Rescue before a fall: an Anglo-French analysis of the balance between corporate rescue and employment protection

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Gant, JLL ORCID: https://orcid.org/0000-0002-5789-8742, 2016. Rescue before a fall: an Anglo-French analysis of the balance between corporate rescue and employment protection. PhD, Nottingham Trent University.

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Abstract

The financial crisis of 2007/8 has had a significant impact on the place of social policy objectives in the Common Market. As laws have been reformed over the years since the failure of Lehman Brothers1 set in motion a domino effect among high risk investment banks and financial institutions throughout the economically advanced nations of this world, both employment protection and corporate rescue have been found, at times, in the spotlight. While the corporate rescue culture of the European Union2 promotes the rehabilitation of businesses in financial distress in preference to liquidation where possible, it also emphasises reducing unemployment and social exclusion.3 The social implications of corporate rescue must therefore be considered, rather than taking a purely economic approach, emphasising creditor wealth maximisation during insolvency proceedings.4 EU social policy has generated a number of employment regulations, such as the Acquired Rights Directive,5 which are arguably the greatest obstacle to promoting corporate rescue. Thus there is an enduring conflict that subsists between the aims of corporate rescue and employment protection regulation.
Substantial employment protection damages the effectiveness of corporate rescue by deterring acquisitions in view of the potential liability attached to transferring employees.6 Ineffective corporate rescue may then have an adverse effect on the economy and job security due to increased company failures and job losses.7 Employees attached to the sale of a business in a corporate rescue procedure can represent a liability, reducing the intrinsic value of that business and potentially reducing the number of businesses successfully rehabilitated through the use of corporate rescue mechanisms. The obstruction to successful corporate rehabilitation represented by employment protection must therefore be balanced with corporate rescue in order to successfully promote the rescue culture. An examination of the approaches taken by different jurisdictions, in this case the United Kingdom and France due to their important influence in the EU as well as their archetypically different legal systems should help elucidate how the tension could be managed in order to achieve a balance between them.
The form of examination is particularly important if an effective reform is to be introduced. As such, a comparative historical methodology concentrating on the path dependent legal developments of both jurisdictions will be applied in order to discover the fundamental historical, economic, social, political, and cultural differences between the UK and France that have influenced their approaches to social policy and corporate insolvency law. Legal developments cannot be explained by examining a legal rule in isolation, but must account for the social and economic pressures operating on the law from the outside as well as the established ways in which the issues are dealt with internally. Even when economic and social conditions are similar at the time that a parallel rule is promulgated, the differences in historical journeys to arrive at similar rules can explain why different jurisdictions do not approach new problems in the same way.8
This thesis will analyse the legal position of employment protection and corporate rescue in the UK and France through a historical comparative analysis of the political, social, and economic developmental context. Based on the understanding of each jurisdiction’s path dependent position within the legal framework of the EU, reform of the ARD will be recommended that attempts to balance the aims of corporate rescue and employment protection in the event of business transfers occurring during corporate rescue procedures. Given that the regulation of this policy intersection is made within the EU legal framework, the comparative historical analysis methodology will assist in identifying the most effective reform that will fit within the varied legal systems of the EU Member States, and also help to predict how such a reform may be implemented over time. This Thesis will provide an innovative contribution to the existing knowledge and literature in the area of social policy in insolvency by using a comparative, historical, path dependent methodology to reveal a potentially effective approach to introducing unique legal reform to the conflicted intersection in the ARD of the promotion of the rescue culture by ensuring effective business transfers in corporate rescue procedures, while providing a balanced protection for employees affected by corporate restructuring.
1 See The Economist "The Origins of the Financial Crisis: Crash Course" (7 September 2013)
<http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article> accessed 17 December 2015.
2 Hereafter referred to as the "EU".
3 KG Broc and R Parry, Corporate Rescue: An Overview of Recent Developments from Selected Countries (Kluwer 2003) 5-6.
4 V Finch, Corporate Insolvency Law: Perspectives and Principles (2nd edn, CUP 2009) 14-15.
5 Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L82/16 (hereafter referred to as the "ARD").
6 H Collins, "Transfer of Undertakings and Insolvency" (1989) 18 ILJ 144.
7 Ibid.

Item Type:	Thesis
Creators:	Gant, J.L.L.
Date:	January 2016
Rights:	This work is the intellectual property of the author (Note: if there are other owners of the IP, as a consequence of any statement issued under paragraph 12 of Section 14A, they must also be named here). You may copy up to 5% of this work for private study, or personal, non-commercial research. Any re-use of the information contained within this document should be fully referenced, quoting the author, title, university, degree level and pagination. Queries or requests for any other use, or if a more substantial copy is required, should be directed to the owner(s) of the Intellectual Property Rights.
Divisions:	Schools > Nottingham Law School
Record created by:	Linda Sullivan
Date Added:	04 Nov 2016 16:29
Last Modified:	09 Jun 2017 14:08
URI:	https://irep.ntu.ac.uk/id/eprint/29038