Caribbean Property & Bankruptcy

CROSS-BORDER INSOLVENCY – WITHIN THE UK AND OUTSIDE THE EUROPEAN UNION
September 2008
INTRODUCTION
42.1 Introduction
All property belonging to the insolvent, wherever situated, is covered by the Act URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/Intro%20notes.htm#1"]note 1[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/Intro%20notes.htm#2"]note 2[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/Intro%20notes.htm#1"]note 3[/URL. Therefore, under English law the liquidator or trustee has the power to deal with all assets. In practice, however, it is often the case that the country in which the property is situated will retain control of the property, regardless of the making of an insolvency order in England and Wales.
The approach to insolvency law differs widely between nations, both in terms of the practical approaches to dealing with insolvency and in respect of matters of the principles of public policy. This can lead to difficulties in dealing effectively with insolvencies that have a cross-border dimension. Recent developments in international law have improved the position in respect of the recognition of foreign insolvency proceedings.
Along with Chapter 41, this chapter gives advice and information relating to the legislation concerning insolvencies of entities and individuals whose interests straddle international borders and, in the case of this chapter, borders within the UK. The information and advice given in this chapter covers the procedures under the Act, the UNCITRAL Model Law on Cross-Border Insolvency and the related Cross-Border Insolvency Regulations 2006.

CROSS BORDER INSOLVENCY CONCERNING COUNTRIES OUTSIDE THE UK
42.2 Cross border insolvency – use of informal procedures
This part of the Chapter gives advice and information concerning the procedures relating to cross-border insolvency outside the UK.
Most cases where the official receiver may need to invoke powers granted under relevant legislation will be in respect of the recovery of assets or the provision of information by third parties. Due to the time cost and financial cost of some of these procedures, it is likely to be more beneficial to deal with matters on an informal basis, such as having the company officer or bankrupt agree to surrender the assets voluntarily (providing, if necessary, a declaration authorising the surrender and disposal of the asset), or provide an authority for the disclosure of information, as appropriate.
See paragraph 42.3 for steps that can be taken where the company officer or bankrupt will not co-operate in obtaining information or assets overseas.

42.3 Use of compulsive powers in a cross-border insolvency
The fact that an insolvency proceeding has a cross border dimension need not, in itself, stop the official receiver from taking enforcement action where a bankrupt or director is failing to co-operate.
Where property or information is situated overseas and the official receiver is having difficulty in obtaining an authorisation declaration (see paragraph 42.2), the official receiver should draw the company officer’s or bankrupt’s attention to the provisions of the Act that set out the duty to co-operate and deliver property URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#1#$35259#1"]note 1[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#2#$35259#2"]note 2[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#3#$35259#3"]note 3[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#4#$35259#4"]note 4[/URL, set out the consequences of failure to deliver up property URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#5#$35259#5"]note 5[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#6#$35259#6"]note 6[/URL and, in connection with a bankrupt, the provisions regarding the suspension of the period of automatic discharge URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#7#$35259#7"]note 7[/URL. For company officers, attention can also be drawn to the provisions of the Company Directors Disqualification Act 1986 that set out the matters for determining unfitness, particularly in respect of non-cooperation URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#8#$35259#8"]note 8[/URL.

42.4 Cross border insolvency within the UK
Part 4of this Chapter explains the procedure for obtaining assistance in cross-border insolvencies within the UK – these being procedures specifically legislated for in the Act URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#9#$35259#9"]note 9[/URL.

42.5 Cross border insolvency within the EU
Where the insolvent has interests in a member state of the European Union (EU) then the provisions of the EC Regulation on Insolvency Proceedings should be used to seek the co-operation of the foreign courts (see Chapter 41). The current members of the EU are listed in paragraph 41.6 of Chapter 41. Similarly, the provisions of the EC Regulation will be of assistance to foreign insolvency practitioners dealing with insolvents with interests in the UK.

