A UK-led group of insolvency experts is preparing to draft legislative guidelines that could lead to a United Nations model law on insolvency. It would be designed to make insolvency procedures in the UK and worldwide more efficient.
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The group is expected to meet in September to draft the guidelines, which are expected to be submitted for approval to the UN by the end of the year. The guidelines specify what the group of about 60 experts believes ‘a good modern insolvency law’ would include. It comes after intense global discussion.
According to UK insolvency expert Neil Cooper, the representative of international insolvency group INSOL, some guidelines are specific – such as the inclusion of proceedings that could make insolvencies faster. But others have to be broad, so that countries can integrate the guidelines in their own national law.
He said: ‘UK insolvency practitioners will benefit from greater certainty in international insolvencies as the laws develop. They will also help us in continuing to move towards worldwide harmonisation of insolvency laws.’
The proposals will go hand in hand with a model secure transactions law that will ensure the rights of lenders are upheld internationally in the event of insolvency.
Work on an international insolvency agreement began as early as July last year when representatives from 80 UN states met in New York.
The UN drafted guidelines on cross-border insolvencies in 1997. A review has been prompted in part by a reconfiguration in the sources of working capital. Five years ago, 75% of companies received their capital from clearing banks, compared with 45% now.
