CNUDMI - UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation (2009)

UNCITRAL UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW

UNITED NATIONS

UNCITRAL

Practice Guide on Cross-Border Insolvency Cooperation 1052330 United Nations publication Printed in Austria Sales No. E.10.V.6 USD 20

ISBN 978-92-1-133688-7

V.10-52330—June 2010—1,150UNCITRAL

Practice Guide on Cross-Border Insolvency Cooperation

UNITED NATIONS

New York, 2010

UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAWUNITED NATIONS PUBLICATION

Sales No.: E.10.V.6

ISBN 978-92-1-133688-7

Further 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.orgiii

UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation Preface The Practice Guide on Cross-Border Insolvency Cooperation was prepared by the United Nations Commission on International Trade Law (UNCITRAL). The project arose from a proposal made to the Commission in 2005 that further work should be undertaken on coordination and cooperation in crossborder insolvency cases, particularly with regard to the use and negotiation of cross-border insolvency agreements. The topic was viewed as closely related and complementary to the promotion and use of the UNCITRAL Model Law on Cross-Border Insolvency and, in particular, implementation of its article 27, paragraph (d). In 2006, the Commission agreed that initial work to compile information on practical experience with negotiating and using cross-border insolvency agreements should be facilitated informally through consultation with judges and insolvency practitioners. The first draft of the practice guide was developed through those consultations in 2006 and 2007 and, as requested by the Commission, presented

information on practical experience with negotiating and using cross-border insolvency agreements should be facilitated informally through consultation with judges and insolvency practitioners. The first draft of the practice guide was developed through those consultations in 2006 and 2007 and, as requested by the Commission, presented to Working Group V (Insolvency Law) in November 2008 for discussion. That draft was also circulated to Governments for comment in late 2008. A revised version of the practice guide, taking into account the comments provided by Governments and the Working Group, was presented to the Commission for finalization and adoption at its forty-second session, in

2009. The text was adopted by consensus on 1 July 2009 and, on 16 December 2009, the General Assembly adopted resolution 64/112, in which it expressed its appreciation to the Commission for completing and adopting the Practice Guide (see annex II).v

Contents Paragraphs Page Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-17 1

A. Organization and scope of the Practice Guide on Cross-Border Insolvency Cooperation . . . . . . . . . . . . 1-5 1

B. Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-17 2

1. Notes on terminology . . . . . . . . . . . . . . . . . . . . . 6-12 2

2. Terms and explanations . . . . . . . . . . . . . . . . . . . . 13 4

1. Notes on terminology . . . . . . . . . . . . . . . . . . . . . 6-12 2

2. Terms and explanations . . . . . . . . . . . . . . . . . . . . 13 4

3. Reference material . . . . . . . . . . . . . . . . . . . . . . . . 14-17 6

I. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-20 9

A. The legislative framework for cross-border insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3 9

B. International initiatives . . . . . . . . . . . . . . . . . . . . 4-20 10

1. Model International Insolvency Cooperation Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 11

2. Cross-Border Insolvency Concordat . . . . . . . 6-8 11

3. UNCITRAL Model Law on Cross-Border Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-16 12

4. Regional arrangements . . . . . . . . . . . . . . . . . 17-19 15

5. Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases . . . 20 16

II. Possible forms of cooperation under article 27 of the UNCITRAL Model Law . . . . . . . . . . . . . . . . . . . 1-21 17

Communications in Cross-Border Cases . . . 20 16

II. Possible forms of cooperation under article 27 of the UNCITRAL Model Law . . . . . . . . . . . . . . . . . . . 1-21 17

A. Article 27, paragraph (a): Appointment of a person or body to act at the direction of the court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 18

B. Article 27, paragraph (b): Communication of information by any means considered appropriate by the court . . . . . . . . . . . . . . . . . . . 4-10 18vi

Paragraphs Page

C. Article 27, paragraph (c): Coordination of the administration and supervision of the debtor’s assets and affairs . . . . . . . . . . . . . . . . . . . . . . . . . 11 21

