Document Type

Article

Disciplines

International Law

Abstract

Insolvency regimes differ widely around the world, some can be described as highly developed and sophisticated, based as they are on many hundreds of years of experience, constantly being updated and refined in the light of constant usage and practice. The systems of countries such as the United States, the United Kingdom, Canada and various European countries would spring to mind as examples. Equally, there are many jurisdictions where the evolution of insolvency systems is much less advanced, ranging down to those where they are largely ineffective, whether through lack of modem commerciality, or because implementation or predictability are lacking, with those needing recourse to such laws lacking faith in either their usage or reliability.

The development of out-of-court restructurings, which has become an integral part of the "rescue culture," has been equally as patchy. Such practices as the "London Approach" which evolved in the U.K., have proved highly successful, and quite similar practices have evolved in countries such as the U.S. and Canada, albeit against differing legal backgrounds. However, as the South East Asian crisis proved, there are many countries in the world where the whole concept of informal or out-of-court restructuring is new-there is no background at all-and endeavours to achieve successful restructurings even when based on procedures and experience in the U.K. and the U.S. have, by and large, proved unsuccessful.

It was against this background in 1999 at a symposium in Washington, that the World Bank launched its initiative to develop principles and guidelines for improving insolvency procedures around the world. Whilst this was primarily aimed at legal systems and formal insolvency procedures, it also made reference to out-of-court or informal Principles, expressing the desire to see the latter considered and encouraged alongside the development of the formal laws. A number of bodies including Insol were invited to participate in this project. Of particular interest to Insol was the out-of-court restructuring aspect, as this matched well with work already being undertaken by the Insol Lenders Group, who had been endeavouring to produce a set of global protocols which could be used as a common basis for informal rescues around the world.

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