UNCITRAL Model Law on Cross-Border Insolvency

The UNCITRAL Model Law on Cross-Border Insolvency was a model law issued by the secretariat of UNCITRAL on 30 May 1997 to assist states in relation to the regulation of corporate insolvency and financial distress involving companies which have assets or creditors in more than one state.

[2] The to the Model Law provides: The purpose of this Law is to provide effective mechanisms for dealing with cases of cross-border insolvency so as to promote the objectives of: (a) Cooperation between the courts and other competent authorities of this State and foreign States involved in cases of cross-border insolvency; (b) Greater legal certainty for trade and investment; (c) Fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested persons, including the debtor; (d) Protection and maximization of the value of the debtor's assets; and

As a result, it had become difficult to protect the residual value of the assets of financially troubled businesses, and impeded corporate rescue culture for cross-border entities.

[3] The working assumption is that any international business will nonetheless have a centre of main interest, where the principal insolvency should take place.

The Model Law also seeks to limit insolvency regimes which favour domestic creditors over foreign ones.