This part of the paper is limited to describing the main features of the Model Law, highlighting issues of particular relevance to Australia's enactment of it. There are a number of other publications containing more detailed descriptions and analyses of the Model Law provisions.11
General approach of the Model Law
The Model Law reflects a universal approach to cross-border insolvency. It is based on the principle that the domestic courts of each home country should endeavour to cooperate with the courts of other countries in cross-border insolvency cases. It is generally accepted that adoption of such an approach is more likely to successfully address the problems of cross-border insolvencies than a territorial approach.
The Model Law is modest in its objectives. It does not attempt to impose substantive laws or rules for the choice of substantive laws. It is essentially procedural in nature - laying out a practical framework for administering cross-border insolvencies. It provides for judicial cooperation between States, rights of access for foreign insolvency administrators and recognition of foreign insolvency proceedings by participating States.
A key feature of the Model Law is that it is not based upon a principle of reciprocity between States. There is no condition or requirement that a foreign representative wishing to access facilities under the Model Law must have been appointed, or foreign proceedings commenced, under the law of a State which has itself enacted the Model Law. The underlying assumption is that some countries will, in enacting the Model Law without any precondition of reciprocity, set an example for others and, in this way, raise levels of international awareness and cooperation.
Main features of the Model Law
The Model Law comprises a Preamble, followed by 32 articles, which together take the form of model provisions intended to be enacted by participating States.
Objectives and key features
The Preamble states that:
'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
(e) Facilitation of the rescue of financially troubled businesses, thereby protecting investment and preserving employment.'
The remaining 32 articles:
- set out the conditions under which the person administering a foreign insolvency proceeding has access to the courts of the State that has enacted the Model Law (Chapter II);
- sets out the conditions for recognition of a foreign insolvency proceeding and for granting relief to the representative of such foreign proceeding (Chapter III);
- allow foreign creditors to participate in proceedings in the local jurisdiction (Articles 13-14);
- permit courts and insolvency administrators from different countries to cooperate more effectively (Chapter IV); and
- make provision for coordination of insolvency proceedings that are taking place concurrently in different States (Chapter V).
In summary, the Model Law covers the following procedural issues:
- inbound requests for recognition of a foreign insolvency proceeding;
- outbound requests for assistance from a foreign State in connection with a proceeding in the enacting State under its laws relating to insolvency;
- requests for coordination of insolvency proceedings taking place concurrently in a foreign State and the enacting State in respect of the same debtor; and
- participation by foreign creditors or other interested parties in proceedings occurring in the enacting State.
To constitute a 'foreign proceeding' in a foreign State, the proceeding must be a 'collective judicial or administrative proceeding', it must be 'pursuant to a law relating to insolvency', it must entail control or supervision of the assets and affairs of the debtor by a foreign court or other authority, and it must be for a 'purpose of reorganisation or liquidation'.
In the Australian Corporations Act context, that means the scope of the Model Law would extend to liquidations arising from insolvency, reconstructions and reorganisations under Part 5.1 and voluntary administrations under Part 5.3A. It would not extend to receiverships involving the private appointment of a controller. It would also not extend to a members' voluntary winding up or a winding up by a court on just and equitable grounds as such proceedings may not be insolvency related.
The types of debtor covered by the Model Law is discussed further in the next part.
Key issues for possible enactment of the Model Law in Australia
If Australia proceeds with enacting the Model Law, there are a number of issues that need to be resolved.
What form would the enactment take?
There would be legislative power under the Constitution to enact the legislation at the federal level through one or more of the insolvency, external affairs, and/or corporations powers.
There are essentially two options for incorporation of the Model Law into Australia's domestic law: it could be enacted as a 'stand alone' Act of Commonwealth Parliament, or it could be incorporated into the relevant existing laws on insolvency (the Corporations Act and/or the Bankruptcy Act).
