Cross-border Insolvency Law Research Articles

India's Journey towards Cross-Border Insolvency Law Reform

India's Journey towards Cross-Border Insolvency Law Reform

McCormack, Gerard: EU Insolvency Law. Cross Border Insolvency Law in Comparative Focus. Cheltenham et al. 2022

McCormack, Gerard: EU Insolvency Law. Cross Border Insolvency Law in Comparative Focus. Cheltenham et al. 2022

South African Creditors May Wield the Gibbs Rule to Confront an Italian Pre-Insolvency Statutory Restructuring Composition

This article summarises the judgment in Cooperativa Muratori & Cementisti & others v Companies and Intellectual Property Commission & others, in which the Supreme Court of Appeal confirmed the statutory denial of business rescue to external companies and refused to recognise and apply the Italian restructuring process in South Africa. The article then discusses the private international law (conflict of laws) on the discharge of a contract by a foreign sequestration or liquidation, and the statutory novation of the contract by a foreign pre-insolvency composition or restructuring. Central to the debate over characterisation and choice of law (between contract or insolvency) is the effect of the Gibbs rule, a long-standing feature of the law of the United Kingdom, South Africa, and several other countries, but increasingly controversial because of contemporary ideas of cross-border insolvency law. The article argues for an approach based on contract and company law rather than insolvency law, because pre-insolvency proceedings, by definition, do not involve a winding-up order or a liquidation process, and, if timely and successful, prevent both. The South African private international law on the recognition of a foreign pre-insolvency statutory composition or restructuring as a foreign judgment may thus need to be reconsidered.

Globalized Cross-Border Insolvency Law: The Roles Played by China

This study empirically investigates China’s participation in the globalized cross-border insolvency collaboration system. It is the first time for the development of China’s cross-border insolvency law to be examined against the background of private international law on foreign judgment recognition and enforcement. The findings of this article reveal that foreign bankruptcy representatives face considerable difficulties in satisfying the treaty and reciprocity requirements when seeking judicial assistance from China, and that local protectionism in favour of China’s state-owned and state-linked companies undermines foreign bankruptcy representatives’ confidence in approaching China’s courts for support. Although there are several court recognitions of foreign bankruptcy judgments in China, this article finds that they are only used to acknowledge the legal status of foreign bankruptcy representatives to meet the demands of government authorities; Chinese courts have not taken a substantial step in recognizing a foreign bankruptcy judgment so as to bar individual creditors’ action in the interest of a foreign bankruptcy proceeding. On the contrary, for Chinese bankruptcy representatives seeking assistance abroad, they could take advantage of the liberal judicial infrastructure, especially of some advanced jurisdictions, to obtain recognition and relief.

Insolvency Law and Debt on the Silk Road: A New Frontier for Cross-Border Insolvency?

China’s Belt and Road Initiative (BRI), is having a transformative effect on infrastructure development and international trade. This strategic development reflects China’s rapid emergence as a dominant player in the new international economic order and its competition with other major powers. It also reflects China’s championing of globalization. The BRI program will inevitably affect the emerging body of international commercial law operating in the over 125 countries and 29 international organizations that have signed up to be part of the BRI. Although there are many legal issues that have been raised by these developments, this article examines the emerging shape of cross-border insolvency law on the maritime and overland ‘Silk Roads’. Solvency problems are already emerging as serious concerns arising out of debts incurred through China’s infrastructure investments under this initiative. To-date, only 24 BRI countries have to varying degrees implemented the UNCITRAL Model Law on Cross-Border Insolvency, creating a tension between territorial and more universalist approaches. In the short term, these insolvency issues are likely to be dealt with in a number of ways, such as by resort to ‘soft law’ or by using administrative or political mechanisms. Given China’s commitment to the rule of law (with Chinese characteristics), it is inevitable that efforts will be made to give some normative shape to this new global space. This article seeks to explore this emerging frontier for cross-border insolvency law.