D. Article 27, paragraph (d): Approval or implementation by courts of agreements concerning the coordination of proceedings . . . 12-13 22

E. Article 27, paragraph (e): Coordination of concurrent proceedings regarding the same debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-16 22

F. Article 27, paragraph (f): Other forms of cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-21 23

1. Questions of jurisdiction and allocation of disputes among cooperating courts for resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-20 23

2. Coordination of the filing, determination

1. Questions of jurisdiction and allocation of disputes among cooperating courts for resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-20 23

2. Coordination of the filing, determination and priority of claims . . . . . . . . . . . . . . . . . . 21 25

III. Cross-border insolvency agreements . . . . . . . . . . . . . 1-200 27

A. Preliminary issues . . . . . . . . . . . . . . . . . . . . . . . . 1-38 27

1. Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9 27

2. Circumstances supporting use of a cross-border insolvency agreement . . . . . . 10 29

3. Timing of negotiation . . . . . . . . . . . . . . . . . 11-14 31

4. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-18 32

5. Capacity to enter into a cross-border insolvency agreement . . . . . . . . . . . . . . . . . 19-23 33

6. Format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-26 35

7. Common provisions . . . . . . . . . . . . . . . . . . 27-30 36

8. Legal effect . . . . . . . . . . . . . . . . . . . . . . . . . 31-33 38

7. Common provisions . . . . . . . . . . . . . . . . . . 27-30 36

8. Legal effect . . . . . . . . . . . . . . . . . . . . . . . . . 31-33 38

9. Safeguards . . . . . . . . . . . . . . . . . . . . . . . . . . 34-36 39

10. Possible problems and means of resolution 37-38 40

B. Comparison of cross-border insolvency agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39-200 40

1. Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40-51 41 2 Terminology and rules of interpretation . . . . 52-55 48

3. Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56-89 50

4. Administration of the proceedings . . . . . . . . 90-105 65vii

Paragraphs Page

5. Allocation of responsibilities between the parties to the cross-border insolvency agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106-145 71

6. Communication . . . . . . . . . . . . . . . . . . . . . . . 146-181 90

7. Effectiveness, amendment, revision and termination of cross-border insolvency agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 182-190 105

7. Effectiveness, amendment, revision and termination of cross-border insolvency agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 182-190 105

8. Costs and fees . . . . . . . . . . . . . . . . . . . . . . . . 191-194 108

9. Safeguards . . . . . . . . . . . . . . . . . . . . . . . . . . . 195-200 110

Annexes

I. Case summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

II. Decision of the United Nations Commission on International Trade Law and General Assembly resolution 64/112 . . . . . . . . . . . 14111

Introduction

A. Organization and scope of the Practice Guide on

Cross-Border Insolvency Cooperation

1. The purpose of the Practice Guide on Cross-Border Insolvency Cooperation is to provide information for practitioners and judges on practical aspects of cooperation and communication in cross-border insolvency cases, specifically in cases involving insolvency proceedings in multiple States where the insolvent debtor has assets and cases where some of the debtor’s creditors are not from the State in which the insolvency proceedings have commenced. Such cases might involve individual debtors, but typically they involve enterprise groups with offices, business activities and assets in multiple States. The information is based upon a description of collected experience and practice and focuses on the use and negotiation of cross-border insolvency agreements, providing an analysis of a number of those agreements, which range from written agreements approved by courts to oral arrangements between parties to insolvency proceedings entered into in cross-border insolvency cases over the past two decades. The Practice Guide is not intended to be prescriptive, but rather to illustrate how the resolution of issues and conflicts that might

number of those agreements, which range from written agreements approved by courts to oral arrangements between parties to insolvency proceedings entered into in cross-border insolvency cases over the past two decades. The Practice Guide is not intended to be prescriptive, but rather to illustrate how the resolution of issues and conflicts that might arise in cross-border insolvency cases could be facilitated by the use of such agreements, tailored to meet the specific needs of each case and the particular requirements of applicable law.

