1. Introduction
Over the past few decades, there is a continuing global expansion of trade and investment. As there are more and more companies doing business not only in their home country, they may have assets and/or establishment in other countries, or even their activities take place other than the company has its registered office. In case of insolvency of such a company, many legal issues arise. Therefore, a well-equipped national insolvency laws dealing with such cases is needed.
Without national insolvency laws kept pace with the trend, countries are ill equipped to deal with cases of a cross-border nature. This would result in inadequate and inharmonious legal approaches, which hamper the rescue of financially troubled businesses, are not conducive to fair and efficient administration of cross-border insolvencies, impede the protection of assets of the insolvent debtor against dissipation, and hinder maximization of the value of those assets.
2. Definition of “cross-border” insolvency
Cross-border insolvency is a term used to describe circumstances in which an insolvent entity has assets or debts in more than one country or jurisdiction. Many businesses have interests expanding beyond their home jurisdictions. More and more companies would like to organize their business activities on a global scale and forming production chains including inputs that cross national boundaries. As the advent of sophisticated communications and information technology, it is no longer for reserving the cross border trade of the large multi-national corporations. These led to an increasing trend for businesses, which are involved in matters where cross border insolvency issues arise.
3. Legal issues arise
If an insolvent company has assets in more than ...