May 2-6, 2016 – New York
Representatives
Dominique D’Allaire (head of delegation and representative - Justice Canada)
Paul Morrison (Senior Analyst, Corporate, Insolvency and Competition Policy Directorate with Innovation, Science and Economic Development Canada)
The Honourable Geoffrey B. Morawetz (advisor - Ontario Superior Court of Justice)
Terry Czechowskyj (advisor - Canadian Bar Association)
Professor Janis Sarra (advisor University of British Columbia)
Introduction
The Canadian delegation was very active at this session with numerous interventions made during the debate on the various issues raised. This report outlines the main issues considered by Canada in the context of the 49th session of the UNCITRAL Working Group ("WG") on Insolvency held in New York, from May 2-6, 2016. The full report of the WG's deliberations and conclusions is also available for those interested.
Insolvencies of multinational enterprise groups
In considering WG V’s reports from its previous sessions on this topic, a number of key principles were reviewed for clarification and editing by the Secretariat for the next session to be considered for inclusion in the Model Law or Legislative Guideline. Issues of concern continue with the scope of the proposed draft guidelines as well as how solvent entities can be involved in the restructuring process. WG V is agreed that any participation by a solvent entity should be voluntary and not affect or alter existing creditor rights of that solvent entity. Draft text will clarify that participation by a solvent entity does not equate to the solvent entity being bound by insolvency legislation. Participation of a solvent entity should be limited to procedural matters such as a right to be heard and participating with negotiations of the proposed restructuring.
Cross Border Recognition of enforcement of insolvency related judgments
WG V debated extensively over the definitions of what constitutes a foreign proceeding, who qualifies to be a foreign representative and what constitutes a foreign insolvency related judgment. It was generally agreed that the insolvency related judgment should have been issued after the insolvency proceedings had been initiated. The Secretariat is mandated to revise the draft of the current working paper on this topic for review by the WG at the next session. WG will consider for discussion whether this paper should be included with the Model Law or be part of the Legislative Guide.
Directors’ Obligations in the period approaching insolvency
Draft Recommendations 1-10
The recommendations were reviewed in detail with the understanding that at the next session a final draft will be agreed upon for presentation to the Commission.
Issues for future consideration and other business
There was discussion on the importance of dealing with micro, small and medium-sized enterprise (MSME) insolvencies. As such, the WG has requested the Commission to clarify the mandate for the WG on this topic at the next session of the Commission.
Convention proposal
Delegations have been meeting on an informal basis to consider the feasibility of developing a convention on international insolvency issues and adoption of the model law. A report to the WG will be prepared for future consideration and the Secretariat will provide an update, as appropriate.
Next Steps
The WG is expected to finalize its work on directors’ obligations in insolvency cases at its 50th session, scheduled from December 12-16th 2016 in Vienna. In the meantime, the Secretariat is expected to hold experts group meetings in an effort to further develop the text in preparation for the next session of the WG.