2. Chapter I of the Practice Guide discusses the increasing importance of coordination and cooperation in cross-border insolvency cases and provides an introduction to the various international texts relating to cross-border insolvency proceedings that have been developed in recent years. These texts address various aspects of cross-border insolvency, from elaborating a legislative framework to facilitate cooperation and coordination in cross-border insolvency proceedings to providing guidance on issues that could be included in cross-border insolvency agreements or adopted by courts to guide cross-border communication.2 UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation

3. Chapter II amplifies article 27, in particular paragraph (d), of the UNCITRAL Model Law on Cross-Border Insolvency 1 (the UNCITRAL Model Law), discussing the various ways in which cooperation in crossborder cases might be achieved.

4. Chapter III examines in detail the use of one of the means of cooperation referred to in article 27, paragraph (d), of the UNCITRAL Model Law, namely cross-border insolvency agreements. The analysis in this chapter is based on practical experience with the negotiation and use of these agreements, in particular in the cases referred to in annex I. This chapter also includes a number of what are termed “sample clauses”, which are based to varying degrees upon provisions found in the different insolvency agreements. These clauses are included to illustrate how different issues have been addressed or might be addressed, but are not intended to serve as model provisions for direct incorporation into an agreement (see also sect. 3 (c)

to varying degrees upon provisions found in the different insolvency agreements. These clauses are included to illustrate how different issues have been addressed or might be addressed, but are not intended to serve as model provisions for direct incorporation into an agreement (see also sect. 3 (c) (“Sample clauses”), paras. 16-17 below).

5. Annex I includes summaries of the cases in which the cross-border insolvency agreements that form the basis of the Practice Guide were concluded. The summaries provide a basic overview of the contents of those agreements and, if available, of the reasons the agreements were negotiated.

Detailed reasons for using an agreement are not generally included in the agreement, although there are some exceptions. 2

B. Glossary

1. Notes on terminology

6. The following terms are intended to provide orientation to the reader of the Practice Guide. Since many terms have fundamentally different meanings in different jurisdictions, an explanation of the use of those terms in the Practice Guide may assist in ensuring that the concepts discussed are clear and widely understood. The Practice Guide uses terminology common to the UNCITRAL Model Law and the UNCITRAL Legislative Guide on Insolvency Law3 (the Legislative Guide), where relevant. For ease of reference, these terms are repeated below. 1 Legislative Guide on Insolvency Law (United Nations publication, Sales No. E.05.V .10), annex III, part one; text also available from www.uncitral.org under “UNCITRAL Texts and Status”. 2 See, for example, agreements approved in the cases concerning Lehman Brothers Holdings Inc. and Madoff Securities International Limited. 3 United Nations publication, Sales No. E.05.V .10; text also available from www.uncitral.org under “UNCITRAL Texts and Status”.Introduction 3

(a) References in the Practice Guide to “court”

7. The Practice Guide follows the Legislative Guide’s use of the word “court” and assumes that there is reliance on court supervision throughout the insolvency proceedings, which may include the power to commence insolvency proceedings, to appoint the insolvency representative, to super -

(a) References in the Practice Guide to “court”

7. The Practice Guide follows the Legislative Guide’s use of the word “court” and assumes that there is reliance on court supervision throughout the insolvency proceedings, which may include the power to commence insolvency proceedings, to appoint the insolvency representative, to supervise that representative’s activities and to take decisions in the course of the proceedings. Although this reliance may be appropriate as a general principle, alternatives may be considered where, for example, the courts are unable to handle insolvency work (whether for reasons of lack of resources or lack of requisite experience) or supervision by some other authority is preferred

(see the Legislative Guide, part one, chap. III (“Institutional framework”)).

8. For reasons of consistency, the Practice Guide uses the word “court” in the same way as article 2, paragraph (e), of the UNCITRAL Model Law to refer to a judicial or other authority competent to control or supervise insolvency proceedings.

