International

Update on Canadian Insolvency Reform

The reform of Canada’s insolvency laws continues to move forward slowly. In an article published in a previous edition of this newsletter, I outlined the proposed amendments to Canada’s two major insolvency statutes, the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) under Bill C-55.

New China

By all accounts the Chinese Bankruptcy Law needed reform, and on June 1, 2007 the new bankruptcy law will take effect. Although the old law will still apply to state-owned enterprises (SOEs) until 2008,¹ some experts believe the SOE exception for SOEs will be extended beyond 2008.

Domestically Avoiding International Fraudulent Conveyances—Can It Be Done?

Introduction

Protecting the Attorney/Client Privilege in Transnational Insolvency Proceedings

The ever-growing proliferation of international trade and the rise of increasingly large transnational corporations means that whenever the next big downturn overtakes us, there will be an unprecedented level of transnational insolvency proceedings. This, in turn, will likely result in a number of unprecedented legal issues that will need to be resolved through a patchwork of overlapping (and potentially contradicting) international treaties, country-specific laws, and established practices relating to international law.

China’s New Bankruptcy Law: An Introductory Note

China’s market-oriented reform has generally been successful since it started in the late 1970s. However, the transition of its corporate and financial sectors has suffered greatly from the absence of a functioning insolvency regime. While a trial bankruptcy law was adopted in 1986 and took effect in 1988, it covered only state-owned enterprises (SOEs), which now account for only about one third of the country’s total output. Non-state-owned enterprises have been left to a set of simple insolvency rules of the Civil Procedure.

China’s New Bankruptcy Law

On Aug. 27, 2006, the People’s Republic of China passed a new bankruptcy law that will become effective on June 1, 2007. The concept of bankruptcy law is not new in Chinese law. The first bankruptcy law, called the “Qing Law,” dates from 1906, near the end of Qing dynasty. Before that, the issue was governed by an ethical precept, according to which “the debts of the father are to be paid by the son.” But the Qing Law had a short duration and was abolished with the fall of the empire around 1912.

The Attorney-Client Privilege and Chapter 15: How Secure Are Your Communications?

As a general matter, the attorney-client privilege is perceived as an almost bullet-proof wall against disclosure of client communications. This perception rests largely on the often unstated assumption that the corporate entity will continue to operate as a going-concern and desires to maintain the confidentiality of its communications. Bankruptcy, however, fundamentally alters that assumption.

Canadian Insolvency Reform

Not only has the last year been marked by a new Canadian government under the leadership of conservative Prime Minister Stephen Harper, it has also brought about significant revisions to Canada’s federal insolvency statutes.

In the fall of 2003, the Canadian Senate’s Banking, Trade and Commerce Committee completed its five-year review of insolvency legislation and delivered a detailed series of recommendations for reform. Many of the proposed recommendations were incorporated into Bill C-55, which was tabled in the Canadian House of Commons in June 2005.

Varig Airlines – Recovery or Liquidation?

One of the most polemic, intricate, worst and largest cases of corporate distress in Brazilian history, the Varig Airlines case came to an end last week. The first case resolved under Brazil’s new bankruptcy law has left numerous lessons for its stakeholders as well as billions of dollars of destruction in its wake. It also leaves many questions regarding (i) acts of management and decision-making, (ii) the question of substance vs. form, (iii) concrete effects and results, and (iv) responsibilities.

American Bankruptcy Institute/KI Asia Regional Judicial Reform Project (Project No. BSOP-3399s-B)

Report on the One-Day Workshop on ADR and Panel Presentation on the Efficacy of ADR as a Tool to Resolve Financial Disputes in ASEAN Member Countries Conducted During the 2nd Annual ASEAN Legal Forum, Bangkok, Thailand, July 26-28, 2005