Secured Credit and the Harmonisation of Law

Secured Credit and the Harmonisation of Law

The UNCITRAL Experience

Corporations, Globalisation and the Law series

Gerard McCormack

This is a discerning analysis of international harmonisation efforts for secured credit law and examines the role of globalisation and finance capital in shaping such efforts. Gerard McCormack reveals how an ‘efficient’ law is often seen to increase the availability, and lower the cost, of credit, thereby contributing to international development. He considers whether the most comprehensive international standard – the United Nations Commission on International Trade Law (UNCITRAL) Legislative Guide (2008) – is actually suitable for adoption at the national level. In particular, he examines the hypothesis that American law and lawyers have shaped the content of the Guide to the extent that it is not suitable for translation into other laws.

Chapter 7: The Insolvency Legislative Guide

Gerard McCormack

Subjects: law - academic, commercial law, company and insolvency law, corporate law and governance, finance and banking law, international commercial law


This chapter compares the UNCITRAL Secured Transactions Guide with its Guide on Insolvency. The main part of the chapter is taken up with examining the main features of the Insolvency Guide and analogies between it and the key features of the American Bankruptcy Code. A central message is that the Insolvency Guide is not as closely aligned with US law as the Secured Transactions Guide. The Insolvency Guide is not beyond reproach – arguably it imposes too heavy a legalistic framework on corporate restructurings and fails to pay sufficient heed to context. Nevertheless, there appears to be greater recognition of diversity and greater accommodation of different approaches than in the Secured Transactions Guide. The last part of the chapter tries to explore the reasons why this may be the case. THE INSOLVENCY GUIDE – ITS CENTRAL PHILOSOPHY AND KEY COMPARISONS The Insolvency Guide contains a central underlying philosophy of promoting business rescue as well as providing the appropriate balance between reorganisation and legislation.1 These are stated to be key objectives of the Guide. The Guide also lists other objectives: certainty in the market to promote economic stability and growth; maximising asset values; ensuring equitable treatment of similarly situated creditors; timely, efficient and impartial resolution of insolvency; preservation of the insolvency estate to allow equitable distribution of assets and equitable treatment of creditors; ensuring a transparent and predictable insolvency law with incentives for gathering and dispensing information; establishing clear rules for the ranking of priority claims and a framework for cross-border insolvency.2 These...

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