Finalisation of Guidelines for Turnaround and Restructuring Professionals
During the annual conference in Istanbul in October 2014 and on request of its Turnaround Wing, INSOL Europe decided to commission a project to Leiden Law School (LLS) to design ‘guidelines for out-of-court turnaround professionals’. By setting professional and ethical standards for the profession in Europe, the guidelines aim (a) to offer leadership to turnaround practice in Europe, (b) to promote out-of-court restructuring rather than liquidation, (c) to provide the basis for a long-term sustainable future for the business by ascertaining the quality of turnaround professionals, and (d) to enhance the trust in the profession on the market. The guidelines explicitly target out-of-court turnaround professionals.
An Interactive Process
The Leiden Law School team that has been working on the project – the ‘TRI-Leiden team’, an abbreviation of turnaround, rescue and insolvency - consisted of Professor Jan Adriaanse and Senior Researcher dr. Bernard Santen along with Researcher Gert-Jan Boon, master thesis students and interns.
The project to design Turnaround Wing Guidelines (TW Guidelines) was divided in two phases. The first, the research and analysis phase, culminated in the delivery of Report I, presented to the Executive of INSOL Europe early May 2015. Report I, based on the reports of several country experts and an analysis of a number of international documents, contains a review of issues and topics which can be possibly covered by a system of Principles and Guidelines for restructuring and turnaround professionals.
Six TW Guidelines for RTPs
The second phase was to deliver draft Principles and Guidelines for the Turnaround Wing. Together with the Review and Advisory Group we went in May/June through an intensive process leading to the replacement of the original extensive ‘Principles and Guidelines design’ to a ‘Guidelines only’ approach. The main cause seems to be the difficulty in getting people from different legal systems and different legal cultures on one across-the-board approach towards the profession. Therefor we decided to keep in this project to abstract but essential Guidelines which can be extended in new consultancy rounds with the members towards more practical and detailed Best Practices. The Guidelines drafted relate to application, i.e. only in out-of-court assignments (Guideline 1). Guideline 2 is on Professional Attitude, Guideline 3 on the Ethical Attitude of the Restructuring and Turnaround Professional (RTP). The essentials on transparent Communication with the Client, on honest Communication with Stakeholders and on adequate Governance are covered by Guidelines 4 – 6.
These Guidelines were presented by Bernard Santen on 2 October 2015 to the annual conference of INSOL Europe in Berlin and well received. We added a few recommendations there in order (1) to have the TW Guidelines accepted by INSOL Europe; (2) to encourage application by the INSOL Europe membership in practice; (3) to have this application monitored by a monitoring committee; and (4) to adapt and expand the TW Guidelines gradually according to the findings of the monitoring committee. Report II lists a number of issues that may have to be dealt with in the next phase of the project.