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Insolvency Law

Insolvency Law. Jenny Clift Senior Legal Officer. Membership & structure. 60 State members elected for 6 year terms, representing 5 regional groupings

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Insolvency Law

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  1. Insolvency Law Jenny Clift Senior Legal Officer

  2. Membership & structure • 60 State members elected for 6 year terms, representing 5 regional groupings Africa (14): currently Algeria, Benin, Botswana, Cameroon, Egypt, Gabon, Kenya, Mauritius, Morocco, Namibia, Nigeria, Senegal, South Africa, Uganda Asia Pacific (14), Latin America-Caribbean (10), Eastern Europe (8), WEOG (14) • Structure • Commission: Members, observer States and invited non- and inter-governmental organizations • Working groups: currently 6, including insolvency; membership is the same as the Commission, but delegations more focused around subject-matter expertise; hold one week sessions twice per year • Secretariat: located in Vienna, Austria

  3. Legislative Guide Financial crises of 1990s led to recognition of role of insolvency law in preserving viable businesses and employment; promoting availability of finance; facilitating effective redistribution and recycling of assets; assisting recovery from economic and financial crisis Assessment of insolvency regimes pointed to the need for modernization and adoption of best practice Negotiation involved 87 States, 14 inter-governmental organizations and 13 non-governmental organizations A key reference tool for law reform • Chile, Colombia, China, France, Georgia, Germany, India, Indonesia, Macedonia, Montenegro, Netherlands, ROK, Serbia, South Africa, Spain • Part of the methodology for the FSB Reports on Observance of Standards and Codes (ROSC) • Key resource in the World Bank Group Investment Climate Insolvency Technical Assistance Program • Referenced in work by FSB, IMF, BCBS, EU on bank and financial institution resolution (especially part three)

  4. Legislative Guide Identifies core issues to be addressed in an insolvency law & offers a range of solutions, with advantages and disadvantages discussed Recommendations not intended to be directly enacted – outline issues and indicate how they might be addressed Varying degrees of specificity of recommendations reflect degrees of consensus and/or relevance or importance of other policy and procedural considerations Limited to debtors engaged in economic activity – consumers, specially regulated entities (e.g. banks) & enterprise groups not specifically addressed

  5. Model Law on Cross-Border Insolvency Negotiation involved 72 States, 7 inter-governmental organizations and 10 non-governmental organizations Provides a framework for cooperation and coordination of insolvency proceedings across borders Legislation enacted by: Australia (2008), British Virgin Islands* (2005), Canada (2009), Colombia (2006), Eritrea (1998), Great Britain (2006), Greece (2010), Japan (2000), Mauritius (2009), Mexico (2000), Montenegro (2002), New Zealand (2006), Poland (2003), Republic of Korea (2006), Romania (2003), Slovenia (2008), Serbia (2004), South Africa* (2000) and United States of America (2005)

  6. Model Law on Cross-Border Insolvency Reasons to adopt • Establishes simple straightforward requirements for recognition of foreign proceedings • Focuses on quick and predictable outcomes • Reduces scope for disputes • Recognizes need for speed - provision for interim relief • Similarity of laws (e.g. OHADA, EU) facilitates proof of law, especially in cross-border cases • International jurisprudence provides resource for interpretation and application • Establishes framework for cooperation and coordination • Multinational Judicial Colloquium fosters cooperation • The Judicial Perspective provides information for judges on issues associated with applications under the ML

  7. Model Law on Cross-Border Insolvency Concerns and apprehensions • Imports insolvency law of the foreign country • Protection of local creditors and participation of local creditors in foreign proceedings not ensured • Foreign insolvency practitioners will be allowed to administer local proceedings • Recognition of foreign court decisions and orders on insolvency detracts from sovereignty and independence • Cannot be adopted without reciprocity • Practical issues make implementation difficult – mechanics of how to cooperate, judicial experience

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