sou 1999 1 - Regeringen

42 Summary SOU 1999:1
The Committee has also asked the question whether it is reasonable that
the strongest lenders, i.e. those which, through alternative investment possibilities,
possess the best negotiating position, are to be given the possibility
to always mortgage almost all of the debtors assets, whether the security
was necessary for the loan or not. The tax creditor (the State) and tort
creditors can not negotiate regarding credit, albeit the State has, to a certain
extent, assumed personal payment liability. Employees must, to a great extent,
accept the work which is offered (otherwise they cannot receive unemployment
benefits) and they cannot periodically ration their labour in order
to work even more later on. In addition, the provision of credit which takes
place from suppliers of goods with limited marketability is often only apparently
voluntary, if the supplier is to be rid of the goods in time. In order
to prevent this transfer of the credit risk to persons who involuntarily provide
their credit or, in any event, occupy an inferior negotiating position,
one could consider providing the State and employees with rights of priority
superior to floating charges and introducing more generous regulations regarding
retention of title. Thus, the current situation is not a given one.
However, the Committee believes that the right of priority regulations
should be streamlined rather than being made more complicated. The introduction
of retention of title provisions which are valid in rem with respect to
goods which the purchaser has a right of disposition prior to payment to the
seller would result in a situation where neither the party with the floating
charge nor the seller would be able to rely on the fact that the stock in trade
is available for recourse as security in the event of an bankruptcy.
When a company becomes insolvent, the business mortgage has largely
negative effects.
The existence of security may result in the secured party not taking action
before the security is threatened, and by then the company is often in
such bad shape that a successful reorganisation is impossible. Even if certain
reorganisation actions have a positive current value (the chance that
they will become profitable exceeds the risk of loss), security holders tend to
oppose such proposals since, in the event of success, they can only obtain a
limited portion of the profits (the difference between the current value of the
security and the claim) while, in the event of poor results, he can lose even
more (the entire value of the security). If the security only applies to certain
types of assets, the picture becomes even more complicated. The best situation
would be if all creditors were in the same boat when a reorganisation is
discussed.
Series bankruptcies, which are based on the owner of a limited liability
company being able to purchase the company’s assets after having rolled
the loan over to a new company so that his guarantee need not be utilised,
presuppose that the party which provided the loan to the company in bank-