CNUDMI - UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation

UNITED NATIONS

UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation UNCITRAL UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAWFurther information may be obtained from: UNCITRAL Secretariat, Vienna International Centre P.O. Box 500, 1400 Vienna, Austria Telephone: (+43-1) 26060-4060 Telefax: (+43-1) 26060-5813

Internet: www.uncitral.org E-mail: uncitral@uncitral.orgUNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation

UNITED NATIONS

New York, 2014

UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAWUNITED NATIONS PUBLICATION

Sales No.: E.14.V.2

ISBN 978-92-1-133819-5 e-ISBN 978-92-1-056399-4

Note Symbols of United Nations documents are composed of letters combined with figures. Mention of such symbols indicates a reference to a United Nations document. © United Nations, January 2014. All rights reserved, worldwide. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Information on uniform resource locators and links to Internet sites contained in the present publication are provided for the convenience of the reader and are correct at the time of issue. The United Nations takes no responsibility for the continued accuracy of that information or for the content of any external website. This publication has not been formally edited.

Publishing production: English, Publishing and Library Section, United Nations

Office at Vienna.iii Contents Page Part One. UNCITRAL Model Law On Cross-Border Insolvency Preamble ........................................................ 3 Chapter I. General provisions ..................................... 3 Article 1. Scope of application ......................... 3

Publishing production: English, Publishing and Library Section, United Nations

Office at Vienna.iii Contents Page Part One. UNCITRAL Model Law On Cross-Border Insolvency Preamble ........................................................ 3 Chapter I. General provisions ..................................... 3 Article 1. Scope of application ......................... 3 Article 2. Definitions ................................. 4 Article 3. International obligations of this State ........... 4 Article 4. [Competent court or authority ] ................ 5 Article 5. Authorization of [insert the title of the person or body administering a reorganization or liquidation under the law of the enacting State ] to act in a foreign State ............................... 5 Article 6. Public policy exception ...................... 5 Article 7. Additional assistance under other laws .......... 5 Article 8. Interpretation ............................... 5 Chapter II. Access of foreign representatives and creditors to courts in this State ............................................. 6 Article 9. Right of direct access ........................ 6 Article 10. Limited jurisdiction .......................... 6 Article 11. Application by a foreign representative to commence a proceeding under [identify laws of the enacting State relating to insolvency] ........ 6 Article 12. Participation of a foreign representative in a proceeding under [identify laws of the enacting State relating to insolvency ] ................... 6 Article 13. Access of foreign creditors to a proceeding under [identify laws of the enacting State relating to insolvency] ................................. 6 Article 14. Notification to foreign creditors of a proceeding under [identify laws of the enacting State relating to insolvency] .............................. 7 Chapter III. Recognition of a foreign proceeding and relief .............. 8 Article 15. Application for recognition of a foreign proceeding ................................. 8 Article 16. Presumptions concerning recognition ........... 8 Article 17. Decision to recognize a foreign proceeding ...... 9iv Page

Chapter III. Recognition of a foreign proceeding and relief .............. 8 Article 15. Application for recognition of a foreign proceeding ................................. 8 Article 16. Presumptions concerning recognition ........... 8 Article 17. Decision to recognize a foreign proceeding ...... 9iv Page Article 18. Subsequent information ...................... 9 Article 19. Relief that may be granted upon application for recognition of foreign proceeding .............. 9 Article 20. Effects of recognition of a foreign main proceeding ................................. 10 Article 21. Relief that may be granted upon recognition of a foreign proceeding .......................... 11 Article 22. Protection of creditors and other interested persons 12 Article 23. Actions to avoid acts detrimental to creditors .... 12 Article 24. Intervention by a foreign representative in proceedings in this State ..................... 12 Chapter IV . Cooperation with foreign courts and foreign representatives ... 13 Article 25. Cooperation and direct communication between a court of this State and foreign courts or foreign representatives .............................. 13 Article 26. Cooperation and direct communication between the [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State ] and foreign courts or foreign representatives ............... 13 Article 27. Forms of cooperation ........................ 13 Chapter V . Concurrent proceedings ................................. 14 Article 28. Commencement of a proceeding under [identify laws of the enacting State relating to insolvency ] after recognition of a foreign main proceeding ... 14 Article 29. Coordination of a proceeding under [identify laws of the enacting State relating to insolvency] and a foreign proceeding .......................... 14 Article 30. Coordination of more than one foreign proceeding 15 Article 31. Presumption of insolvency based on recognition of a foreign main proceeding . . . . . . . . . . . . . . . . . . 15

foreign proceeding .......................... 14 Article 30. Coordination of more than one foreign proceeding 15 Article 31. Presumption of insolvency based on recognition of a foreign main proceeding . . . . . . . . . . . . . . . . . . 15 Article 32. Rule of payment in concurrent proceedings ...... 15 Part Two. Guide to Enactment and Interpretation of the UNCITRAL Model Law on Cross-Border Insolvency

