Vol 16 (2019) - Issue 1

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The Eurosail Judgment in a Post-Crisis World – Part Two

Introduction

The first part of this article explored different insolvency theories, the background facts of the Eurosail case, as well as the macroeconomic bank and securitisation context in which the decision was reached. It has argued that there were strong policy reasons for the courts to accept a pro-liquidity approach, one supported theoretically and achieved through valuation mechanisms in the context of US restructuring cases. This part will explore the appellate history of the Eurosail case, focusing on how the provisions of the Insolvency Act have been diluted to achieve, in my opinion, a desired policy outcome. An alternative solution based on the observations made in Part I will be proposed for future insolvency proceedings in the context of securitisation. Firstly, this part will move to explore the appellate history of the Eurosail case. Secondly, it will move on to explore the case law developments after the Eurosail decision and the interpretation issues that have arisen. Thirdly, this part will explain Eurosail’s impact on director’s duties during doubtful solvency. Finally, this part will conclude with recommendations.