C. Except as provided in D , the insolvency law should provide that an asset of the estate acquired after the commencement of an insolvency proceeding is not subject to a security right created by the grantor before the commencement of the insolvency proceeding.

(46) The insolvency law should specify that, on commencement of insolvency proceedings add a, b, c, d, e

(31) The insolvency law of the State in which insolvency proceedings are commenced (lex fori concursus) should apply to all aspects of the commencement, conduct, administration and conclusion of those insolvency proceedings and their effects. These may include, for example

The insolvency law should provide that an asset of the estate acquired after the commencement of an insolvency proceeding with respect to the grantor is subject to a security right created by the grantor before the commencement of the insolvency proceeding to the extent the asset is proceeds (whether cash or non cash) of an encumbered asset which was an asset of the grantor before the commencement of the proceeding.

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.

(49) The insolvency law should specify that the measures applicable on commencement of insolvency proceedings remain effective throughout those proceedings until

(30) The law applicable to the validity and effectiveness of rights and claims existing at the time of the commencement of insolvency proceedings should be determined by the private international law rules of the State in which insolvency proceedings are commenced.

(65) The insolvency law should enable a security interest to be granted for repayment of post commencement finance, including a security interest on unencumbered assets, including after acquired assets, or a junior or lower priority security interest on already encumbered assets of the estate.

E. The insolvency law should provide that, if a security right was effective against third parties at the time of the commencement of insolvency proceedings, action may be taken after the commencement of the insolvency proceedings to continue, preserve or maintain the effectiveness against third parties of the security right to the extent and in the manner permitted under the secured transactions law.

laws of the enacting State relating to insolvency

enacting State relating to insolvency 137 146 29

(51) The insolvency law should specify that a secured creditor may request the court to grant relief from the measures applicable on commencement of insolvency proceedings on grounds that may include that

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

relating to insolvency after recognition of a foreign main proceeding

(2) As soon as insolvency proceedings are opened in the enacting State, and to the extent that notification of commencement of insolvency proceedings is required for creditors in the enacting State, the court administrator shall cause notification of the opening of the proceedings to be made also to creditors not resident, domiciled or with a registered office in the enacting State.

The phrase quot to commence ... insolvency proceedings in the enacting State quot was found to be inadequate, as in many legal systems the insolvency proceedings were only commenced by judicial decision.

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).

The law should provide that, notwithstanding the commencement of an insolvency proceeding, the creation, effectiveness against third parties, priority and enforcement of a security right are governed by the law that would be applicable in the absence of the insolvency proceeding.

provide that the foreign representative is entitled to commence an insolvency proceeding in the enacting State (if the conditions therefor are otherwise met) and that the foreign representative may participate in an insolvency proceeding in the enacting State (arts. 9 and 10)

For the purposes of this chapter, the term debtor as used in the recommendations taken from the Insolvency Guide should be read as referring to a person who meets the requirements for the commencement of insolvency proceedings (see Insolvency Guide, part two, chapter I, section A, paras. 1 11 and recommendation 8).

It was noted that national laws, in enumerating persons who may apply to commence an insolvency proceeding, often did not mention a representative of a foreign insolvency proceeding.

quot A foreign representative is entitled to request the opening of proceedings in this State under insert names of laws of the enacting State relating to insolvency if the conditions for opening such proceedings under the law of this State are met. quot

Where law other than the insolvency law does not include such time periods, the stay applicable on commencement would operate to prevent the security interest being made effective.

(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

Developments in insolvency law adoption of the UNCITRAL Model Law on Cross Border Insolvency

(b) The value of the encumbered asset is diminishing as a result of the commencement of insolvency proceedings and the secured creditor is not protected against that diminution of value and

See footnote to recommendation 46(b) of the Insolvency Guide, which provides that If law other than the insolvency law permits those security interests to be made effective within certain specified time periods, it is desirable that the insolvency law recognize those periods and permit the interest to be made effective where the commencement of insolvency proceedings occurs before expiry of the specified time period.

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.

quot (a) the receivables were assigned arose were earned by performance before the opening of the insolvency proceeding or attachment or

Treatment of assets acquired after commencement

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The stay does not apply to commencement of full insolvency proceedings in the United States, although those proceedings would be subject to the provisions on coordination and cooperation.

quot (b) opening of an insolvency proceeding is deemed to have taken place when the order opening the proceeding becomes effective, whether or not final subject to appeal and

(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.

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(66) The law should specify that a security interest over the assets of the estate to secure post commencement finance does not have priority ahead of any existing security interest over the same assets unless the insolvency representative obtains the agreement of the existing secured creditor(s) or follows the procedure in recommendation 67.

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.

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The Model Provisions provide an opportunity for the enacting State to include in its insolvency law a clear statement of the effect that recognition of a foreign proceeding would have on the jurisdiction of the courts in the enacting State to commence or continue insolvency proceedings.

It was explained that a court might appoint an interim representative prior to the final decision that opened the insolvency proceedings.

Article 9 answered those questions by ensuring that the foreign representative had standing for requesting the opening of an insolvency proceeding.

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