I. Purpose and origin of the Model Law ............................ 19

A. Purpose of the Model Law ................................. 19

B. Origin of the Model Law .................................. 20

C. Preparatory work and adoption .............................. 22

II. Purpose of the Guide to Enactment and Interpretation ............... 24v

Page

III. The model Law as a vehicle for the harmonization of laws .......... 24

A. Flexibility of a model law .................................. 25

B. Fitting the Model Law into existing national law ............... 25

IV . Main features of the model law ................................. 26

A. Access .................................................. 27

B. Recognition .............................................. 28

C. Relief .................................................. 29

D. Cooperation and coordination ............................... 30

V . Article-by-article remarks ...................................... 32

A. Preamble ................................................ 32

B. Chapter I. General provisions .............................. 34

Article 1. Scope of application ............................ 34 Article 2. Definitions .................................... 37 Article 3. International obligations of this State .............. 48 Article 4. [Competent court or authority ] ................... 49 Article 5. Authorization of [insert the title of the person or body administering a reorganization or liquidation under the law of the enacting State ] to act in a foreign State .................................. 51 Article 6. Public policy exception ......................... 52 Article 7. Additional assistance under other laws ............. 53

body administering a reorganization or liquidation under the law of the enacting State ] to act in a foreign State .................................. 51 Article 6. Public policy exception ......................... 52 Article 7. Additional assistance under other laws ............. 53 Article 8. Interpretation .................................. 54

C. Chapter II. Access of foreign representatives and creditors to courts in this State ........................................ 55

Article 9. Right of direct access .......................... 55 Article 10. Limited jurisdiction ............................ 55 Article 11. Application by a foreign representative to commence a proceeding under [identify laws of the enacting State relating to insolvency] .............. 57 Article 12. Participation of a foreign representative in a proceeding under [identify laws of the enacting State relating to insolvency ] ..................... 58 Article 13. Access of foreign creditors to a proceeding under [identify laws of the enacting State relating to insolvency] ................................... 59 Article 14. Notification to foreign creditors of a proceeding under [identify laws of the enacting State relating to insolvency] ................................... 60

D. Chapter III. Recognition of a foreign proceeding and relief ..... 64

Article 15. Application for recognition of a foreign proceeding . . 64vi Page Article 16. Presumptions concerning recognition .............. 68 Article 17. Decision to recognize a foreign proceeding ......... 73 Article 18. Subsequent information ......................... 78 Article 19. Relief that may be granted upon application for recognition of a foreign proceeding ............... 80 Article 20. Effects of recognition of a foreign main proceeding .. 82 Article 21. Relief that may be granted upon recognition of a foreign proceeding ............................. 87 Article 22. Protection of creditors and other interested persons .. 90 Article 23. Actions to avoid acts detrimental to creditors ....... 91

Article 21. Relief that may be granted upon recognition of a foreign proceeding ............................. 87 Article 22. Protection of creditors and other interested persons .. 90 Article 23. Actions to avoid acts detrimental to creditors ....... 91 Article 24. Intervention by a foreign representative in proceedings in this State ........................ 93

E. Chapter IV . Cooperation with foreign courts and foreign representatives ........................................... 94

Article 25. Cooperation and direct communication between a court of this State and foreign courts or foreign representatives ................................. 97 Article 26. Cooperation and direct communication between the [insert the title of a person or body administering a reorganization or liquidation under the law of the enacting State] and foreign courts or foreign representatives ................................. 97 Article 27. Forms of cooperation ........................... 98

F. Chapter V . Concurrent proceedings ......................... 100

Article 28. Commencement of a proceeding under [identify laws of the enacting State relating to insolvency] after recognition of a foreign main proceeding .......... 100 Article 29. Coordination of a proceeding under [identify laws of the enacting State relating to insolvency] and a foreign proceeding ............................. 102 Article 30. Coordination of more than one foreign proceeding ... 104 Article 31. Presumption of insolvency based on recognition of a foreign main proceeding ........................ 105 Article 32. Rule of payment in concurrent proceedings ......... 106

