Members of the Working Group and observers to the session deliberated the development of the following projects: (1) asset tracing and recovery in insolvency proceedings, and (2) applicable law in insolvency proceedings.
Asset tracing and recovery in insolvency proceedings
The session started with a reading of the first draft of a descriptive, informational and educational draft text on civil asset tracing and recovery in insolvency proceedings (ATR). The text provides an extensive inventory of ATR tools found in the laws relating to insolvency of the surveyed jurisdictions and in UNCITRAL insolvency texts. Submissions by Poland, the HccH and UNIDROIT pointed at further developments of ATR tools. The ability of criminal law tools to achieve similar effects in cases of (alleged) fraud or other criminal offences is known to the Working Group but not covered in much detail in this document.
Being non-prescriptive, the text aims at increasing awareness of ATR tools and related matters among policy makers, legislators, judges and practitioners. States may find the text informative when they assess availability, accessibility, effectiveness and efficiency of their domestic ATR framework. Judges and practitioners may find the text helpful with reference to ATR tools used in other jurisdictions, including legal requirements for their use, issues that arise from their use and possible solutions for addressing them.
The structure of the first draft does not yet provide a clear idea of the structure in which ATR tools are described, as well as its scope. A Canadian proposal offering a more principle-based approach was welcomed but not adopted (yet). Further discussions will also regard to what extent digital aspects of ATR are to be included. Divergent views remained as to the idea of developing an “ATR toolkit” to inform countries. Some delegations prefer the text to be informative, not prescriptive. It remains to be seen whether this remains a limiting factor in future work on ATR.
Applicable law in insolvency proceedings
The second topic considered remains proposals regarding the law applicable in insolvency proceedings. The project on applicable law in insolvency proceedings has already reached the stage of draft legislative provisions with accompanying commentary. These provisions included a definition of the scope and content of the issues covered by insolvency law – the lex fori concursus.
The Working Group discussed whether the draft texts should also comprise the governing law in concurrent and enterprise group proceedings, on which the Working Group did not settle yet.
The discussion focussed also on a selected number of issues as regards the scope of the lex fori concursus and exceptions to its application. In this session, the Working Group deliberated on the law applicable to avoidance claims, the treatment of rights in rem and rights in digital assets, in particular for secured creditors, and of payment and settlement systems in the financial sector as well as the effects of insolvency proceedings on pending litigation and arbitration proceedings. On all subjects, the Working Group requested the secretariat to perform additional research on options that were discussed, including holding meetings with experts and cooperation and coordination with other organisations conducting work related to applicable law.
You can read more about the ELI Rescue of Business in Insolvency Law project here.