New Zealand is proposing to enact through a separate Act. South Africa has already done likewise. By contrast, the United States proposes to include the Model Law as part of the Bankruptcy Code. However, in considering enactment of the UNCITRAL Model Law, the National Bankruptcy Review Commission said that:
'It is recommended that the law be adopted as a single section, with a few exceptions. The law is drafted as a coherent whole and will be more useful to the courts in that form. Furthermore, because it is hoped that other countries will follow the United States' lead in adopting it, our approval will be clearer and more demonstrable if it is all in one place in our law, rather than in bits and pieces.'12
Advantages of having a separate Act include that:
- it is more visible internationally (the point made by the United States National Bankruptcy Review Commission);
- it could be extended to personal insolvency contexts, if required (see below);
- as its language does not line up precisely with standard drafting of Commonwealth Acts it would not 'dovetail' easily with existing Acts;
Disadvantages include that:
- the whole of the law concerning corporate/personal insolvency would not be in the one place; and
- there may be more risk for argument about legislative intention and conflict of laws - for example, unintentional 'override' of domestic provisions by enacting a later law outside the existing framework.
Whatever form of enactment is adopted, relevant Bills would be subject to the requirements of the Corporations Agreement concerning consultation with, and approval of, the Ministerial Council for Corporations regarding potential effects on the operation of the national corporate regulation scheme.
It is proposed that the enactment of the UNCITRAL Model Law would be by separate enactment of the Commonwealth Parliament.
uld the scope of the Model Law cover insolvency of corporations and natural persons?
The focus of the Model Law is squarely on business debtors. The guide to enactment mentions that enacting States may wish to exclude from the scope of the cross-border provisions consumer debtors (or non-traders).
In Australia, there is no obvious legal barrier in terms of insolvency law applicable to traders and non-traders - rather, on the one hand, corporate insolvency is dealt with under the Corporations Act, while personal bankruptcy of natural persons is dealt with under the Bankruptcy Act.
Should that distinction be retained under the Model Law, so it only applies to corporate insolvency proceedings, or should it be extended to some (or all) personal bankruptcies also?
On one hand, applying the cross-border provisions only to corporate insolvencies could be justified on the basis that Australian businesses with an international dimension are very likely to involve corporations. Use of the provisions against Australian consumer debtors could be controversial, and Australia's legal framework does not contain obvious legal boundaries between consumer debtors and business debtors in the context of individual bankruptcy. Designing an appropriate interface between the Model Law and the Bankruptcy Act may involve some complexities.
On the other hand, it is arguable that failure to include personal bankruptcy within the scope of the provisions is undesirable because, as Australia has experienced, there are individuals that enter personal bankruptcy in the aftermath of corporate failures and the facilities provided by the Model Law to trace assets across jurisdictions would be very useful in those circumstances.
It is proposed that the Insolvency and Trustee Service Australia consider and make recommendations to the Government about the application of the Model Law to individual debtors in Australia. This review would be conducted with a view to applying the Model Law to insolvent corporations and, if appropriate, some or all types of individual debtors, at the same time.
What special categories of debtor should be excluded from the scope of the Model Law?
Article 1(2) of the Model Law envisages that entities such as banks or insurance companies that are subject to special insolvency arrangements under their respective statutory schemes may be excluded by enacting States from the application of the Model Law. It is recognised that the peculiar policy considerations applying to the insolvency of those entities should not be disturbed by operation of the Model Law.
As there are special insolvency arrangements for authorised deposit-taking institutions and insurance companies in the Banking Act, the Insurance Act and the Life Insurance Act, it would be appropriate to exclude institutions regulated by these Acts.
There may also be special categories of entity under State and Territory law that are given special treatment in cases of insolvency, such as corporations whose business involves the provision of essential services. These categories of debtor may also be excluded.
It is proposed to exclude corporate entities that are currently subject to special insolvency regimes at the Commonwealth level (including financial institutions) from the scope of the Model Law. Views of States and Territories will be sought on exclusion of further types of entities under special insolvency frameworks.
Should the current cross-border framework in the Corporations Act be repealed or retained to operate in parallel with the Model Law?
