Model Of Cross-border Insolvency Proceeding

The main purpose of this article is to research the design, practice and reference value of the mode of main-ancillary insolvency proceedings which is under the direction from pragmatism in the area of transnational insolvency.Because of the inflexible inherent deficiency of the traditional "territorial" and "universal" principle, it becomes an important task for the scholars and operators who work around this field to find out a new resolution which is more reasonable and practical to reduce the conflicts. More and more legislations concerning the transnational insolvency are deviating from the territorial principle and turn to the attitude of cooperation and coordination. These legislations focus on providing solutions instead of making clear of their theory tendency in the lawmaking proceedings. They try hard to avoid conflicts between the two traditional principles and find an eclectic way to keep balance between protection of local creditors and international cooperation in cross-border insolvency cases from the point of view of increasing the international economic communication. This is the so-called "new pragmatism" which provides the mode of main-ancillary proceedings.The mode of main-ancillary proceedings concerns with so many legal issues that this article cannot discuss all of them due to the limitation of time, energy and scope of article, etc. Thus, the starting point should be to discuss some important and key problem raised by cross-border insolvency. With respect to the research methods, comparative researches and case studies are used in this article in order to probe into some key problems more clearly and distinctly. The most representative EUIR and UNCITRAL model law make an important role to illustrate the key points of the mode of main-ancillary proceedings clearly and, certain classic cases are combined into the necessary discussion and explanation. This article contains five parts.The first part elaborates the three alternative modes of transnational insolvency proceeding. The three alternative modes are mode of universal proceeding, mode of separate proceeding and mode of main-ancillary proceedings. The meanings, features, motivation, advantages and deficiency of the mode of universal proceeding and separate proceeding are firstly introduced. After weighing the pros and cons, this article believes that the dichotomy mode -the mode of main-ancillary proceedings which is on the ground of pragmatism can effectively overcome the deficiency of the mode of universal proceeding and the mode of separate proceeding. The EUIR and UNCITRAL model law embody the vitality and development trends of the mode of main-ancillary proceedings.The second part of this article analyzes the design of the mode of main-ancillary proceedings. Because of the different perspective and start points, the mode of main-ancillary proceedings in the UNCITRAL model law is different from the mode in the EUIR. The modes in the EUIR and UNCITRAL model law are separately introduced, and then the differences between them are pointed out. The EUIR and UNCITRAL model law are of the same core concept—the center of main interests .This concept determines that which court can open a main insolvency proceeding. But the classifications of proceedings are different in the two modes. The UNCITRAL model law classifies the transnational insolvency proceedings into three kinds: main insolvency proceeding, non-main insolvency proceeding and concurrent insolvency proceeding. Meanwhile, the EURI only classifies the proceedings into two kinds: main proceeding and secondary proceeding. Moreover, the power of the administrator in the main insolvency is also different in each mode.The third part of this article researches on the practice of the main-ancillary mode. Any mechanism shall be examined in practice. The reasonableness of the mode can be proved in practice, and the drawback of the mode can also be found in practice. "Eurofood" is a landmark case in the EU. The main reason for the battle of jurisdiction on "Eurofood" between the Irish and Italy is that they interpret the "center of main interest" differently. To resolve the dispute, the ECJ interpreted the "center of main interest" in its verdict in May 2006. It made the "center of main interest" more clearly for the EU member state. The USA promulgated "Chapter 15" in 2005.The "Chapter 15"totally copied the mode in the UNCITRAL model law, even the order of clauses was still unchanged. On 16^th Jan.2008, United State Bankruptcy Court for the Southern District of New York made a judgment on the recognition of the foreign insolvency proceeding of Basis Yield Alpha Fund. This article believes that the "center of main interest" was applied reasonably in this case. It set up a systematic approach on this issue.The forth part of this article discusses the problems in the existing mode of main-ancillary proceedings and reviews the solutions to these problems in practice. In this part, the author's own opinions have been put forward. The main problems are follows: Firstly, the definition of the "center of main interest"; Secondly, the burden of proves; thirdly, the agreement and disagreement of the parties; fourthly, the insolvency of corporate group; fifthly, forum shopping and the battle of jurisdiction. Those problems are very practical and interdependent.The fifth part of this article discusses the relevant legislation in our country. At present, the relevant legislation in the new law of insolvency in our country is only the provision in Article 5.So, at first, this article analyzes the current legislative situation in our country combined with the Article 5. Then, the concrete legal mechanism is envisaged this article for our country. The legal mechanism envisaged concerns several aspects: Firstly, the recognition of foreign insolvency proceeding; secondly, the cooperation between the co-existing foreign insolvency proceeding; thirdly, concurrent proceeding; fourthly, the consequence of recognition; fifthly, the power of the administrator in the foreign proceedings and the manner in which the administrator exercises the power.In the end, this article concludes that: in light of the diversities of society, culture, legal system and politics among countries, the mode of main-ancillary proceedings chooses a compromise between the mode of universal proceeding and the mode of separate proceeding. Since there is still no universal mode for every country in the international community, the pragmatic mode which is between the ideal and the realistic is still an appropriate alternative. The experience of other countries in the mode of main-ancillary proceedings can be used for our reference.