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Strengthening Insolvency Systems in Asia and the Pacific

A well-functioning insolvency system is essential for the competitiveness and growth of an economy. Yet, many countries in Asia and the Pacific still have inefficient insolvency frameworks. The lack of an attractive legal, market and institutional environment to deal with financial distress may hamper entrepreneurship, access to finance and economic growth. Additionally, a weak insolvency framework may increase the level of non-performing loans in the banking sector. If so, it can end up jeopardizing the stability of the financial system and even lead to sovereign debt issues.

The Asian Development Bank (ADB), INSOL International, Singapore Management University, The University of Cambridge's Centre for Corporate and Commercial Law, and The University of Chicago's Center on Law and Finance will convene the Strengthening Insolvency Systems in Asia and the Pacific Conference on 15–16 December 2022. Gathering industry experts and academics, this event seeks to analyze how countries in Asia and the Pacific can strengthen their insolvency and restructuring frameworks, taking into account the legal, market, and institutional features existing in a particular jurisdiction.

With special attention to emerging economies in Asia and the Pacific, the Strengthening Insolvency Systems in Asia and the Pacific Conference covers: 

  • strategies to effectively promote workouts; 
  • design of hybrid procedures and formal insolvency proceedings; 
  • adoption of simplified insolvency frameworks for micro and small enterprises; 
  • implementation of rescue financing provisions; 
  • directors’ duties and liability in the zone of insolvency; 
  • governance models of insolvency and restructuring proceedings; 
  • regulatory framework of insolvency practitioners; 
  • treatment of contracts in insolvency and restructuring proceedings; 
  • valuation of assets and ranking of claims in insolvency proceedings; 
  • treatment of corporate groups in insolvency; 
  • personal insolvency; and 
  • cross-border insolvency. 

  Download the pre-conference booklet   Register for the Webinar

Day 1 (15 December 2022)

08.30 – 09:00: Registration and coffee

09:00 – 09:10: Welcome by Organizers

  • Nicholas Moller, Principal Counsel, Asian Development Bank (ADB)
  • Anthony Casey, Deputy Dean and Donald Ephraim Professor of Law and Economics, The University of Chicago Law School
  • Felix Steffek, Associate Professor, Faculty of Law of the University of Cambridge
  • Aurelio Gurrea-Martinez, Assistant Professor of Law and Head, Singapore Global Restructuring Initiative, Singapore Management University
  • Scott Atkins, President, INSOL and Co-Head of Restructuring, Norton Rose Fulbright

09:10 – 09:15: Opening Address

  • Thomas Clark, General Counsel, ADB

09:15 – 10:05: Panel 1 - Strategies to Effectively Promote Workouts
Chair: Nicholas Moller, Principal Counsel, ADB

Panelists: 

  • Scott Atkins, President, INSOL and Co-Head of Restructuring, Norton Rose Fulbright
  • Adam Badawi, Professor of Law, UC Berkeley  
  • Antonia Menezes, Senior Financial Sector Specialist, World Bank
  • Stephanie Yeo, Partner, WongPartnership

10:05 – 11:00: Panel 2 - Hybrid Procedures and Formal Insolvency Proceedings
Chair: Aurelio Gurrea-Martínez, Assistant Professor of Law and Head, Singapore Global Restructuring Initiative, Singapore Management University

Panelists:

  • Scott Atkins, President, INSOL and Co-Head of Restructuring, Norton Rose Fulbright
  • Anthony Casey, Deputy Dean and Donald Ephraim Professor of Law and Economics, The University of Chicago Law School
  • Edmund Ma, Senior Associate, Baker McKenzie
  • Yu-Wen TAN, Director, Corporate Insolvency Division, Insolvency and Public Trustee’s Office – Singapore
  • Mahesh Uttamchandani, Manager for Digital Development in East Asia and the Pacific, World Bank