The Corporations Act currently provides alternative procedures for winding up an insolvent foreign company which is registered as a foreign company in Australia or which carries on business in Australia: under section 601CL and Part 5.7. The Corporations Act also gives recognition to the operation of principles of comity in international insolvency (Division 9, Part 5.6). The question arises as to how these various provisions should continue to operate vis-à-vis the Model Law.
Section 601CL: Winding up a registered foreign company
The Corporations Act provides that where a registered foreign company commences to be wound up or is dissolved or deregistered in its place of origin, the local agent of the company must lodge notice of the fact with the Australian Securities and Investments Commission and the Australian court must, on application by the foreign liquidator of the company, appoint an Australian liquidator of the foreign company: subsection 601CL(14).
The Model Law addresses the typical circumstances of a winding up of a registered foreign company and expands on the framework set out in section 601CL. It is arguable that subsections 601CL(14)-(16) are no longer required as the Model Law will cover the situations to which section 601CL applies.
However, a cross-border insolvency law should address the full range of circumstances that arise in an insolvency context, including novel or atypical situations that may not fall within the intended scope of the Model Law, or where the Model Law is not invoked (for example, where no foreign representative is appointed or authorised to act).
Section 601CL expressly addresses one such situation, that is where a registered foreign company is dissolved or deregistered in its place of origin. The provision imposes obligations on the foreign company's local agent to take steps to have the company's affairs in Australia dealt with. The Model Law does not impose such obligations - it merely facilitates action. It may be advantageous, therefore, to retain the framework in subsections 601CL(14)-(16) for such situations.
A possible disadvantage in retaining what is effectively an alternative means of proceeding in a cross-border insolvency is that it may detract from the operation of the Model Law. Retaining a procedure under section 601CL in addition to the Model Law may serve to complicate cross-border insolvency law. However, this may be overcome by clarifying the scope of application of subsections 601CL(14)-(16) and including measures to ensure that it will not operate in derogation of the Model Law.
It is proposed that subsections 601CL(14)-(16) of the Corporations Act concerning the cessation of business of a foreign company be retained to address circumstances that fall outside the scope of the Model Law or where the Model Law is not invoked. It should be made clear that section 601CL shall not operate in derogation of the Model Law where the Model Law is invoked.
Part 5.7: Winding up bodies other than companies
Part 5.7 of the Corporations Act authorises a court to wind up a Part 5.7 body, a term which includes a foreign company that is registered under Division 2 of Part 5B.2, as well as a foreign company that is not registered under that Division but 'carries on business in this jurisdiction and outside its place of origin'. It provides an alternative mechanism for winding up a foreign company which is not available or is not pursued under section 601CL. However, it overlaps in part with section 601CL as it may be utilised where the foreign company is in the process of being wound up or has been dissolved, deregistered or otherwise ceased to exist as a body corporate under the laws of the place of its incorporation.
Part 5.7 envisages a local winding up of the foreign company in accordance with the normal winding up provisions of C
hapter 5 (Parts 5.4, 5.4A and 5.4B), with the Australian liquidator redeeming the local assets and paying the creditors in accordance with the priority provisions of the Corporations Act. A Part 5.7 body may be wound up under Chapter 5 with such adaptations as are necessary in addition to the adaptations specified in section 583. Part 5.7 establishes a separate insolvency administration in Australia and does not give recognition to any foreign insolvency proceeding.
It is arguable that Part 5.7 should be retained as a feature of Australia's insolvency law as it is necessary to provide for the administration of a foreign company where the Model Law cannot or has not been invoked, for example, where no foreign proceeding has been commenced or the foreign company has been dissolved in its place of origin. Further, retaining Part 5.7 allows creditors, whether Australian or foreign, the option of having an Australian liquidator appointed to a foreign company with the powers, procedures and avenues available to a liquidator in a winding up under Chapter 5.
The drafting of Part 5.7 has been criticised.13 In Kintsu Co Ltd v The Peninsular Group Ltd, Santow J noted that Part 5.7 has remained essentially unaltered notwithstanding significant changes to Part 5.4 made by the Corporate Law Reform Act 1992. Part 5.7 could be reviewed to ensure that its provisions are consistent with the Model Law and the remaining parts of Chapter 5.
