Global Bankruptcy Mutual Assistance

The UNCITRAL (UN Commission on International Trade Law) Model Law on cross-border insolvency is in force in Great Britain. It was brought into force by the Cross-Border Insolvency Regulations 2006. It is a voluntary framework and requires national implementation to give effect to it but most significantly the United States, South Africa and Japan were well ahead of GB in implementing the framework.

These Regulations apply where:

(a)Assistance is sought in Britain by a foreign court or a foreign representative in connection with a foreign proceeding.

(b)Assistance is sought in a foreign state in connection with a proceeding under British insolvency law.

(c)There are concurrent insolvency proceedings in a foreign state and Britain.

(d)Creditors or other interested persons in a foreign state have an interest in requesting the commencement of, or participating in, a British insolvency case.

The core provision is that a foreign insolvency officeholder can apply to the British courts for recognition of foreign proceedings where the debtor has a place of business or assets in Britain or if, for any other reason, Britain is an appropriate forum.

A foreign officeholder is also granted certain rights of access to the British courts to commence, participate and/or intervene in British insolvency proceedings and to apply to the British courts under the anti-avoidance provisions: for example, transactions at an undervalue and preferences under sections 238 and 239 of the IA86.

Foreign creditors also have the same right to commence and/or participate in British insolvency proceedings as creditors in Britain. Foreign creditors may not be given a lower priority than that of general unsecured claims solely because they are foreign.

The Regulations also provide for co-operation of the British courts and insolvency officeholders with foreign courts and representatives. Different standards apply to the British courts which may co-operate, but British insolvency officeholders are required to co-operate.