(e) Protection of the insolvency estate against the actions of creditors, the debtor itself and the insolvency representative, and where the protective measures apply to secured creditors, the manner in which the economic value of the security interest will be protected during the insolvency proceedings

Those instances include cases where the insolvent debtor has assets in more than one State or where among the creditors of the debtor there are some that are not from the State where the insolvency proceeding is taking place.

In the insolvency of a non grantor debtor, the creditor is an unsecured creditor with an unsecured claim against the non grantor debtor.

84. It was suggested that the following should be addressed the question of the ranking of creditors, the priority between the insolvency administrator and creditors, legal mechanisms for reorganization of the insolvent debtor, special rules designed to ensure the continuity of the public service in case of insolvency of the project company and provisions on avoidance of transactions entered into by the debtor shortly before the opening of the insolvency proceedings.

(ll) Insolvency estate means assets and rights of the debtor that are controlled or supervised by the insolvency representative and subject to the insolvency proceedings.

It was also noted that a number of jurisdictions did not enquire as to the nature of the debtor s debts for insolvency purposes, nor did they exclude consumers or other individuals from the ordinary insolvency regime.

(1) Where an insolvency proceeding has been opened in a foreign jurisdiction in which the debtor has the centre of its main interests, the courts of the enacting State shall have jurisdiction to open insolvency proceedings against the debtor only if the debtor has an establishment or assets in the enacting State , and the effects of those proceedings shall be restricted to the establishment or assets of the debtor situated in the territory of the enacting State .

Creditors in insolvency proceedings

(b) Facilitating the gathering of information about the debtor apos s assets and affairs, and protecting and maximizing the value of the debtor apos s assets for the purposes of administering a cross border insolvency

In the US, the usual bankruptcy rules allow regulators and courts to hold a bankrupt company s operations together long enough to determine if the firm is worth more dead than alive. The law stops creditors from grabbing assets after the company enters bankruptcy, and it recalls many payments made to favored creditors in the 90 days before bankruptcy was declared, so that all creditors facilitate the firm s survival.

quot Noting also that when a debtor with assets in more than one State becomes subject to an insolvency proceeding, there often exists an urgent need for cross border cooperation and coordination in the supervision and administration of the insolvent debtor s assets and affairs,

That is why, for domestic debt disputes, countries have bankruptcy laws and courts. But there is no such mechanism to adjudicate international debt disputes.

Bankruptcies Debtor sales

ATHENS The point of restructuring debt is to reduce the volume of new loans needed to salvage an insolvent entity. Creditors offer debt relief to get more value back and to extend as little new finance to the insolvent entity as possible.

The Section on Insolvency, Restructuring and Creditors' Rights (SIRC) of the Legal Practice Division of the International Bar Association undertakes a number of activities in the area of insolvency law.

(103) Once the financial contracts of the debtor have been terminated, the insolvency law should permit counterparties to enforce and apply their security interest to obligations arising out of financial contracts.

quot (c) in case the assigned receivables constitute security for indebtedness or other obligations, any insolvency rules or procedures generally governing the insolvency of the assignor

(39) The insolvency law should specify that the court may grant relief of a provisional nature, at the request of the debtor, creditors or third parties, where relief is needed to protect and preserve the value of the assets of the debtor or the interests of creditors, between the time an application to commence insolvency proceedings is made and commencement of the proceedings, including

(54) The insolvency law should specify that the insolvency representative may use an asset owned by a third party and in the possession of the debtor provided specified conditions are satisfied, including

In the situation dealt with in paragraph (1), the court of the enacting State should be able to open an insolvency proceeding not only when the debtor had an establishment in the enacting State but also when it had assets in that State.

(mm) Insolvency proceedings means collective judicial or administrative proceedings for the purposes of either reorganization or liquidation of the debtor's business conducted according to the insolvency law.

quot (b) the debtor is a insert the designations of specially regulated financial services institutions , if the debtor apos s insolvency in this State is subject to special regulation in insert names of laws of the enacting State relating to insolvency of such institutions . quot

(179) The insolvency law should provide that the insolvency representative may determine the portion of a secured creditor's claim that is secured and the portion that is unsecured by valuing the encumbered asset.

