Cross Border Insolvency Case Study

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Introduction
The terms ‘international insolvency’ and ‘cross-border insolvency’ have no designate meaning but are commonly taken to be interchangeable and to refer to insolvencies which derives from cross-border trading or which include the application, or possible application, of the insolvency laws of two or more jurisdictions. An international insolvency is generally characterized by one or more of the following features: the debtor’s business is conducted in different countries; the creditors are situated in different countries; the assets are located in different countries; there are parallel proceedings in different countries.
There are five potential sources of jurisdiction of English courts regarding the insolvency of companies , namely the European Union (EU) Insolvency Regulation 2000 (EC Insolvency Regulation), the UNCITRAL Model Law on Cross-Border Insolvency as embodied in Sch.1 to the Cross-Border Insolvency Regulations 2006 (Model Law), the Insolvency Act 1986, the Banking Act 2009 in relation to banks, and the common law conflict of laws rules governing the insolvency of companies.
This article will discuss the issues of cross-border corporate insolvency in the context of the collapse of the Lehman Brothers by giving some overviews on the case first. Then, it will discuss the issues in details. There will be an overview of the laws applicable in Lehman’s case and the discussion on the resolution of the issues in the next part. After that, the article will suggest few improvements that can be done to such resolution. The last part will then conclude the whole article. This analysis shows that for a ‘giant’ multi-national company like Lehman Brothers which involve in cross-border insolvency, a very good cooper...

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...e for the adoption of formal procedures for determining a debtor's home country to ensure the forum shopping could be more efficiently curbed; and allowing for all of the legal entities in a large multinational corporate group, such as Lehman, which constitute an ‘integrated economic unit’ to file in the same venue. As mentioned earlier, it is agreed that future protocols and the UNCITRAL Model Law would be improved if economically integrated entities of a corporate group had the same home country.
In short, a very good cooperation between countries involved in cross-border corporate insolvency proceedings like Lehman is much needed in order to manage and administer the proceedings effectively. There is no point of having laws or model to govern the cross-border insolvency proceedings if the countries involved are refusing to adopt such laws for the benefit of all.

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