International Legal Cooperation and the Principle of Harmonisation: Lessons from Cross-Border Insolvency

This project assesses how harmonisation can be promoted and achieved in the EU without a completely uniform legal system in place. The project focuses on international legal cooperation as a means to promote harmonisation throughout the EU. It uses the area of cross-border insolvency law as a case study to investigate the interaction between harmonisation and international legal cooperation. This abstract presents the preliminary hypotheses and some preliminary conclusions of this project.

The Belt and Road Initiative, China’s Cross-Border Insolvency Law, and the UNCITRAL Model Law on Cross-Border Insolvency

Abstract By examining the special features of cross-border insolvency affecting the Belt and Road Initiative (BRI), this article explains that it is crucial for China to ensure that its cross-border insolvency law is fit for the purposes of the BRI. The current law is unsatisfactory, as may be seen in Hanjin Shipping’s decision not to seek recognition of its Korean restructuring proceeding in China. China wants to cooperate more in cross-border insolvency, but it is concerned that recognizing foreign insolvency proceedings will prejudice China’s interests. This article explains that the logic and limits of the United Nations Commission on International Trade Law’s Model Law on Cross-Border Insolvency is enlightened self-interest, which leads to recognition being very limited and distinguished from relief and relief being based on domestic law. Thus, it argues that the adoption of the Model Law will not prejudice China’s interests.

The Characterization of Pre-insolvency Proceedings in Private International Law

The decade since the financial crisis has witnessed a proliferation of various ‘light touch’ financial restructuring techniques in the form of so-called pre-insolvency proceedings. These proceedings inhabit a space on the spectrum of insolvency and restructuring law, somewhere between a pure contractual workout, the domain of contract law, and a formal insolvency or rehabilitation proceeding, the domain of insolvency law. While, to date, international insolvency instruments have tended to define insolvency proceedings quite expansively, discussion of the cross-border implications of pre-insolvency proceedings has barely begun. The question is whether pre-insolvency proceedings should qualify as proceedings related to insolvency for the purpose of private international law characterization. The risk is over-inclusivity of cross-border insolvency law, which, where it is based on universality and unity, might defeat contractual expectations. This article argues, however, that we should be slow to exclude pre-insolvency proceedings from cross-border insolvency law: these proceedings are initiated in the zone of insolvency, their effectiveness depends on a statutory mandate and not purely on private ordering, they interact and intersect with formal proceedings, and can benefit from the unique system developed by cross-border insolvency law. We suggest, though, that modified universalism (the leading norm of cross-border insolvency) and international insolvency instruments, should, and are able to, adjust to the peculiarities of pre-insolvency proceedings to address concerns about inclusivity and accommodate pre-insolvency proceedings adequately.

Insolvency law and debt on the Silk Road: a new frontier for cross-border insolvency?*

ABSTRACT China’s Belt and Road Initiative (BRI) is having a transformative effect on infrastructure development and international trade. This strategic development reflects China’s rapid emergence as a dominant player in the new international economic order and its competition with other major powers. It also reflects China’s championing of globalization. The BRI program will inevitably affect the emerging body of international commercial law operating in the over 125 countries and 29 international organizations that have signed up to be part of the BRI. Although there are many legal issues that have been raised by these developments, this article examines the emerging shape of cross-border insolvency law on the maritime and overland ‘Silk Roads’. Solvency problems are already emerging as serious concerns arising out of debts incurred through China’s infrastructure investments under this initiative. To-date, only 24 BRI countries have to varying degrees implemented the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, creating a tension between territorial and more universalist approaches. In the short term, these insolvency issues are likely to be dealt with in a number of ways, such as by resorting to ‘soft law’ or by using administrative or political mechanisms. Given China’s commitment to the rule of law (with Chinese characteristics), it is inevitable that efforts will be made to give some normative shape to this new global space. This article seeks to explore this emerging frontier for cross-border insolvency law.

International legal cooperation and the principle of harmonisation: lessons from cross-border insolvency

This project assesses how harmonisation can be promoted and achieved in the EU without a completely uniform legal system in place. The project focuses on international legal cooperation as a means to promote harmonisation throughout the EU. It uses the area of cross-border insolvency law as a case study to investigate the interaction between harmonisation and international legal cooperation. This abstract presents the preliminary hypotheses and some preliminary conclusions of this project.

