Resolving Insolvency

Introducing provisions on post-commencement financing 
Establishing the possibility for the insolvency representative to request new financing after the commencement of insolvency proceedings and granting creditors who provide post-commencement financing with priority over claims of existing creditors are vital for the continued operation of the debtor’s business during reorganization proceedings and also to maximize the value of the debtor’s assets. It can also be important in liquidation proceedings. New funding is especially important in the period between the commencement of proceedings and approval of the reorganization plan and should be specifically addressed by the insolvency law. The law should recognize the need for post-commencement financing, authorize its use and establish priority of repayment for lenders who agree to supply such financing. Additionally, post-commencement creditors should rank above ordinary unsecured creditors.
Several economies recently strengthened aspects of regulation governing the provision of post-commencement financing during insolvency proceedings. In 2018 Morocco adopted the Law n°73-17 on resolving corporate insolvency establishing the possibility for the debtor to receive new financing after the commencement of insolvency proceedings and granted creditors who provide post-commencement financing priority over claims of existing creditors. In 2019 China also introduced the possibility to obtain post-commencement financing in reorganization proceedings.
Regulating the profession of insolvency administrators 
Professional insolvency practitioners play a key role in the operation of a swift and efficient insolvency system. Courts are of course needed to supervise the proceedings and make legal decisions, but they do not have the technical expertise to, for example, restructure a struggling enterprise or run a company with the aim of maximizing the liquidation value of its assets. Therefore, many countries—such as the United Kingdom, Canada, Australia, China, Japan, Korea, Brazil, Mexico, Zambia and Russia—have facilitated the development of a professional insolvency practitioner profession whose members manage the economic and operational aspects of a proceeding.
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¹ Cirmizi, Elena, Leora Klapper and Mahesh Uttamchandani. 2010. “The Challenges of Bankruptcy Reform.” Policy Research Working Paper 5448, World Bank, Washington, DC.
² Claessens, Stijn, and Leora Klapper. 2003. "Bankruptcy around the World: Explanations of Its Relative Use." Policy Research Working Paper 2865, World Bank, Washington, DC.
³ Robert-Tissot. 2010. “The Effects of a Reorganization on (Executory) Contracts: A Comparative Law and Policy Study.” [United States, France, Germany, Switzerland], in: 3 International Insolvency Law Review 2 (2012): 234.
⁴ UN. 2004. UNCITRAL Legislative Guide on Insolvency Law. New York, NY: UN.
⁵ World Bank. 2001. The World Bank principles and guidelines for effective insolvency and creditor rights systems. Washington, DC: World Bank.
⁶ World Bank. 2011. Principles for Effective Insolvency and Creditor/Debtor Regimes. Revised. Washington, DC: World Bank. Available from http://siteresources.worldbank.org/EXTGILD/Resources/5807554-1357753926066 /ICRPrinciples-Jan2011[FINAL].pdf.

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.^[1]

At present 23 jurisdictions have substantially adopted the Model Law.^[2]