(b) References in the Practice Guide to “cross-border insolvency agreement”

9. Cross-border insolvency agreements are most commonly referred to in some States as “protocols”, although a number of other titles have been used, including “insolvency administration contract”, “cooperation and compromise agreement” and “memorandum of understanding”. The Practice Guide attempts to compile practice with respect to as many forms of crossborder insolvency agreements as possible and, since the use of the term “protocol” does not necessarily reflect the diverse nature of the agreements being used in practice, the more general term “cross-border insolvency agreement”, or more simply “insolvency agreement”, is used herein.

(c) Rules of interpretation

10. Use of the singular also includes the plural; “include” and “including” are not intended to indicate an exhaustive list; “such as” and “for example” are to be interpreted in the same manner as “include” or “including”. 11. “Creditors” should be interpreted as including both the creditors in the forum State and foreign creditors, unless otherwise specified.

are not intended to indicate an exhaustive list; “such as” and “for example” are to be interpreted in the same manner as “include” or “including”. 11. “Creditors” should be interpreted as including both the creditors in the forum State and foreign creditors, unless otherwise specified.

12. References to “person” should be interpreted as including both natural and legal persons, unless otherwise specified.4 UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation

2. Terms and explanations

13. The following paragraphs explain the meaning and use of certain expressions that appear frequently in the Practice Guide. Many of these terms are common to the Legislative Guide and the UNCITRAL Model Law and their use in the Practice Guide is consistent with their use in those texts. They are included here for ease of reference:

(a) “Assets of the debtor”: property, rights and interests of the debtor, including rights and interests in property, whether or not in the possession of the debtor, tangible or intangible, movable or immovable, including the debtor’s interests in encumbered assets or in third-party-owned assets; (b) “Avoidance provisions”: provisions of the insolvency law that permit transactions for the transfer of assets or the undertaking of obligations prior to insolvency proceedings to be cancelled or otherwise rendered in effective and any assets transferred, or their value, to be recovered in the collective interest of creditors; (c) “Centre of main interests”: the place where the debtor conducts the administration of its interests on a regular basis and that is therefore ascertainable by third parties; (d) “Claim”: a right to payment from the estate of the debtor, whether arising from a debt, a contract or other type of legal obligation, whether liquidated or unliquidated, matured or unmatured, disputed or undisputed, secured or unsecured, fixed or contingent; (e) “Commencement of proceedings”: the effective date of insolvency proceedings whether established by statute or a judicial decision; (f) “Court”: a judicial or other authority competent to control or supervise insolvency proceedings; 4

secured or unsecured, fixed or contingent; (e) “Commencement of proceedings”: the effective date of insolvency proceedings whether established by statute or a judicial decision; (f) “Court”: a judicial or other authority competent to control or supervise insolvency proceedings; 4 (g) “Creditor”: a natural or legal person that has a claim against the debtor that arose on or before the commencement of the insolvency proceedings; (h) “Creditor committee”: a representative body of creditors appointed in accordance with the insolvency law, having consultative and other powers as specified in the insolvency law; (i) “Cross-border insolvency agreement”: an oral or written agreement intended to facilitate the coordination of cross-border insolvency proceedings and cooperation between courts, between courts and insolvency representatives and between insolvency representatives, sometimes also involving other parties in interest; 4 See paras. 7-8 above.Introduction 5 (j) “Debtor in possession”: a debtor in reorganization proceedings, which retains full control over the business, with the consequence that the court does not appoint an insolvency representative; (k) “Deferral”: when one court accepts the limitation of its responsibility with respect to certain issues, including for example the ability to hear certain matters and issue certain orders, in favour of another court; (l) “Establishment”: any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services; (m) “Insolvency”: when a debtor is generally unable to pay its debts as they mature or when its liabilities exceed the value of its assets; (n) “Insolvency estate”: assets of the debtor that are subject to the insolvency proceedings; (o) “Insolvency proceedings”: collective proceedings, subject to court supervision, either for reorganization or liquidation; (p) “Insolvency representative”: a person or body, including one appointed on an interim basis, authorized in insolvency proceedings to administer the reorganization or the liquidation of the insolvency estate;

