provides less protection for creditors. Thirdly, the appointment of a company's administrator is compulsory in Australia and NZ while the German court may order the personal management by the debtor which is less costly, provides continuity in the management of the business, incites the debtor to initiate the procedure early, and saves the time administrators need for their orientation.