Cross-Border and International Insolvency

• Insolvency proceedings can be initiated in more than one country, leading to parallel processes that may conflict with each other.
• Debtors may choose to file for insolvency in jurisdictions with more favourable laws, which may disadvantage creditors in other countries.
• Courts may not recognise judgments and insolvency proceedings in other jurisdictions, leading to enforcement issues.

• Countries may differ significantly in their insolvency laws regarding priorities, insolvency processes and the rights of creditors and debtors.
• The legal definition of insolvency, triggers for filing and entering processes and the treatment of assets can vary widely.
• Domestic creditors may be treated preferentially over foreign creditors in some jurisdictions.

• Debtors may have assets in various countries, complicating asset identification and recovery.
• Cross-border fraud schemes can hinder an insolvency practitioner’s ability to trace and repatriate assets.

• Courts in different jurisdictions may be reluctant or slow to coordinate.
• In some jurisdictions, there are limited mechanisms to enable cooperation and information sharing between the insolvency practitioner and the courts.

• Competing rules on how assets and realisations should be distributed can disadvantage some creditors.
• Treatment of security interests will differ across jurisdictions.
• A jurisdiction may refuse to recognise foreign proceedings where this conflicts with domestic public policy.

• Not all jurisdictions recognise foreign restructuring proceedings.
• Getting creditors and courts across jurisdictional borders to support a common restructuring or recovery plan can be difficult.

• Multinational companies are more exposed to insolvency risks across jurisdictions.
• New asset classes (such as digital assets and crypto) present novel cross-border challenges.

It is possible to get a foreign insolvency process recognised in the UK but it depends on several factors, including the country in which the insolvency originates, the type of insolvency proceedings and whether the recognition is sought under common law or a specific statutory regime such as under the Cross-Border Insolvency Regulations 2006. 

Recovering monies owed by a debtor with assets or operations in multiple jurisdictions will involve a strategic cross-border approach.  You will need to combine both available insolvency proceedings in the UK (such as winding up or bankruptcy proceedings and the recognition of foreign judgments in the UK) with international tools such as asset tracing and the recognition of UK insolvency proceedings. 

This will vary widely depending on different factors such as the jurisdiction where recognition is sought, the legal framework used (e.g. common law or statutory regimes), the complexity of the case and whether it is contested, the efficiency of the local court system and the availability of documentation and translations where required. 

Yes, generally speaking the UK courts will cooperate in relation to offshore liquidations, especially when the offshore jurisdiction is a common law country with strong ties to the UK, such as Jersey, Guernsey and the Isle of Man.  However, the extent of cooperation will depend upon several legal and factual factors such as whether common law principles or particular statutory regimes apply. 

We were successful in an Application in the High Court in London relating to the registration and enforcement of Singaporean Judgments in England.

The issue which had to be considered by the Court was whether our client was entitled to register in England two Judgments made in their favour following a six-day commercial fraud trial in the Singaporean High Court. The Singaporean Judgments totalled US$1,028,455 and US$413,199.58 plus interest.

The Judgment Debtor argued that the Singaporean Court had no jurisdiction to determine the original proceedings, that the Judgments had been obtained by fraud and that the registration of the Singaporean Judgments in England was contrary to public policy.

The case involved difficult questions about the level of evidence needed before the Court would list any issue in contested registration proceedings for trial. In other words, whether any of the Judgment Debtor's arguments had a real prospect of success and needed to be resolved at trial.

After both written and oral submissions, the Court declined to list any of the issues for trial and dismissed the Judgment Debtor's Application to set aside registration.  Therefore, the Singaporean Judgments remain registered and enforceable in England.  In addition, the Court ordered the Judgment Debtor to pay 100% of our client's costs relating to the Application.  The Court's decision is unusual because the Court normally only awards approximately 70% of the costs incurred by a successful party.