Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Printer Friendly Version
Alan Bennett, partner at Ashfords LLP, assesses the legal effect of the Protocol (the protocol) published by the International Association of Restructuring, Insolvency & Bankruptcy Professionals (INSOL) for international recognition of insolvency proceedings affecting natural persons, its main proposals, and how it interacts with other insolvency provisions.
INSOL has published a new ‘protocol for international recognition of insolvency proceedings affecting natural persons’. The protocol was developed by INSOL Small Practice Issues Committee. INSOL expects the protocol will be useful for policymakers and legislators reviewing the long-term development of consumer insolvency legislation in their respective countries. The protocol can be viewed here.
The protocol consists of a series of proposals which serve as recommendations and broad principles for jurisdictions around the world that are looking to revise either their personal insolvency regime as a whole, or specifically cross-border elements of that regime. It therefore has no legal effect, and does not delve into specific mechanics. Rather it states anticipated outcomes in various aspects of cross-border personal insolvency, and allows individual jurisdictions to establish the mechanisms required to achieve that outcome.
It should be noted that many of the recommendations are based on existing law in various jurisdictions (including England and Wales). The protocol is an attempt to standardise best practice across jurisdictions. It is envisaged that this will provide clarity to debtors and creditors alike, and reduce costs and administration for all parties.
The protocol is aimed at legislators as a framework to follow in revising the personal insolvency regime in their respective jurisdiction. It also provides guidance to national trade bodies (like R3 Association of Business Recovery Professionals in the UK) that may be assisting legislators. It is not aimed at individual insolvency practitioners, although it will be of interest to them if more jurisdictions apply the content.
The UNCITRAL model law on insolvency functions as the most influential cross-border insolvency law. However, it does have a number of limitations, particularly with regard to low-value personal insolvency as costs can be prohibitive. With increasing numbers of cross-border personal insolvencies, the protocol is intended to refine and complement the Model Law in these specific circumstances through the development of each individual jurisdiction’s regime.
The Recast Regulation on Insolvency is primarily focussed on cross-border recognition of insolvency procedures within the European Union. With a similar aim, the protocol should also dovetail with the Recast Regulation on Insolvency for proceedings in Member States, and in fact has very similar effect.
The proposals are extensive, but the underlying theme is to reduce costs and administration by enabling recognition across borders. The individual proposals reflect this, from international recognition of insolvency proceedings between jurisdictions to allowing debtors in a different jurisdiction to vote and participate where the creditor has entered proceedings elsewhere.
The protocol also proposes which law should determine which claims, with the general focus being the lex concursus (or law of the court in which proceedings have been brought) unless there is security, in which case the lex sitae (law where the asset is situated) would apply.
The proposals are:
Currently, this has a minimal effect in practice. However, as further jurisdictions subscribe to the protocol and reform their insolvency regimes accordingly it should significantly assist IPs in the future in these situations. In light of the increase of multi-jurisdictional personal insolvency, this will be welcomed in the long term, especially as it can only be thought that the number of these cases will rise in the future.
Interviewed by Susan Ghaiwal
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
If you are a LexisPSL Subscriber, click the link below for further information:
Recast Regulation—personal insolvency and COMI
Recast Regulation—main, secondary and territorial proceedings
When does UNCITRAL (implemented by the Cross-Border Insolvency Regulations) apply and what are the effects?
Not a subscriber? Find out more about how LexisPSL can help you and click here for a free trial of LexisPSL Restructuring and Insolvency.First published on LexisPSL Restructuring and Insolvency
0330 161 1234