CHAPTER 3, I. Will Recent UNCITRAL Projects Impact U.Bankruptcy Practice?

• Jurisdiction: United States

I. Will Recent UNCITRAL Projects Impact U.S. Bankruptcy Practice?

ABI Journal

October 2019

Richard J. Mason

McGuireWoods LLP

Chicago, Ill.

In the 1960s, the United Nations formed the United Nations Commission on International Trade Law (UNCITRAL) to promote the flow of international trade.¹ Currently, UNCITRAL has six "working groups" that formulate conventions, model laws and legislative guides designed to harmonize the commercial laws of different countries. One of the working groups, Working Group V, focuses on bankruptcy and reorganizations.²

There are 60 member-states that officially participate in the work of UNCITRAL and Working Group V. Non-member states and non-governmental organizations (such as bar associations) also provide comments as observers. Working Group V typically meets twice a year, once in Vienna, Austria, and again in New York. Meetings usually last four days and involve lively discussions among representatives of member-states and observers. The UNCITRAL secretariat produces and circulates draft summaries of the discussions. Once a project is in final form, it is reviewed and voted on by the full commission.³

The first major project of Working Group V was the 1997 adoption of the Model Law on Cross-Border Insolvency (the "Cross-Border Model Law").⁴ This model law, subject to country-specific adjustments, has been adopted by more than 40 jurisdictions.⁵ In 2005, Congress enacted a version of the Cross-Border Model Law as chapter 15 of the Bankruptcy Code.⁶ Since 2005, chapter 15 has been employed in hundreds of cases. During the 12-month period ending June 30, 2019, the Administrative Office of the U.S. Courts reported that 138 chapter 15 cases had been filed.⁷

In the last 13 months, UNCITRAL issued two new model laws. The first, adopted by the commission in July 2018, is the Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the "Model Law on Insolvency Judgments").⁸ The second, adopted in July 2019, is the Model Law on Enterprise Group Insolvency (the "Model Law on Groups").⁹

If history is any guide, in the following years the U.S. Congress will study both Model Laws to determine whether to incorporate either or both into the Bankruptcy Code. In the interim, the Model Laws will likely influence bankruptcy judges and professionals in at least cross-border and possibly some domestic cases.

This article provides a brief summary of the issues addressed by the new Model Laws and some of the proposed solutions. As with all summaries of legislation, there is a risk of oversimplification. Thus, the Model Laws need to be examined in their entirety to obtain a full understanding of their provisions.

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