VI. Assistance from the UNCITRAL secretariat ....................... 108

A. Assistance in drafting legislation ............................ 108

B. Information on the interpretation of legislation based on the Model Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Annexes

B. Information on the interpretation of legislation based on the Model Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Annexes

I. General Assembly resolution 52/158 of 15 December 1997 .......... 109

II. Decision of the United Nations Commission on International Trade Law 111Part one

UNCITRAL MODEL LAW

ON CROSS-BORDER INSOLVENCY3

UNCITRAL Model Law on Cross-Border Insolvency PREAMBLE The purpose of this Law is to provide effective mechanisms for dealing with cases of cross-border insolvency so as to promote the objectives of: (a) Cooperation between the courts and other competent authorities of this State and foreign States involved in cases of cross-border insolvency; (b) Greater legal certainty for trade and investment; (c) Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor; (d) Protection and maximization of the value of the debtor’s assets; and (e) Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment. CHAPTER I. GENERAL PROVISIONS Article 1. Scope of application

1. This Law applies where:

(a) Assistance is sought in this State by a foreign court or a foreign representative in connection with a foreign proceeding; or (b) Assistance is sought in a foreign State in connection with a proceeding under [identify laws of the enacting State relating to insolvency ]; or (c) A foreign proceeding and a proceeding under [identify laws of the enacting State relating to insolvency] in respect of the same debtor are taking place concurrently; or4 UNCITRAL Model Law on Cross-Border Insolvency Law with Guide to Enactment and Interpretation (d) Creditors or other interested persons in a foreign State have an interest in requesting the commencement of, or participating in, a proceeding

place concurrently; or4 UNCITRAL Model Law on Cross-Border Insolvency Law with Guide to Enactment and Interpretation (d) Creditors or other interested persons in a foreign State have an interest in requesting the commencement of, or participating in, a proceeding under [identify laws of the enacting State relating to insolvency ].

2. This Law does not apply to a proceeding concerning [designate any types of entities, such as banks or insurance companies, that are subject to a special insolvency regime in this State and that this State wishes to exclude from this Law].

Article 2. Definitions

For the purposes of this Law: (a) “Foreign proceeding” means a collective judicial or administrative proceeding in a foreign State, including an interim proceeding, pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation;

(b) “Foreign main proceeding” means a foreign proceeding taking place in the State where the debtor has the centre of its main interests; (c) “Foreign non-main proceeding” means a foreign proceeding, other than a foreign main proceeding, taking place in a State where the debtor has an establishment within the meaning of subparagraph (f) of this article; (d) “Foreign representative” means a person or body, including one appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor’s assets or affairs or to act as a representative of the foreign proceeding; (e) “Foreign court” means a judicial or other authority competent to control or supervise a foreign proceeding; (f) “Establishment” means any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services. Article 3. International obligations of this State To the extent that this Law conflicts with an obligation of this State arising out of any treaty or other form of agreement to which it is a party with one or more other States, the requirements of the treaty or agreement

or services. Article 3. International obligations of this State To the extent that this Law conflicts with an obligation of this State arising out of any treaty or other form of agreement to which it is a party with one or more other States, the requirements of the treaty or agreement prevail.Part one. UNCITRAL Model Law on Cross-Border Insolvency 5 Article 4. [Competent court or authority] a The functions referred to in this Law relating to recognition of foreign proceedings and cooperation with foreign courts shall be performed by [specify the court, courts, authority or authorities competent to perform those functions in the enacting State ]. Article 5. Authorization of [insert the title of the person or body administering reorganization or liquidation under the law of the enacting State] to act in a foreign State A [insert the title of the person or body administering a reorganization or liquidation under the law of the enacting State ] is authorized to act in a foreign State on behalf of a proceeding under [identify laws of the enacting State relating to insolvency ], as permitted by the applicable foreign law. Article 6. Public policy exception Nothing in this Law prevents the court from refusing to take an action governed by this Law if the action would be manifestly contrary to the public policy of this State. Article 7. Additional assistance under other laws Nothing in this Law limits the power of a court or a [insert the title of the person or body administering a reorganization or liquidation under the law of the enacting State ] to provide additional assistance to a foreign representative under other laws of this State. Article 8. Interpretation In the interpretation of this Law, regard is to be had to its international origin and to the need to promote uniformity in its application and the observance of good faith. a A state where certain functions relating to insolvency proceedings have been conferred upon government-appointed officials of bodies might wish to include in article 4 or elsewhere in chapter I the following provision: Nothing in this Law affects the provisions in force in the State governing the authority of [insert