11:00 – 11:15: Coffee break

11:15 – 12:15: Panel 3 - Governance of Insolvency and Restructuring Procedures: Debtor in Possession, Insolvency Practitioner or Hybrid model?
Chair: Adriana Robertson, Donald N. Pritzker Professor of Business Law, The University of Chicago Law School

Panelists:

  • Jared Ellias, Professor of Law, Harvard Law School
  • Kotaro Fuji, Counsel, Nishimura & Asahi
  • Aurelio Gurrea-Martínez, Assistant Professor of Law and Head, Singapore Global Restructuring Initiative, Singapore Management University
  • Wai Yee WAN, Associate Dean (Research and Internationalisation) and Professor, School of Law, City University of Hong Kong
  • Paul Zumbro, Partner, Cravath, Swaine & Moore LLP

12:15 – 12:55: Panel 4 - Regulatory Framework of Insolvency Practitioners
Chair: Scott Atkins, President, INSOL and Co-Head of Restructuring, Norton Rose Fulbright

Panelists:

  • Ravi Mital, Chairman, Insolvency and Bankruptcy Board of India (IBBI)
  • Catherine Robinson, Senior Lecturer, Faculty of Law, University of Technology Sydney, Australia

12:55 – 14:00: Lunch

14:00 – 15:30: Panel 5 - Valuation of Assets and Treatment of Claims and Contracts in Insolvency Proceedings
Chair: Anthony Casey, Deputy Dean and Donald Ephraim Professor of Law and Economics, The University of Chicago Law School

Panelists:

  • David Chew, Partner, DHC Capital
  • Debanshu Mukherjee, Co-Founder, Vidhi Centre for Legal Policy, India
  • Elizabeth McColm, Partner, Paul, Weiss, Rifkind, Wharton & Garrison LLP
  • Deepak Rao, General Manager, Insolvency and Bankruptcy Board of India (IBBI)
  • Wataru Tanaka, Professor, Institute of Social Science, The University of Tokyo

15:30 – 15:50: Coffee break

15:50 – 16:50: Panel 6 - Directors’ Duties and Liability in the Zone of Insolvency
Chair: Felix Steffek, Associate Professor, Faculty of Law of the University of Cambridge

Panelists:

  • Jared Ellias, Professor of Law, Harvard Law School
  • Aurelio Gurrea-Martínez, Assistant Professor of Law and Head, Singapore Global Restructuring Initiative, Singapore Management University
  • Jason Harris, Professor of Corporate Law, University of Sydney Law School
  • Neeti Shikha, Lecturer, University of Bradford School of Law, United Kingdom
  • Paul Zumbro, Partner, Cravath, Swaine & Moore LLP

16:50 – 17:40: Panel 7: Avoidance Actions
Chair: Jared Ellias, Professor of Law, Harvard Law School

Panelists:

  • Sumant Batra, Founder, Insolvency Law Academy
  • Charles Booth, Michael J. Marks Distinguished Professor in Business Law and Director, Institute of Asian-Pacific Business Law (IAPBL), William S. Richardson School of Law, University of Hawai‘i at Manoa
  • Brook Gotberg, Francis R. Kirkham Professor of Law, Brigham Young University
  • Joshua Macey, Assistant Professor of Law, The University of Chicago Law School

18:00 – 19:00: Reception

19:00: Dinner

Day 2 (16 December)

08:00 – 08:30: Coffee

08:30 – 09:20: Panel 8 - Insolvency Frameworks for Individuals and Micro and Small Enterprises
Chair: Nicholas Moller, Principal Counsel, ADB

Panelists:

  • Scott Atkins, President, INSOL and Co-Head of Restructuring, Norton Rose Fulbright
  • Charles Booth, Michael J. Marks Distinguished Professor in Business Law and Director, Institute of Asian-Pacific Business Law (IAPBL), William S. Richardson School of Law, University of Hawai‘i at Manoa
  • Jason Harris, Professor of Corporate Law, University of Sydney Law School
  • John Martin, Partner, Norton Rose Fulbright Australia and President, International Insolvency Institute
  • Andres Martinez, Senior Financial Sector Specialist, World Bank

