On Jurisdiction And Coordination In Insolvency Of Cross-border Enterprise Group

There has been a rapid number increase and business expansion of cross-border enterprise groups.A group solution is demanding when these giants fall.Substantive consolidation,procedural consolidation and procedural coordination are the three main plans.UNCITRAL Model Law on Enterprise Group Insolvency and EU Regulation 2015/848 on Insolvency Proceeding both took the soft path of procedural coordination,but did not reject any jurisdiction of the place where the COMI of an enterprise locates.However,in crossborder group insolvency cases like Daisytek and Nortel Networks,the concepts of procedural consolidation and substantive consolidation are involved,in which Chinese domestic courts also have some practice experience.Value maximization of the enterprise group and protection of creditors’ interests are key principles of insolvency law,whose realization highly depends on procedural efficiency and fairness.The article starts with a case study on Nortel Networks,which involves three separate and independent insolvency proceedings for different group members.A comparatively satisfying result was reached in this case through one consolidated sale of the business lines and intellectual property of the enterprise group and a modified pro rata distribution of the proceeds.As for coordination method,the courts in this case employed joint hearing and helped the parties to reach several cross-border insolvency agreements.The case will hopefully help to explain the legal issues of jurisdiction and coordination mechanism expanded in the following chapters.The second chapter discusses concepts in insolvency of cross-border enterprise group,together with the relevant legislative background.This chapter also tries to address the features of insolvency of cross-border enterprise group compared with domestic insolvency cases and cross-border insolvency in general.The third chapter is on the jurisdiction issue.This part discusses: whether and why several jurisdictions shall start parallel proceedings for separate group members;the concept of Group COMI and its applicability;and substantive consolidation and procedural consolidation as special alternatives.The fourth chapter is a comparative study on three different mechanisms or scenarios for procedural coordination,which are appointment of the same insolvency representative in separate insolvency proceedings of group members,coordination of parallel insolvency proceedings with the opening of special proceedings,and facilitating communication between courts and parties through protocols or alternative dispute resolutions.This part is a principle-based analysis from the perspective of procedural efficiency and procedural fairness.The last chapter tris to offer suggestions based on the current legislative and judicial practice.The article suggests that COMI shall be the connecting factor to determine jurisdiction;and thus a court shall recognize the main proceeding where the COMI locates.The general idea is to recognize and coordinate the separate proceedings of group members.However,procedural consolidation and substantive consolidation can remain as voluntary options.The arrangement between mainland and Hong Kong is a great opportunity to further discuss insolvency of cross-border group enterprise,especially how to protect the creditors’ interests in the situations involving offshore corporate structures.