The Never-Ending Challenge of Defining COMI (This Time Due to Groups of Companies)

Two years after the Recast European Insolvency Regulation (EIR) came into effect and just weeks after the Second Chance Directive was adopted by the European Council, I conclude that regulating cross-border insolvency legislation at the EU-level is an ungratifying task. Not only is European insolvency law one of the most trending and ever-changing fields of law nowadays, but it is also constantly challenged by the human creativity and evolution of business strategies. Just within the past two decades, EU cross-border insolvency law has, (i) witnessed the introduction of COMI (Centre of Main Interests) as the unique connecting factor determining both jurisdiction and governing law and (ii) gone through a major revision, taking into account EU case law and resulting in an adjustment of the definition of COMI. (iii), it substantially shifted the course of resolving insolvencies from mandatory liquidation to the preferred reorganizations (maintaining the debtor’s going concern value) and finally (iv), included groups of companies under the scope of the EIR. This article aims to analyze the latter - the long-anticipated inclusion of groups with emphasis on the current definition of COMI, as well as whether or not this works well together with the concept of group insolvencies.

프랑스 국제도산법의 소개 및 우리 법과의 비교

프랑스 국제도산법의 소개 및 우리 법과의 비교

Principios del Derecho de la insolvencia transfronteriza

The rules of cross-border insolvency law are based on a set of principles. These, at the same time, are not only behavioral prescriptions, but also guide the jurisprudence, and create new formulas of how to understand the systems of norms, both in the soft law and in the national law of each country.

Principles of Cross-Border Insolvency Law

The rules of cross-border insolvency law are based on a set of principles. These, at the same time, are not only behavioral prescriptions, but also guide the jurisprudence, and create new formulas of how to understand the systems of norms, both in the soft law and in the national law of each country.

Reconsidering procedural consolidation for multinational corporate groups in the context of the recast European insolvency regulation

Procedural consolidation, as a solution to the rescue of insolvent multinational corporate groups (‘MCGs’), is said to be able to preserve group value for creditors. This article explores the desirability of procedural consolidation in the EU in the light of theories of corporate rescue law, cross-border insolvency law, multinational enterprises and relevant EU cases with reference to the European Insolvency Regulation.1 It argues that, based on current cross-border insolvency rules in the EU, there is an inherent difficulty for procedural consolidation in balancing the goal of preservation of group value and the goal of certainty. The article also considers the new ‘group procedural coordination proceedings’ offered by the Recast European Insolvency Regulation and argues that it may help to supplement the gap left by the procedural consolidation in the EU. Copyright © 2017 INSOL International and John Wiley & Sons, Ltd.

Cross-Border Insolvency Law in Europe: Present Status and Future Prospects

In May 2007 the European countries celebrated the first lustrum of the EU Insolvency Regulation (1346/2000). This article describes where Europe stands with its model which is based on well known theories of private international law for dealing with cross-border insolvencies. The EU Insolvency Regulation provides for a national court to exercise international jurisdiction to open insolvency proceedings. The basis for international jurisdiction is the debtor’s “centre of main interests” or COMI. The two most important cases decided by the European Court of Justice (17 January 2006 Staubitz Schreiber and 2 May 2006 Eurofood) are discussed. The article further analyses the regulation’s legal concept and its procedural context and explains that 'financial institutions' are not covered by the Insolvency Regulation, but by separate directives (2001/17; 2001/24). After having taken stock several suggestions are submitted for improvement of the system of cross-border insolvency in Europe.

Challenge and Opportunity: the ALI/III Global Principles Project

This article deals with an international project to establish the extent to which it is feasible to achieve a worldwide acceptance of the Principles of Cooperation among the NAFTA Countries together with the Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases. This contribution explains the process whereby the American Law Institute and the International Insolvency Institute (1) developed principles of cooperation with regard to cross-border insolvency; (2) established acceptance of these principles in jurisdictions across the world, subject to any necessary local modifications; and (3) obtained the endorsement of leading domestic associations, courts, and other groups in those jurisdictions. This article may contribute to the development the South African cross-border insolvency law. The inclusion of the challenges of harmonisation of private international law is also contributing to current debate.

