Impact of insolvency on conflict of laws rules

We have one for processing economically bankrupt states.

(72) The insolvency law should specify that the insolvency representative may decide to continue the performance of a contract of which it is aware where continuation would be beneficial to the insolvency estate. The insolvency law should specify that

(35) The insolvency law should specify that the estate should include

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

While there was support for the suggestion, the concern was expressed that the rule suggested might interfere with national insolvency rules or international conventions dealing with matters of insolvency (e.g., the European Union Convention on Insolvency Proceedings) that involved public policy considerations.

The insolvency law should specify that, if a security right is entitled to priority under law other than the insolvency law, that priority continues unimpaired in insolvency proceedings except if, pursuant to the insolvency law, another claim is given priority.

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.

This recommendation does not affect the application of any insolvency rules, including any rules relating to avoidance, priority, or enforcement of security rights.

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.

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

This recommendation does not affect the application of any insolvency rules, including any rules relating to avoidance, priority or enforcement of security rights.

Note to the Working Group The commentary will note that the Insolvency Guide commentary provides the same rule for all assets, see paragraph 66, part two, chapter II, section B.

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 rule set forth in article 23, sometimes referred to as the quot hotchpot quot rule, is widely viewed as a useful safeguard in a legal regime for coordination and cooperation in the administration of cross border insolvency proceedings.

Note to the Working Group See recommendation I in the recommendations of this Guide on Insolvency The insolvency law should specify that, if a security right is entitled to priority under law other than the insolvency law, that priority continues unimpaired in insolvency proceedings except if, pursuant to the insolvency law, another claim is given priority.

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.

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.

Well, I'll get it tomorrow or bust a gut.

You're breaking up the game. What do you want?

J. The insolvency law should provide that, if a holder of a security right in an asset of the insolvency estate has subordinated its priority unilaterally or by agreement in favour of any existing or future competing claimant, such subordination is binding in insolvency proceedings with respect to the grantor.

(4) The insolvency law should specify that where a security interest is effective and enforceable under law other than the insolvency law, it will be recognized in insolvency proceedings as effective and enforceable.

In response to those views, it was observed that the purpose of paragraph (2) was not to introduce new substantive rules of law in the enacting State, but rather to make it possible for the court to open insolvency proceedings on the basis of a presumption of insolvency, without having first to establish that the debtor was insolvent, where such requirement existed.

Argentina just went through it, broke a lot of rules.

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.

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

She has merely broken a rigid and timehonored... code of our society a code so severe that whoever breaks it is hounded from our midst... as unfit to live with.

(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

The modalities could draw on the principles laid out in national bankruptcy procedures.

(71) The insolvency law should specify the contracts that are exempt from the operation of recommendation 70, such as financial contracts, or subject to special rules, such as labour contracts.

Note to the Working Group See recommendation 85 (see WP.21 Add.1), which sets forth the general rule on subordination applicable in the absence of insolvency proceedings.

(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.

Well, it sort of turns out that we need rules to help us break the old rules and norms that otherwise we might bring to the creative process.

The Insolvency Sector Assessment uses a comprehensive guideline, developed as a composite of the leading international standards in insolvency, to measure a given country's legislative compliance with these standards.

(88) The insolvency law should specify that notwithstanding that a security interest is effective and enforceable under law other than the insolvency law, it may be subject to the avoidance provisions of insolvency law on the same grounds as other transactions.

The commentary will also explain that this recommendation refers to insolvency rules without regard to whether they are characterized for any purpose as procedural, substantive, jurisdictional or otherwise.

(e) Provide for timely, efficient and impartial resolution of insolvency

I was broke, facing bankruptcy.

(80) The insolvency law should specify that the insolvency representative may accept or require performance from the counterparty to a contract prior to continuation or rejection of the contract.

Another reason in favour of retaining paragraph (5) or (6) was that insolvency rules of the forum might be applied, even if the applicable law was the law of the country in which the assignor had its place of business, vesting the insolvency administrator with rights that might not be available under the applicable law (e.g., to reorganize the assets and affairs of the insolvent assignor).

The other three, the International Statement of United States Bankruptcy Law, International Statement of Canadian Bankruptcy Law, and International Statement of Mexican Bankruptcy Law describe the bankruptcy laws of the three NAFTA States, and set out principles governing multinational insolvency cases which involve assets located in one or more of the three NAFTA countries.

The insolvency law should provide that, in the case of the insolvency proceedings of the grantor, the acquisition financier has the rights and duties of a holder of a security right.

relating to insolvency after recognition of a foreign main proceeding

(62) The insolvency law should permit the insolvency representative to determine the treatment of any assets that are burdensome to the estate.

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.