09:20 – 10:20: Panel 9 - Rescue Financing and Administrative Expenses
Chair: Richard Squire, Alpin J. Cameron Chair in Law, Fordham University School of Law

Panelists:

  • Jared Ellias, Professor of Law, Harvard Law School
  • Aurelio Gurrea-Martínez, Assistant Professor of Law and Head, Singapore Global Restructuring Initiative, Singapore Management University
  • Justice Christopher Sontchi, International Judge, Singapore International Commercial Court
  • Paul Zumbro, Partner, Cravath, Swaine & Moore LLP

10:20 – 10:35: Coffee break

10:35 – 11:25: Panel 10: Corporate Groups
Chair: Felix Steffek, Associate Professor, Faculty of Law of the University of Cambridge

Panelists:

  • Edith Hotchkiss, Professor of Finance, Carroll School of Management, Boston College
  • Raelene Pereira, Partner, Rajah & Tann Singapore LLP
  • Richard Squire, Alpin J. Cameron Chair in Law, Fordham University School of Law
  • Urmika Tripathi, Legal Analyst for Asia, REDD Intelligence

11:25 – 12:30: Panel 11 - Cross-Border Insolvency
Chair: Justice Christopher Sontchi, International Judge, Singapore International Commercial Court

Panelists:

  • Joshua Macey, Assistant Professor of Law, The University of Chicago Law School
  • Dan T. Moss, Partner, Jones Day
  • Felix Steffek, Associate Professor, Faculty of Law of the University of Cambridge
  • Deeptanshu Singh, Manager, Insolvency and Bankruptcy Board of India (IBBI)

Relevant Readings

Panel 1: Strategies to Effectively Promote Workouts 
An out-of-court restructuring (“workout”) provides several advantages, including flexibility, confidentiality, and saving the costs and stigma associated with insolvency proceedings. Therefore, promoting the use of workouts is generally considered a desirable practice, especially in countries without efficient insolvency frameworks. However, for a variety of reasons, including opportunistic behavior of debtors and creditors, regulatory barriers, and lack of a rescue culture, completing a workout is often challenging even for viable companies only facing financial trouble. For that reason, regulators or private actors may be required to adopt certain practices to effectively promote workouts. To that end, jurisdictions around the world have adopted several approaches, including: (i) the publication of good practices for workouts by association of banks or insolvency practitioners; (ii) the enactment of good practices and promotion of inter-creditor agreements facilitated by central banks; (iii) regulation of workouts in the insolvency legislation, even providing workouts with various tools existing in formal reorganization procedures. Likewise, as a means to further incentivise workouts, countries may adopt various changes in the regulatory framework for businesses, including changes in the tax legislation, amendments to the rules governing directors’ duties and liability in the zone of insolvency, and changes in the regulatory framework for financial institutions. This panel will discuss the most effective strategies to promote workouts, as well as the country-specific and firm-specific factors that may affect the design and effectiveness of these strategies. 


Panel 2: Hybrid Procedures and Formal Insolvency Proceedings
Countries around the world design insolvency proceedings very differently. For example, while certain jurisdictions have a single-entry insolvency process that may end up with a reorganization plan, a going concern sale or a piecemeal liquidation, other jurisdictions provide various insolvency proceedings – at least one of them primarily focused on reorganization and at least another one primarily focused on liquidation. Additionally, many jurisdictions provide hybrid procedures, such as a scheme of arrangement, preventive restructuring frameworks and pre-packs, that facilitate a debt restructuring – generally when a company is not formally insolvent yet. This panel will discuss the most desirable way to design an insolvency and restructuring framework, with particular emphasis on the type of procedures that should be ideally adopted taking into account the market and institutional environment existing in a country. 