Modified Universalisms & the Role of Local Legal Culture in the Making of Cross-Border Insolvency Law

Cross-border insolvency law scholars have devoted much attention to theoretical questions of international system design. There is a general consensus in the literature that the ideal system would be a universalist system in which cross-border insolvencies would be administered in a single forum under a single governing law But scholars have paid less systematic attention to how a universalist system can be implemented in the real world by institutional actors such as legislatures and judges. This article seeks to redress the balance by discussing the reception of the UNCITRAL Model Law on Cross-Border Insolvency in the United States and the United Kingdom and exploring the role that judges play in harmonizing cross-border insolvency law. As the Model Law is choice-of-law neutral, domestic enactments typically contain no express choice-of-law rules. Universalists urge judges to take their cue from modified universalism and interpret Model Law enactments in a manner that approximates to universalism’s ideal “one court, one law” approach. But comparative analysis of Anglo-American judicial practice reveals that the contours of modified universalism are contested. “Modified universalism” as it is understood in the United States implies that judges should presumptively defer to the law of the foreign insolvency proceeding (lex concursus). American universalists tend therefore to favor a strong, centralizing version of modified universalism. By contrast, British modified universalism has a forum law (lex fori) choice-of-law orientation. British modified universalism supports effective coordination of insolvency proceedings with one court having a primary coordinating role. But it lacks any commitment to a centralizing lex concursus rule in the absence of statutory mandate. Framed by reference to this account of the Model Law’s Anglo-American reception, the article argues that modified universalism offers no convincing theory of how a universalist system is to be institutionalized in practice in the absence of more and harder law, the province of legislatures. Competing versions of modified universalism cannot support an interpretive methodology capable of yielding global judge-made rules of private international law that would address the Model Law’s choice-of-law indeterminacy.

A COMPARATIVE ANALYSIS OF THE UNCITRAL MODEL LAW ON CROSS-BORDER INSOLVENCY AND EU INSOLVENCY REGULATION 2017, AGAINST THE BACKGROUND OF VARIOUS SOURCES OF CROSSBORDER INSOLVENCY LAW

In this investigation, I will compare and contrast the UNCITRAL model law on cross-border insolvency law (hereafter referred to as ‘UNCITRAL model law’) with the EU Insolvency Regulation against the backdrop of various sources or dispensations of cross-border insolvency law. In this comparison, I will highlight the similarities and differences between the two, as well as discuss the other sources in depth, as they largely inform my research. My main aim in including the other sources in this comparative study is to provide deeper insight into these two sources of international cross-border insolvency law, as provided for by academics and sages in the field of insolvency law. These other sources include legislation, common law, treaties and regional dispensations.

The Problem of Local Methods in Cross-Border Insolvencies

A major and frequent criticism of the current cross-border insolvency framework is that international cooperation is likely to break down whenever significant local interests are at risk. The Model Law on Cross-Border Insolvencies, adopted in Chapter 15 of the Bankruptcy Code, and the commentary thereon have largely focused on such instances when states might be unwilling to cede control over local property, i.e., sovereignty-related problems. This article is the first to explore a separate set of problems in cross-border insolvencies that have little or nothing to do with sovereignty-related concerns. Cross-border insolvency law also faces acculturation problems as states attempt to synthesize the Model Law into already existing legal structures. Cultural differences between the Model Law and domestic laws may impede the Model Law’s goals of promoting legal certainty in this field. These cultural differences may include terminology and interpretation issues, as well as case management and procedural issues.This article examines two recent opinions from the Second Circuit Court of Appeals to illustrate these acculturation problems. It then considers the degree to which the Model Law (and Chapter 15) are currently equipped to minimize such defections. UNCITRAL, when drafting the Model Law, created a Guide to Enactment and Interpretation in order to promote consistent interpretation. I conclude that this Guide may be effective at dealing with some issues, but that it is ill-suited to address differences in the manner of interpretation.