(172) The insolvency law should specify whether secured creditors are required to submit claims.

Avoidance of repeated proof of financial failure reduces the likelihood that a debtor may delay proceedings long enough to conceal or carry away assets.

In such cases, commencement of an insolvency proceeding would be possible if the debtor has assets in the enacting State.

In order to achieve those benefits, it was justified to impose on the insolvent debtor the possibly harsher consequences of insolvency proceedings in the country where it maintained a limited business presence, even if the country where the centre of the debtor s main interests was situated posed less stringent conditions for the opening of insolvency proceedings.

(1) Upon recognition of a foreign main proceeding, the courts of this State have jurisdiction to commence a proceeding in this State against the debtor under identify laws of the enacting State relating to insolvency only if the debtor has assets in this State, and the effects of that proceeding shall be restricted to the assets of the debtor situated in the territory of this State.

It was pointed out that proof of insolvency of the debtor was not universally required for the opening of insolvency proceedings, since some legal systems authorized the opening of insolvency proceedings under specific circumstances defined by the law (e.g. cessation of payments) or upon accomplishment by the debtor of certain actions (e.g. dissipation of its assets, abandonment of its establishment).

It is important to note that indebted governments are both more and less vulnerable than private debtors. Sovereign borrowers cannot seek the protection of bankruptcy laws to delay and restructure payments at the same time, their creditors cannot seize non commercial public assets in compensation for unpaid debts.

(b) 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

In reply, it was observed that, for example, the names and addresses of foreign creditors would be obtainable from the debtor apos s books and correspondence and that in the case of debtor initiated insolvencies, national laws often required the debtor to produce a full list of creditors.

So, for example, the definition of assets of the debtor is included to explain the scope of the insolvency estate formed on commencement of the insolvency proceedings and thus the assets that will be affected by the commencement of those proceedings.

This rule may be helpful in those legal systems in which commencement of insolvency proceedings requires proof that the debtor is in fact insolvent.

(c) fair and efficient administration of cross border insolvencies that protects the interests of all creditors and other interested persons, including the debtor

A further suggestion was that another situation possibly to be covered in the article was where, after the conclusion of the insolvency proceeding in a foreign State, assets pertaining to the debtor emerged in the enacting State and the foreign creditors sought to seize those assets.

A foreign insolvency proceeding, in order to fall within the scope of the Model Provisions, needs to possess certain attributes. These include basis in insolvency related law of the originating State collective representation of creditors and control or supervision of the assets and affairs of the debtor by a court or another official body (art. 2(a)).

It was pointed out that, in practice, a request for the opening of a local insolvency proceeding might typically come into consideration at the initial stages of the foreign insolvency proceeding, often to secure control over the assets of the debtor.

For both borrowers and creditors, the risks and costs are enormous. The borrower is cut off from international markets, and essential imports can no longer be purchased, while large scale defaults threaten to plunge creditors into insolvency.

quot (1) Upon recognition of a foreign main proceeding, the courts of this State have jurisdiction to open a proceeding in this State against the debtor under insert names of laws of the enacting State relating to insolvency only if the debtor has an establishment or assets in this State , and the effects of those proceedings shall be restricted to the establishment or assets of the debtor situated in the territory of this State .

In response to that suggestion it was observed that in legal systems that recognized insolvency proceedings of natural persons, such as individual traders or merchants, it would sometimes be difficult to establish a clear distinction between the debtor s business and personal affairs, and that proceedings apparently falling in the latter category might well have influence on the debtor s assets and liabilities.

The project, initiated in close cooperation with the International Association of Insolvency Practitioners (INSOL), benefitted from suggestions and expert advice from practitioners from many countries such as administrators of insolvent debtors apos assets, attorneys, judges and officials concerned with insolvency matters.

(2) Recognition of a foreign insolvency proceeding is, for the purposes of initiating proceedings in the enacting State referred to in paragraph (1) and in the absence of evidence to the contrary, proof that the debtor is insolvent.

The prevailing view was that it would be preferable to restrict the commencement of insolvency proceedings in the enacting State to those cases in which the debtor had an establishment in the enacting State.

quot (c) fair and efficient administration of cross border insolvencies that protects the interests of all creditors and other interested persons, including the debtor