supervision, either for reorganization or liquidation; (p) “Insolvency representative”: a person or body, including one appointed on an interim basis, authorized in insolvency proceedings to administer the reorganization or the liquidation of the insolvency estate; (q) “Main proceeding”: an insolvency proceeding taking place in the State where the debtor has the centre of its main interests; 5 (r) “Non-main proceeding”: an insolvency proceeding, other than a main proceeding, taking place in a State where the debtor has an establishment;6 (s) “Ordinary course of business”: transactions consistent with both (i) the operation of the debtor’s business prior to insolvency proceedings and (ii) ordinary business terms; (t) “Party in interest”: any party whose rights, obligations or interests are affected by insolvency proceedings or particular matters in the insolvency proceedings, including the debtor, the insolvency representative, a creditor, an equity holder, a creditor committee, a government authority or any other person so affected. It is not intended that persons with remote or diffuse interests affected by the insolvency proceedings would be considered to be a party in interest; (u) “Priority”: the right of a claim to rank ahead of another claim where that right arises by operation of law; (v) “Reorganization”: the process by which the financial well-being and viability of a debtor’s business can be restored and the business continue 5 UNCITRAL Model Law, art. 2, para. (b), and art. 16, para. 3. 6 Ibid., art. 2, paras. (c) and (f). Non-main proceedings conducted in European Union member States under European Council (EC) Regulation No. 1346/2000 of 29 May 2000 on insolvency proceedings are referred to as “secondary proceedings”.6 UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation to operate, using various means, possibly including debt forgiveness, debt rescheduling, debt-equity conversions and sale of the business (or parts of it) as a going concern;

are referred to as “secondary proceedings”.6 UNCITRAL Practice Guide on Cross-Border Insolvency Cooperation to operate, using various means, possibly including debt forgiveness, debt rescheduling, debt-equity conversions and sale of the business (or parts of it) as a going concern; (w) “Reorganization plan”: a plan by which the financial well-being and viability of the debtor’s business can be restored; (x) “Stay of proceedings”: a measure that prevents the commencement, or suspends the continuation, of judicial, administrative or other individual actions concerning the debtor’s assets, rights, obligations or liabilities, including actions to make security interests effective against third parties or to enforce a security interest; and prevents execution against the assets of the insolvency estate, the termination of a contract with the debtor and the transfer, encumbrance or other disposition of any assets or rights of the insolvency estate.

3. Reference material

(a) References to cases

14. References to specific cases are included throughout the Practice Guide and particularly in the footnotes. In general, those references are to cases cited and summarized in annex I, so only a short-form reference is included in the text of the Practice Guide, e.g. “GBFE” refers to the proceedings concerning Greater Beijing First Expressways Limited, “Systech” to the proceedings concerning Systech Retail Systems Corporation. References to page or paragraph numbers in association with those cases are references to the relevant portion7 of the publicly available 8 English version of the agreement; many of these agreements are available in English only. Where an agreement is available in other languages, this is indicated in annex I.

(b) References to texts

15. The Practice Guide includes references, where relevant, to several international texts addressing various aspects of coordination of cross-border

insolvency cases, including: (a) “Concordat”: Cross-Border Insolvency Concordat adopted by the Council of the International Bar Association Section on Business Law (Paris, 7 The agreements use different terms, including “section”, “paragraph”, “clause” and “article”. For