It is proposed that Part 5.7 of the Corporations Act - Winding Up Bodies other than Companies - be retained, but with such changes as are necessary to ensure it operates harmoniously with the proposed Model Law and consistently with the remainder of Chapter 5 of the Corporations Act.
Division 9 of Part 5.6: Cooperation between Courts
Division 9 of Part 5.6 of the Corporations Act (comprising sections 580 and 581), sets out a statutory scheme for cooperation between Australian and foreign courts in external administration matters. Australian courts are required to act in aid of, and be auxiliary to, the courts of prescribed countries that have jurisdiction in external administration matters (paragraph 581(2)(a)) and may act in aid of other countries (paragraph 581(2)(b)). Prescribed countries are the United Kingdom, the United States, Singapore, New Zealand, Malaysia, Canada, Papua New Guinea, Switzerland and Jersey.14
Subsection 581(3) also provides that where a letter of request from a foreign country requesting aid in an external administration matter is filed with an Australian court the court may exercise the powers that it would have had if the matter had arisen within its own jurisdiction. The letter of request will be obtained by the foreign insolvency administrator making an application to the foreign court.
Subsection 581(4) permits an Australian court to request a court of an external Territory, or of a country other than Australia, that has jurisdiction in external administration matters to act in aid of, and be auxiliary to, it in an external administration matter.
Articles 25 to 27 of the Model Law would provide a more comprehensive set of principles and practices for formal cooperation and communication between the courts of different countries. They not only authorise cooperation and direct communication between local courts and foreign courts or foreign representatives but also mandate it. Chapter V of the Model Law complements these provisions by means of specific directives as to the procedures to be followed in cases where there are concurrent proceedings under the laws of the different States, and addresses the rights of creditors participating in more than one proceeding. Article 7 recognises that additional assistance may be provided under other laws of an enacting State and seeks to preserve the efficacy of those laws.
However, retention of the existing provisions could be advantageous because they have been a long standing feature of insolvency/bankruptcy and, in the view of one commentator, they have operated in an effective way and would add extra avenues for recognition and cooperation.15
It is proposed that Division 9 of Part 5.6 be retained in relation to external administration matters arising under the Corporations Act.
Implementation of the Model Law - specific proposals
Scope of the Model Law
Article 1 of the Model Law outlines the intended scope of its application. It is intended to apply:
- where assistance is sought locally by a 'foreign court' or a 'foreign representative' in connection with a 'foreign proceeding';
- where assistance is sought in a foreign State in connection with a proceeding under the enacting State's insolvency laws;
- where concurrent insolvency proceedings are taking place in the enacting State and in a foreign State;
- where creditors or other interested persons in a foreign State have an interest in initiating a local proceeding.
'Foreign proceeding' is defined by Article 2(a) as:
'a collective judicial or administrative proceeding, including a proceeding opened on an interim basis, pursuant to a law relating to insolvency in a foreign State in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation'.
Under Article 9, a 'foreign representative' is entitled to apply directly and immediately to a court in the enacting State to apply for relief and assistance in relation to a foreign proceeding, including interim relief pending recognition and/or to seek recognition of a 'foreign proceeding'. A 'foreign representative' is defined by Article 2(e) as:
'a person or body, including a person or body appointed on an interim basis, authorised in a foreign proceeding to administer the reorganisation or the liquidation of the debtor's assets or affairs or to act as a representative of the foreign proceeding'.
The right to apply for relief and assistance is not subject to any precondition that the foreign proceeding must first have been accorded formal recognition. Consequently, prompt action can be taken to protect the debtor's assets from local acts of individual enforcement without the customary delay that ordinarily follows from the need to obtain an order of recognition and execution from a local court before anything can be done under the law of that State. The Model Law will not override the separate legal entity concept. In the case of an entity such as a subsidiary of a foreign company, the Model Law will apply to the subsidiary in its capacity as a separate legal entity.