Panel 3: Governance of Insolvency and Restructuring Proceedings: DIP, IPs or Hybrid Model? 
The governance of insolvency and restructuring proceedings significantly differs across jurisdictions. Broadly understood, there are three primary models for the governance of insolvency and restructuring procedures: (i) the adoption of a debtor in possession model where the company’s management would continue to run the firm without the appointment of an insolvency practitioner (“DIP model”); (ii) the appointment of a trustee/administrator/insolvency practitioner replacing the debtor’s management team (“IP model”); and (ii) the appointment of a monitor overseeing the procedure and the debtor’s management team (“hybrid model”). This panel will discuss the legal, market and institutional factors affecting the choice of the governance model of insolvency and restructuring proceedings. 


Panel 4: Regulatory Framework of Insolvency Practitioners 
This panel will discuss the optimal way to design a regulatory framework for insolvency practitioners. To that end, it will discuss the qualifications of insolvency practitioners and whether countries should adopt a licensing regime for insolvency practitioners and, if so, how. Moreover, it will discuss whether countries should adopt a regulatory agency to oversee insolvency practitioners. Finally, the panel will discuss the duties, liability and remuneration of insolvency practitioners. 


Panel 5: Valuation of Assets and Treatment Claims and Contracts in Insolvency Proceedings 
An insolvency proceeding should maximize the returns to creditors by promoting the most efficient allocation of the debtor’s assets. Therefore, valuation will play an essential role when determining the fate of a financially distressed firm. Additionally, creditors should be paid according to a set of contractual and statutory priorities. To that end, while some jurisdictions only respect (if so) the preferential treatment of secured creditors and most unsecured creditors are paid pari passu, other jurisdictions provide a preferential treatment to certain creditors such as tax authorities, employees, and tort claimants, and some legislations subordinate certain claims such as shareholder loans. This panel will discuss the most desirable way to determine the valuation and treatment of assets and claims in insolvency proceedings. It will also discuss the treatment of contracts in insolvency and restructuring proceedings, with particular emphasis on the contracts in which none of the parties have materially performed their contractual obligations (“executory contracts”) and contractual provisions allowing a party to terminate the contract if the counterparty becomes insolvent (“ipso facto clauses”). 


Panel 6. Directors’ Duties and Liability in the Zone of Insolvency 
When a company becomes factually insolvent but it is not yet subject to a formal insolvency proceeding, the shareholders –or the directors acting on their behalf– may engage in various forms of behavior that can divert or destroy value at the expense of the creditors. For this reason, many jurisdictions around the world impose special directors’ duties and liability in the zone of insolvency. The way to regulate directors’ duties and responsibilities in the zone of insolvency, however, significantly differs across jurisdictions. Namely, countries around the world have adopted different approaches including: (i) the imposition of a duty to initiate insolvency proceedings; (ii) the imposition of a duty to recapitalise or liquidate companies experiencing significant losses; (iii) the imposition of general duties towards the company’s creditors, including a duty to minimize losses for the creditors; (iv) the imposition of a duty to prevent the company from incurring new debts; (v) the imposition of a duty to prevent the company from incurring new debts that cannot be paid in full; and (vi) the imposition of a duty to keep acting in the best interest of the corporation as a whole. This panel will explore the advantages and weaknesses of each regulatory model of directors’ duties in the zone of insolvency, as well as a variety of country-specific and firm-specific factors that may affect the desirability of a particular approach. It will also discuss different mechanisms to deal with wrongful behavior in the zone of insolvency, including disqualification and liability of corporate insiders. 


Panel 7. Avoidance Actions
Most insolvency jurisdictions include provisions that facilitate the avoidance of certain transactions entered into by a debtor prior to the commencement of an insolvency proceeding. These transactions seek to prevent or otherwise reverse transactions that can be detrimental for the creditors. Despite the benefits eventually created by these mechanisms, the use –and even existence– of avoidance actions is not costless. On the one hand, the initiation of these actions may generate litigation costs. On the other hand, the existence of avoidance provisions may harm predictability and legal certainty, especially in jurisdictions where it is relatively easy to avoid a transaction, usually because bad faith is not required, the lookback period for the avoidance of transactions is too long, or no financial conditions are required to avoid a transaction.  This panel will discuss how countries should design avoidance provisions taking into account the conflicting policy goals often existing in the design of avoidance actions as well as the particular features of a country. 


