12.8.1 General requirements for ensuring effectiveness

In order for pre-insolvency proceedings to be effective, it is imperative that they be flexible, fast, and efficient. Court involvement has to be kept to a minimum, and the right of appeal has to be excluded. The proceedings must not create more legal consequences or generate more publicity than is strictly necessary. They should be managed by a specialised court that has the legal and economic expertise and the commercial experience to take the necessary decisions swiftly and accurately in one instance.

It would be useful to have a provision for staying, upon the request of the proponent of the plan, individual enforcement actions and involuntary bankruptcy petitions. The proceedings should include provisions for handling executory contracts. In particular it should be possible to prevent parties that have no legitimate interest in doing so from invoking ipso facto and change-of-control clauses and from suspending or terminating contracts merely because the debtor is subject to pre-insolvency proceedings. The proponent of the plan should have the right to unilaterally terminate contracts that it considers to have a negative value. Upon termination, the counterparty should receive a claim with ordinary unsecured status for the damages incurred as a result of the premature termination. This damages claim should be capable of being restructured under the terms of the plan.

The proponent of the plan should be able to request the court at the earliest possible moment, before the vote, to give a binding determination on all issues that are relevant for the implementation of the plan and that can be decided before the vote. Such topics include class formation and valuation.