A united front
Gordon Stewart is president of INSOL International (2011-2013), and a partner and head of the global restructuring group at Allen & Overy in London. He has also served as INSOL vice-president, sat on its board, and acted as the first lawyer president of the Association of Business Recovery Professionals (R3).
What role is INSOL playing in protecting international insolvency frame- works from the long-term challenges that may be posed by the current absence of cross-border insolvency regimes in major emerging economies? This is not an emerging markets issue, per se. If you look across Europe you’ll find hard- ly any countries have adopted the UNCITRAL Model Law on Cross-Border Insolvency. That’s disappointing to see. Within the EU we have the European Insolvency Regulation but the world is much, much more than Europe. In truth, it’s a strange miscellany of countries that have adopted UNCITRAL.
If all the mature economies had it, it would be rather easier to persuade the BRIC [Brazil, Russia, India, China] countries that there are international standards they ought to meet. Indeed, as part of its involvement in the Professional Services Taskforce (PSFT) report-
ing to the G20, INSOL has recommended that the G20 throw their weight behind the adoption of the Model Law. I do think that there is a widespread failure to grasp how important insolvency is.
Indeed, I believe insolvency and restructuring professionals should more actively promote the importance of getting national insolvency proceedings right. ‘Lack of legislative time’ is too easy an answer for governments. Where a company gets into difficulty, the business, if it is still intact, is either in the
“ I was intrigued by
the use in the General Motors and Chrysler cases of sales under Section 363 of the Code
” 008
hands of the unlucky, the incompetent or the fraudulent. If, of course, it’s the latter two the business should be transferred to someone new who can make better use of it. But otherwise, there should be a rescue regime in place to give the unlucky a second
chance. And countries should have laws that enable that to happen, while preserving value and keeping intact the business and its employment. National liquidation laws are equally important. Think how much money was tied up
in Lehman Brothers and MF Global; you need good systems to get that money back out to the creditors so that it can be invested. Chapter 11 in the US and administration in the UK came out of those cases pretty well. People make quite a fuss about forum shopping. It is presented as a bad thing. But I
believe if you have a majority group of creditors who have put together a fair restructur- ing with the debtor, they should be capable of implementing that against the will of the minority. Certainly, provided the deal is fair, the majority shouldn’t be held to ransom by minority views. If you are in a jurisdiction that doesn’t enable you to do that, it seems silly not to put
yourself in a jurisdiction where you are capable of delivering a deal. I see it as a market- place for systems of law and courts. People will go where the services are provided. The
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