42.6 Cross border insolvency where UNCITRAL Model Law on Cross-Border Insolvency applicable
Where the insolvent has interests in a country that is outside the EU, but has implemented the UNCITRAL Model Law on Cross Border Insolvency (see Part 3) then the provisions of the law implementing the UNCITRAL Model Law should be used to seek the co-operation of the foreign courts. A list of the countries that have implemented the Model Law is provided at paragraph 42.35.

42.7 Cross border insolvency and assistance between courts
Where the insolvent has interests in a country that is outside the EU, and has not implemented the UNCITRAL Model Law then the assistance of the foreign court may be granted under local laws providing for assistance to be granted in relation to English insolvency proceedings. Many of the countries that are in the Commonwealth (http://www.thecommonwealth.org/Internal/142227/members/) are likely to have provisions in their laws to allow the courts to provide assistance or recognise an English insolvency proceeding. Having said that, as many of these provisions are carry-overs from the Bankruptcy Act 1914 (which applied directly throughout the British Empire), they are likely to be of assistance in bankruptcy matters only.
The provisions under which the courts of these countries may seek the assistance of the courts in the UK is outlined further in this part.

42.8 Cross border insolvency and the Channel Islands and Isle of Man
The position regarding insolvents with interests in the Channel Islands or Isle of Man is explained in paragraphs 42.18. 42.19 and 42.20, respectively.

42.9 Assistance to foreign courts
The courts having jurisdiction in relation to insolvency law (see paragraph 42.10) in any part of the UK are required to assist the courts having corresponding jurisdiction in any of the countries designated under relevant orders of the Secretary of State (see paragraph 42.11) URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#10#$35259#10"]note 10[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#11#$35259#11"]note 11[/URL.
The court has discretion regarding if and, if so, how it will provide the requested assistance URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#12#$35259#12"]note 12[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#13#$35259#13"]note 13[/URL. The court in England and Wales may choose to accept the jurisdiction of the foreign court and, where this is done, the court cannot then decide matters according to English Law URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#14#$35259#14"]note 14[/URL.
Merely because a country is not designated does not mean that the courts of England and Wales will not assist in the enforcement of that country’s court orders in insolvency matters. The courts in England and Wales possess an inherent jurisdiction to assist foreign office holders.
In addition to providing assistance, the courts have the power to recognise a foreign insolvency judgement (see paragraph 42.12).
Mutual assistance between courts in the UK is dealt with in paragraph 42.86.

42.10 Definition of “insolvency law”
For the purposes of the part of the Act dealing with cross-border cooperation, “insolvency law” is defined as URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#15#$35259#15"]note 15[/URL:
In relation to England and Wales, all parts of the Insolvency Act 1986 and certain parts of the Company Directors Disqualification Act 1986;
In relation to Scotland, all provisions of the Insolvency Act 1986 that apply to Scotland (see paragraph 42.90), certain parts of the Company Directors Disqualification Act 1986, Part XVIII of the Companies Act or the Bankruptcy (Scotland) Act 1985;
In relation to Northern Ireland, all provisions made by or under the Insolvency (Northern Ireland) Order 1989 or the Companies Directors Disqualification (Northern Ireland) Order 2002.
In relation to any relevant country or territory, so much of the law of that country or territory as corresponds with British insolvency law.
The full details of those sections covered under the definition can be found in the relevant section of the Act URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#16#$35259#16"]note 16[/URL.

42.11 Relevant countries and territories
The countries designated for the purposes of the mutual assistance aspects of the Act are:
Anguilla
Australia
The Bahamas
Bermuda
Botswana
Brunei
Canada
Cayman Islands
Falkland Islands
Gibraltar
Hong Kong
Republic of Ireland
Malaysia
Montserrat
New Zealand
St Helena
South Africa
Turks and Caicos Islands
Tuvalu
Virgin Islands
URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#17#$35259#17"]note 17[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#18#$35259#18"]note 18[/URL URL="http://www.insolvency.gov.uk/freedomofinformation/technical/TechnicalManual/Ch37-48/chapter42/part%201/part%201%20notes.htm#19#$35259#19"]note 19[/URL

RacineFan wrote: »

I can't find that point - could you point me to the appropriate para please? [an IP?]