insolvency cases, including: (a) “Concordat”: Cross-Border Insolvency Concordat adopted by the Council of the International Bar Association Section on Business Law (Paris, 7 The agreements use different terms, including “section”, “paragraph”, “clause” and “article”. For simplicity of reference, the present text uses “paragraph” to refer to any numbered part of an agreement and indicates the page where there are no relevant paragraph numbers. 8 At the date of publication of the Practice Guide, a few of the agreements cited were not publicly available; they are identified in annex I.Introduction 7 17 September 1995) and by the Council of the International Bar Association (Madrid, 31 May 1996); (b) “UNCITRAL Model Law”: UNCITRAL Model Law on CrossBorder Insolvency with Guide to Enactment (1997); (c) “Court-to-Court Guidelines”: Guidelines Applicable to Court-toCourt Communications in Cross-Border Cases, published by the American Law Institute (16 May 2000) and adopted by the International Insolvency Institute (10 June 2001); (d) “EC Regulation”: European Council (EC) Regulation No. 1346/2000 of 29 May 2000 on insolvency proceedings; (e) “Legislative Guide”: UNCITRAL Legislative Guide on Insolvency Law (2004); (f) “CoCo Guidelines”: European Communication and Cooperation Guidelines for Cross-Border Insolvency, prepared by INSOL Europe’s Academic Wing (2007). (c) Sample clauses

16. The sample clauses included in the Practice Guide are merely illustrative, providing examples, based upon actual agreements, of how the provisions of a cross-border insolvency agreement addressing the particular issues discussed in chapter III might be drafted. The user is advised to read the sample clauses together with the discussion of the relevant issue in the preceding paragraphs. It should be noted that the sample clauses are not intended to be used as model clauses and they should not be regarded as

discussed in chapter III might be drafted. The user is advised to read the sample clauses together with the discussion of the relevant issue in the preceding paragraphs. It should be noted that the sample clauses are not intended to be used as model clauses and they should not be regarded as necessarily comprehensive. Moreover, they should not be considered as forming the basis of what might be regarded as a model agreement. Some provisions might only be appropriate for a particular case, whereas others of a more general nature might be more widely and commonly used. Further, some sample clauses are only effective if approved by the responsible courts, for example when they allocate or touch upon responsibilities of the courts.

17. The Practice Guide therefore emphasizes the individual approach that has to be taken for each insolvency agreement, recognizing that an insolvency agreement has to be drafted for a specific case, taking into consideration the peculiarities of the case and the interests of the parties, as well as local conditions, including the applicable law.9

I. Background

A. The legislative framework for cross-border insolvency

1. Although the number of cross-border insolvency cases has increased significantly since the 1990s, the adoption of legal regimes, either domestic or international, equipped to address cases of a cross-border nature has not kept pace. The lack of such regimes has often resulted in inadequate and uncoordinated approaches that have not only hampered the rescue of financially troubled businesses and the fair and efficient administration of crossborder insolvency proceedings, but have also impeded the protection and maximization of the value of the assets of the insolvent debtor and are unpredictable in their application. Moreover, the disparities and, in some cases, conflicts between national laws have created unnecessary obstacles to the achievement of the basic economic and social goals of insolvency proceedings. There has often been a lack of transparency, with no clear rules on recognition of the rights and priorities of existing creditors, the treatment of foreign creditors and the law applicable to cross-border issues. While many of these inadequacies are also apparent in domestic insolvency regimes,

ceedings. There has often been a lack of transparency, with no clear rules on recognition of the rights and priorities of existing creditors, the treatment of foreign creditors and the law applicable to cross-border issues. While many of these inadequacies are also apparent in domestic insolvency regimes, their impact is potentially much greater in cross-border cases, particularly where reorganization is involved.

2. In addition to the inadequacy of existing laws, the absence of predictability as to how they will be applied and the potential cost and delay involved in application has added a further layer of uncertainty that can impact on capital flows and cross-border investment. Acceptance of different types of proceedings, understanding of key concepts and the treatment accorded to parties with an interest in insolvency proceedings differ.

Reorganization or rescue procedures, for example, are more prevalent in some countries than others. The involvement of and treatment accorded to secured creditors in insolvency proceedings vary widely. Different countries also recognize different types of proceedings with different effects. An e