Representing the Interests of Unsecured Creditors: A Comparative Look at UNCITRAL's Legislative Guide on Insolvency Law

Abstract

After outlining the collective action issues that the unsecured creditors face in bankruptcy and the conventional notion that creditors' committees or creditors' representatives assist in resolving these obstacles, we compare the recommendations of the UNCITRAL's Legislative Guide on Insolvency Law to the laws on the representation of unsecured creditors in bankruptcy proceedings in eight countries: United States, United Kingdom, France, Germany, Russia, South Korea, Singapore and China.. Our findings reveal the presence of insolvency laws governing creditor representation in all the reviewed jurisdictions, whether or not the debtor remains in possession. The jurisdictions vary in the structure of the representative bodies, in the criteria for eligibility for a committee, and in the powers given to the committees. Further research will be necessary to ascertain whether these differences affect the dynamics of bankruptcy proceedings, especially reorganization proceedings. Nonetheless, our research clearly shows that there is a widespread acceptance of the notion that unsecured creditors need a specific structure for the representation of their interests and that the structures selected by different legislators tend to share certain characteristics.