Article 11 confers on a 'foreign representative' the further right to apply to commence a proceeding under the local insolvency law of the enacting State if the conditions for commencing such a proceeding are otherwise met. Such a right may help to 'collectivise' matters affecting the debtor's assets in the enacting State and put a halt to local actions by individual creditors directed against particular assets. This right is not dependent on a requirement that the foreign proceeding must first have been accorded formal recognition.
The Model Law aims to ensure the equal treatment of foreign and local creditors. Article 13 provides that foreign creditors have the same rights to commence and participate in a proceeding under the laws of the enacting State as local creditors. It also permits an enacting State to specify h
ow claims of foreign creditors are to be ranked. Article 14 ensures that foreign creditors are notified of proceedings equally with local creditors. In relation to notification of foreign creditors it may be appropriate to permit a court to allow for some other form of notification (such as, by electronic means or via a web site) where a court considers it just to do so.
Subject to the proposal concerning Article 13 below, it is proposed that Chapters I and II of the Model Law (Articles 1-14) be adopted essentially as written.
Ranking of foreign and domestic creditors
The Model Law is primarily concerned with the foreign representative's rights of access to courts. However, Chapter II (Articles 9-14) also contains some provisions which confer rights of access upon foreign creditors. Under Article 13(1), foreign creditors are to have the same rights as local creditors regarding the commencement of and participation in an insolvency proceeding.
Article 13(2) provides that Article 13(1) does not affect the ranking of claims in an insolvency proceeding under local law. An optional version of Article 13(2) under the Model Law expressly refers to the treatment under local law of foreign revenue claims. Under the current Australian common law, claims on behalf of a foreign State to recover revenue claims due under its laws are not provable in insolvency proceedings.
In relation to Article 13 it is proposed to adopt the optional provision in Article 13(2) that provides that the Model Law does not affect the exclusion of revenue claims by a foreign State from insolvency proceedings under Australian law.
Recognition of the foreign proceeding
Notwithstanding the absence of any precondition that recognition of the foreign proceeding must first be granted, the substantive benefits available under the Model Law flow from recognition of the foreign proceeding. The criteria for such recognition contained in Articles 15 to 17 seek to simplify the process of recognition. The Model Law provides for two categories of recognition: the foreign proceeding may qualify as a 'main' or as a 'non-main' proceeding according to the circumstances under which it has been opened under the law of the foreign State. If it is taking place in the State where the debtor has the centre of its main interests, it is recognised as a 'foreign main proceeding': Article 17(2)(a). If the debtor has an establishment (within the meaning of Article 2(f)) in the foreign country where the proceeding is pending it is recognised as a 'foreign non-main proceeding' under Article 17(2)(b).
Articles 2(b) and 2(c) define what is meant by a 'foreign main proceeding' and a 'foreign non-main proceeding'. A 'foreign main proceeding' means 'a proceeding taking place in the State where the debtor has the centre of its main interests'. A 'foreign non-main proceeding' means 'a proceeding taking place in the State where the debtor has an establishment within the meaning of subparagraph (g) of this Article'. Under Article 2(f) 'establishment' means 'any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services'. There would be no recognition of an insolvency proceeding commenced in a foreign State which is not the debtor's centre of main interests or which does not have a place of operations qualifying as an 'establishment'.
'Centre of main interests' is not defined. It is therefore open to a court to elaborate its meaning. A definition would be likely to prove over-prescriptive and limit a court's ability to react to changing business practices. Article 16(3) supplies a rebuttable presumption that the debtor's registered office is presumed to be the 'centre of main interests'. Under Article 15(1), a foreign representative may apply to a court of the enacting State for recognition of the foreign proceeding in which he or she has been appointed. Articles 15(2) to (4) set out formal and documentary requirements in support of an application. Article 17(1) sets out the grounds on which a decision to recognise a foreign proceeding is to be recognised. The permissible categories of recognition - 'main' or 'non-main' proceeding - are confirmed by Article 17(2). Article 17(3) requires a court to decide upon an application for recognition at the earliest possible time. Under Article 17(4) recognition may be modified or terminated in the light of altered circumstances or further information becoming available to the court. Article 18 requires foreign representatives to inform the court promptly of changes in the status of the recognised proceeding or other foreign proceeding regarding the debtor or changes in the status of the foreign representative's appointment.