observance of good faith. a A state where certain functions relating to insolvency proceedings have been conferred upon government-appointed officials of bodies might wish to include in article 4 or elsewhere in chapter I the following provision: Nothing in this Law affects the provisions in force in the State governing the authority of [insert the title of the government-appointed person or body].6 UNCITRAL Model Law on Cross-Border Insolvency Law with Guide to Enactment and Interpretation CHAPTER II. ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO COURTS IN THIS STATE Article 9. Right of direct access A foreign representative is entitled to apply directly to a court in this State. Article 10. Limited jurisdiction The sole fact that an application pursuant to this Law is made to a court in this State by a foreign representative does not subject the foreign representative or the foreign assets and affairs of the debtor to the jurisdiction of the courts of this State for any purpose other than the application. Article 11. Application by a foreign representative to commence a proceeding under [identify laws of the enacting State relating to insolvency] A foreign representative is entitled to apply to commence a proceeding under [identify laws of the enacting State relating to insolvency ] if the conditions for commencing such a proceeding are otherwise met. Article 12. Participation of a foreign representative in a proceeding under [identify laws of the enacting State relating to insolvency] Upon recognition of a foreign proceeding, the foreign representative is entitled to participate in a proceeding regarding the debtor under [identify laws of the enacting State relating to insolvency ]. Article 13. Access of foreign creditors to a proceeding under [identify laws of the enacting State relating to insolvency]

1. Subject to paragraph 2 of this article, foreign creditors have the same rights regarding the commencement of, and participation in, a proceeding under [identify laws of the enacting State relating to insolvency] as creditors in this State.

2. Paragraph 1 of this article does not affect the ranking of claims in

same rights regarding the commencement of, and participation in, a proceeding under [identify laws of the enacting State relating to insolvency] as creditors in this State.

2. Paragraph 1 of this article does not affect the ranking of claims in a proceeding under [identify laws of the enacting State relating toPart one. UNCITRAL Model Law on Cross-Border Insolvency 7 insolvency], except that the claims of foreign creditors shall not be ranked lower than [identify the class of general non-preference claims, while providing that a foreign claim is to be ranked lower than the general nonpreference claims if an equivalent local claim (e.g. claim for a penalty or deferredpayment claim) has a rank lower than the general non-preference claims].b Article 14. Notification to foreign creditors of a proceeding under

[identify laws of the enacting State relating to insolvency]

1. Whenever under [identify laws of the enacting State relating to insolvency] notification is to be given to creditors in this State, such notification shall also be given to the known creditors that do not have addresses in this State. The court may order that appropriate steps be taken with a view to notifying any creditor whose address is not yet known.

2. Such notification shall be made to the foreign creditors individually, unless the court considers that, under the circumstances, some other form of notification would be more appropriate. No letters rogatory or other, similar formality is required.

3. When a notification of commencement of a proceeding is to be given to foreign creditors, the notification shall:

(a) Indicate a reasonable time period for filing claims and specify the place for their filing; (b) Indicate whether secured creditors need to file their secured claims; and (c) Contain any other information required to be included in such a notification to creditors pursuant to the law of this State and the orders of the court. b The enacting State may wish to consider the following alternative wording to replace paragraph 2 of article 13:

and (c) Contain any other information required to be included in such a notification to creditors pursuant to the law of this State and the orders of the court. b The enacting State may wish to consider the following alternative wording to replace paragraph 2 of article 13: “2. Paragraph 1 of this article does not affect the ranking of claims in a proceeding under [identify laws of the enacting State relating to insolvency ] or the exclusion of foreign tax and social security claims from such a proceeding. Nevertheless, the claims of foreign creditors other than those concerning tax and social security obligations shall not be ranked lower than [identify the class of general non-preference claims, while providing that a foreign claim is to be ranked lower than the general non-preference claims if an equivalent local claim (e.g. claim for a penalty or deferredpayment claim) has a rank lower than the general non-preference claims].”8 UNCITRAL Model Law on Cross-Border Insolvency Law with Guide to Enactment and Interpretation CHAPTER III. RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF Article 15. Application for recognition of a foreign proceeding

1. A foreign representative may apply to the court for recognition of the foreign proceeding in which the foreign representative has been appointed.

