There has been great discussion over the course of INSOL on the various restructuring and insolvency reforms being considered or implemented globally. In the break out session ‘The good, the bad and the ugly: national and regional law reforms’, panellists drilled down into the detail of some of these reforms. The panel considered reforms in the EU (Prof. Christoph Paulus, Hamboldt-Universitat zu Berlin), the UK (Mark Craggs, Norton Rose Fulbright LLP), Singapore (Sushil Nair, Drew & Napier LLC), and the US (Donald S.

It has become increasingly common for companies needing to restructure to open restructuring / insolvency proceedings in a jurisdiction outside of where their centre of corporate control is located or assets are concentrated. Forum shopping in a restructuring context is becoming more common place, however it also remains highly controversial. The panelists at the INSOL breakout session, A Hitchhikers Guide of Forum Shopping, considered what makes a good forum for restructuring / insolvency, and whether forum shopping is desirable or undesirable.

Piggybacking off the case study involving a UK-based company in crisis after an oil spill in Nigeria, panelists Ryan Eagle of Ferrier Hodgson, Marcelo Carpenter of Sergio Bermudes Law Office, David Kelleher of Fortress Investment Group (Australia) Pty Ltd., and Fidelis Oditach of South Square discussed the key decision-making factors of investing in a similarly-situated oil and gas company. Some of the key takeaways applicable to investing in oil and gas companies generally were:

Returns to creditors from litigation against associates of the business are often a lucrative way of getting funds into an administration after a corporate failure. Claims are often made against banks, lawyers and accountants associated with the failure. In some cases, those claims may involve chasing other parties for the proceeds of a fraud. Often these claims provide a greater return than chasing down any remaining assets.

1. Introduction

Under Hong Kong law, a company shall be deemed to be unable to pay its debts if a creditor, to whom the company is indebted of at least HKD 10,000 (around USD 1,290), has served on the company a demand requiring the company to pay and the company has not done so within three weeks.

Can you take security over all types of assets, including working capital? Generally yes, before filing for the reorganization or the ruling setting forth the start of the liquidation bankruptcy. After the beginning of the reorganization proceedings, no further security interests can be granted over the assets of the debtor for credits due before the beginning of the reorganization proceedings. The debtor can grant security interests for new creditors after the start of the reorganization proceedings.

The global economy is growing at about 3% a year. This is roughly equal to the average growth rate for the last 50 years. However, growth predictions are ticking slightly downwards, mainly due to concerns around trade. And there are still high levels of government and corporate debt arising from the financial crisis and subsequent period of low interest rates. Nowhere is this better illustrated than China, which is forecast to overtake the US as the world's largest economy as early as this year, on some measures.

On 15 July 2019, UNCITRAL formally approved a new model law (linked here) for enterprise group insolvencies on how to administer group insolvencies across multiple jurisdictions. A lesson learnt from the 2008 global financial crisis when we saw the collapse of Lehman Brothers was the absence of legislation that dealt with group insolvencies. This has been identified as a major gap in UNCITRAL’s model law on cross-border insolvency (MLCBI).

Recent developments

UNCITRAL recently published its Model Law on Recognition and Enforcement of Insolvency Related Judgments ("MLREIJ"), with a recommendation that nations adopt it into their legislation. MLREIJ is the first model law that specifically provides a framework for recognition and enforcement of insolvency related judgments for nations that adopt it. The adoption of this model law might make cross-border insolvencies more predictable, complete and efficient.

UNCITRAL has recently published its Model Law on Recognition and Enforcement of Insolvency-Related Judgments (MLREIJ), with a recommendation that nations adopt it into their domestic law. You can find a complete copy of the text of MLREIJ here (on the UNCITRAL website).