Mike Whale

INSOLVENCY LAW TRENDS

by Mike Whale

“Today’s company directors are being encouraged to seek professional help earlier when their companies are in strife, resulting in an emerging trend towards fewer creditor–initiated formal insolvency proceedings. For business, this new focus on turning a company around rather than liquidating it means that creditors have the opportunity to continue to deal with a viable company. It also means that potential job losses are minimised. Insolvency law specialists regard this new emphasis positively, and it is becoming more commonplace for them to advise on turnaround management and corporate recovery than to be appointed as a receiver or liquidator. The recently enacted voluntary administration regime is a further tool to assist companies to survive or to produce a better return to creditors than a liquidation. As a result of the current global economic crisis, cross–border insolvencies will become more frequent. A number of countries including New Zealand, the United States, Mexico, Australia, England and Hong Kong have enacted, or are considering, a Model Law dealing with cross-border insolvency which has been promoted by the United Nations Commission on International Trade Law (UNCITRAL). The model law should greatly facilitate the administration of these cross-border proceedings.”