2. An application for recognition shall be accompanied by:

(a) A certified copy of the decision commencing the foreign proceeding and appointing the foreign representative; or (b) A certificate from the foreign court affirming the existence of the foreign proceeding and of the appointment of the foreign representative; or (c) In the absence of evidence referred to in subparagraphs (a) and (b), any other evidence acceptable to the court of the existence of the foreign proceeding and of the appointment of the foreign representative.

3. An application for recognition shall also be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.

4. The court may require a translation of documents supplied in support of the application for recognition into an official language of this State.

Article 16. Presumptions concerning recognition

statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative.

4. The court may require a translation of documents supplied in support of the application for recognition into an official language of this State.

Article 16. Presumptions concerning recognition

1. If the decision or certificate referred to in paragraph 2 of article 15 indicates that the foreign proceeding is a proceeding within the meaning of subparagraph (a) of article 2 and that the foreign representative is a person or body within the meaning of subparagraph (d) of article 2, the court is entitled to so presume.

2. The court is entitled to presume that documents submitted in support of the application for recognition are authentic, whether or not they have been legalized.

3. In the absence of proof to the contrary, the debtor’s registered office, or habitual residence in the case of an individual, is presumed to be the centre of the debtor’s main interests.Part one. UNCITRAL Model Law on Cross-Border Insolvency 9

Article 17. Decision to recognize a foreign proceeding

1. Subject to article 6, a foreign proceeding shall be recognized if:

(a) The foreign proceeding is a proceeding within the meaning of subpara graph (a) of article 2; (b) The foreign representative applying for recognition is a person or body within the meaning of subparagraph (d) of article 2; (c) The application meets the requirements of paragraph 2 of article 15; and (d) The application has been submitted to the court referred to in article 4.

2. The foreign proceeding shall be recognized:

(a) As a foreign main proceeding if it is taking place in the State where the debtor has the centre of its main interests; or (b) As a foreign non-main proceeding if the debtor has an establishment within the meaning of subparagraph (f) of article 2 in the foreign State.

3. An application for recognition of a foreign proceeding shall be decided upon at the earliest possible time.

where the debtor has the centre of its main interests; or (b) As a foreign non-main proceeding if the debtor has an establishment within the meaning of subparagraph (f) of article 2 in the foreign State.

3. An application for recognition of a foreign proceeding shall be decided upon at the earliest possible time.

4. The provisions of articles 15, 16, 17 and 18 do not prevent modification or termination of recognition if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist.

Article 18. Subsequent information From the time of filing the application for recognition of the foreign proceeding, the foreign representative shall inform the court promptly of: (a) Any substantial change in the status of the recognized foreign proceeding or the status of the foreign representative’s appointment; and (b) Any other foreign proceeding regarding the same debtor that becomes known to the foreign representative. Article 19. Relief that may be granted upon application for recognition of a foreign proceeding

1. From the time of filing an application for recognition until the application is decided upon, the court may, at the request of the foreign10 UNCITRAL Model Law on Cross-Border Insolvency Law with Guide to Enactment and Interpretation representative, where relief is urgently needed to protect the assets of the debtor or the interests of the creditors, grant relief of a provisional nature, including:

(a) Staying execution against the debtor’s assets; (b) Entrusting the administration or realization of all or part of the debtor’s assets located in this State to the foreign representative or another person designated by the court, in order to protect and preserve the value of assets that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy; (c) Any relief mentioned in paragraph 1 (c), (d) and (g) of article 21. 2. [Insert provisions (or refer to provisions in force in the enacting State) relating to notice .]

3. Unless extended under paragraph 1 (f) of article 21, the relief

(c) Any relief mentioned in paragraph 1 (c), (d) and (g) of article 21. 2. [Insert provisions (or refer to provisions in force in the enacting State) relating to notice .]

3. Unless extended under paragraph 1 (f) of article 21, the relief granted under this article terminates when the application for recognition is decided upon.

4. The court may refuse to grant relief under this article if such relief would interfere with the administration of a foreign main proceeding.

Article 20. Effects of recognition of a foreign main proceeding

1. Upon recognition of a foreign proceeding that is a foreign main

proceeding: (a) Commencement or continuation of individual actions or individual proceedings concerning the debtor’s assets, rights, obligations or liabilities is stayed; (b) Execution against the debtor’s assets is stayed; and (c) The right to transfer, encumber or otherwise di