It is proposed that Articles 15 to 18 of the Model Law relating to recognition of a foreign proceeding be adopted as written.
Relief that may be granted
Article 19 permits a court of the enacting State to grant relief of a provisional nature under the law of the enacting State from the time of the application for recognition until the application is determined where relief is urgently needed to protect assets or the interests of creditors. Such relief is subject to the discretion of the court but a non-exhaustive list of the kind of relief that may be granted is set out in Article 19. This includes a stay of execution against the assets of the debtor, and entrusting the administration of assets of the debtor to the foreign representative or a person designated by the court.
Articles 20 and 21 detail the main effects and benefits of recognition. Article 20 applies only to cases where a foreign proceeding is recognised as a foreign main proceeding. The effects of recognition are automatic and are not dependent on the exercise of any judicial discretion. On recognition of a foreign main proceeding the following occurs:
- the commencement or continuation of individual actions or proceedings concerning the debtor's assets, rights, obligations or liabilities is stayed;
- any type of execution against the debtor's assets is stayed;
- the debtor's rights to transfer, encumber or otherwise dispose of any assets is suspended.
Article 20(2) allows an enacting State to specify exceptions to the automatic stay and suspension under Article 20(1). Such exceptions may typically include the right of a secured creditor to enforce a security over property of the debtor, or specific relief from the effects of the stay granted by a court.
Article 21 applies where a foreign proceeding is recognised either as a main or as a non-main proceeding. It confers a general discretionary power upon the court of the enacting State to grant 'any appropriate relief' including the relief specified in Articles 21(1)(a) to (g).
Under Article 21(2), a foreign representative may request the making of an order turning over the assets by the court of the enacting State where it is satisfied that the interests of creditors in the enacting State are adequately protected. Under Article 22(1) the court is allowed to satisfy itself as a precondition to exercising its powers to grant relief that the interests of the creditors and other interested persons including the debtor are adequately protected. Under Article 22(2) the court may attach conditions to relief granted under Articles 19 or 21.
Under Article 23, recognition of a foreign proceeding enables the foreign representative to initiate the types of actions which are av
ailable under the law of the enacting State to enable the office holder in insolvency proceedings to avoid acts detrimental to the interests of creditors generally.
Under Article 24, upon recognition of a foreign proceeding the foreign representative acquires standing to intervene in any proceedings in the enacting State to which the debtor is a party. Article 12 allows the foreign representative to 'participate' in a proceeding regarding the debtor under the insolvency laws of the enacting State. The right of 'participation' is a limited one, merely enabling the foreign representative to make petitions, requests or submissions.
It is proposed that Articles 19 to 24 of the Model Law concerning the consequences of recognition of a foreign insolvency proceeding be adopted as written. For the purposes of Article 20(2), it is proposed that exceptions will be the right of a secured creditor to enforce a security over property of the debtor, or specific relief from the effects of the stay granted by a court. For the purposes of Article 23(1), it is proposed to specify the voidable transactions provisions in Division 2 of Part 5.7B.
Cooperation between Australian and foreign courts in external administration matters
Chapter IV of the Model Law aims to establish a favourable climate for the resolution of cross-border insolvency issues. The provisions are designed to perform a number of key functions, most importantly to provide for courts in the enacting State to:
- make outgoing requests for assistance; and
- receive incoming requests for assistance.
Although jurisdictions like Australia and the United Kingdom presently have this capacity, these provisions will overcome a legislative gap in many jurisdictions which will allow cooperation, where before it was impossible.
Article 25 directs the courts of the enacting State to cooperate with foreign courts and foreign representatives through the principle of direct communication between the courts of the respective States, the courts of the enacting State and any foreign representative. Article 26 directs foreign representatives similarly.
