Be careful what you wish for! Evaluating the ipso facto reforms

Abstract

A successful corporate rescue will usually require retaining at least some of the value of contracts for supplying goods and services to the company being restructured as well as contracts that that company has with its customers. Ipso facto clauses make restructuring more difficult because they give the contractual counterparties leverage over the restructuring effort which can give the counterparty an advantage over other creditors. In an attempt to facilitate restructuring, the Parliament has introduced amendments to stay ipso facto clauses during restructuring efforts. However, this article argues that rather than encouraging and supporting restructuring efforts, the complex amendments are likely to make restructuring less certain and more difficult.