Panel 8. Insolvency Frameworks for Individuals and Micro and Small Enterprises
Micro and small enterprises (MSEs) represent the vast majority of businesses in most countries around the world. Despite the economic relevance of small businesses, most insolvency jurisdictions in Asia – and elsewhere– do not provide suitable insolvency frameworks for MSEs. This panel analyses how countries can adopt more attractive insolvency frameworks for small businesses. To that end, it will take into account the approaches that have been adopted by various jurisdictions, as well as the policy recommendations suggested by organisations such as the World Bank, UNCITRAL, and the International Insolvency Institute/Asian Business Law Institute. Moreover, it will discuss how these approaches and policy recommendations should be adjusted to different market and institutional environments. Lastly, this panel will discuss whether and, if so, under which conditions, countries should provide a discharge of debt for consumers and individual entrepreneurs. 


Panel 9. Rescue Financing and Administrative Expenses 
When a firm becomes insolvent, it may be unable to obtain new finance. As a result, the lack of finance may lead to the loss of suppliers, investment opportunities and going concern value. To address this problem, several jurisdictions around the world have adopted a system of rescue or debtor-in-possession (“DIP”) financing that seeks to encourage lenders to extend credit to viable but financially distressed firms. This is incentivized by providing DIP lenders with various forms of priority. This panel will discuss the most desirable way to facilitate post-petition financing to viable but insolvent firms. Moreover, it will do so taking into account the particular market and institutional environment existing in a country.

Panel 10. Corporate Groups
Many businesses are often organised through corporate group structures. Therefore, an insolvency system should respond to this economic reality. To that end, countries around the world have generally adopted three regulatory approaches to deal with corporate groups in insolvency. First, certain jurisdictions treat individual companies separately. Second, other jurisdictions have taken steps to facilitate the coordination of insolvency proceedings affecting corporate groups (“procedural coordination”). Finally, other jurisdictions allow, even if it is in exceptional cases, the consolidation of assets and liabilities of companies belonging to the same corporate group (“substantive consolidation”). More recently, as a variation of the approach facilitating procedural coordination, some countries have adopted some substantive rules that, without consolidating assets and liabilities, involve the use of certain insolvency provisions to the whole corporate group. Moreover, this latter approach often considers the “interest of the group” instead of the interest of the individual legal entities comprising the corporate group.  This panel seeks to explore the most desirable way to deal with corporate groups in insolvency. 


Panel 11. Cross-Border Insolvency 
Many businesses nowadays have assets, creditors, offices, subsidiaries, clients or employees in different jurisdictions. The existence of an international component may add an additional layer of complexity to a situation of financial distress. To deal with a situation of insolvency with an cross-border element, commentators have generally suggested two different approach: one of them that seeks to promote a single forum for the management of the insolvency proceeding (“universalism”) and another approach consisting of the opening of insolvency proceedings in those jurisdictions where the debtor has assets and creditors (“territorialism”). The disadvantages of both models led to some intermediate approaches. To that end, the most successful model has been the so-called “modified universalism”, which was the approach embraced by the UNCITRAL Model Law on Cross-Border Insolvency adopted in many jurisdictions around the world. This panel will discuss various approaches to deal with cross-border insolvency. These approaches will include modified versions of universalism and territorialism, as well as innovative contractual approaches suggested in the academic literature. It will also discuss new trends and developments in cross-border insolvency, including the use of insolvency protocols, the guidelines and modalities enacted by the Judicial Insolvency Network, and the UNCITRAL Model Law on Model Law on Recognition and Enforcement of Insolvency-Related Judgments