Under Article 27, cooperation can be implemented by any appropriate means. Those means include: appointment of a person or body to act at the direction of the court; communication of information by any means considered appropriate by the court; coordination of the administration and supervision of the debtor's assets and affairs; approval or implementation by courts of agreements concerning the coordination of proceedings; and coordination of concurrent proceedings regarding the same debtor.
It is proposed that Chapter IV of the Model Law (Articles 25-27) - Cooperation with Foreign Courts and Foreign Representatives - be adopted as written.
Articles 28 to 32 of the Model Law complement provisions of Chapter IV concerning cooperation between foreign courts and representatives in setting out mandatory requirements regarding the procedures to be followed in the event that there are concurrent proceedings under the laws of different States.
Article 28 permits local proceedings to be commenced if the debtor has assets within the jurisdiction even if a local court has recognised a foreign main proceeding. This limitation has been criticised on the ground that it may prevent a local winding up which would otherwise be beneficial.16 Some jurisdictions have chosen to exercise their jurisdiction to wind up a foreign company notwithstanding the absence of local corporate assets. The Guide to Enactment of the Model Law recognises that the mere presence of assets within the jurisdiction is not sufficient to allow an insolvency proceeding to be commenced in some jurisdictions. However, the Model Law favoured the adoption of a broad ground for commencing insolvency proceedings after a foreign main proceeding has been recognised.
Under Article 31 recognition of a foreign proceeding as a main proceeding gives rise to a rebuttable presumption of the debtor's insolvency for the purpose of commencing an insolvency proceeding under the law of the enacting State.
Article 32 adopts the principle of hotchpot. Professor Fletcher outlines the essence of the rule as follows: 'A creditor who has already received partial satisfaction of his unsecured balance of claim against the debtor by participating in a process of distribution taking place in another jurisdiction, is not allowed to participate in any other process without fully accounting for what has already been received in respect of the claim for which proof is lodged. Then, after due allowance has been made for those amounts, the creditor is not entitled to be paid any share of the current distribution so long as the payment to the other creditors whose claims are ranked in the same class is proportionately less than the payment the creditor has already received.'17
It is proposed that Chapter V of the Model Law (Articles 28-32) - Concurrent Proceedings - be adopted essentially as written.
The UNCITRAL Model Law is intended to provide States with a modern, harmonised and fair framework for addressing more effectively the problems that arise in cross-border insolvencies. However, it has been suggested that there may be scope to develop a more detailed framework that would result in further procedural streamlining in a subset of cases. For example, States with a large volume of cross-border activity between them, and with similar insolvency frameworks, may wish to agree that specified events under insolvency law in the foreign State have automatic consequences in the enacting State without the need for court involvement that would otherwise be necessary under the Model Law.
Possible approaches include agreements between participating countries about enhancements to the procedures provided by the Model Law, more detailed protocols between countries as to the handling aspects of cross-border insolvencies (including effects in the enacting State without the need for court intervention), or other arrangements for tailored cooperation between countries.18
It is proposed that there be included in the provisions adopting the Model Law a facility to provide (by way of regulation or other suitable instrument) for streamlining and tailoring the Model Law as it applies to particular types of proceedings or proceedings involving a specific State.
11 The report of the New Zealand Law Commission cited above, together with the articles cited elsewhere in this paper, are some examples. See also Ian F. Fletcher, 'Bridges to the Future - Building Tomorrow's Solutions for International Insolvency Problems',  Company Financial and Insolvency Law Review 161.
s Regulation 5.6.74. Countries are prescribed where analogous provisions are a feature of their own laws. See, for example, section 304, Bankruptcy Code (US); section 426, Insolvency Act (UK).
http://www.uncitral.org/en-index.htm and the Draft Principles of Co-Operation in Transnational Insolvency Cases Among Members of the North American Free Trade Agreement prepared by the American Law Institute http://iiiglobal.org/international/projects.html).