Cross-Border Insolvency Regulations 2006

rose to move, That the Grand Committee do report to the House that it has considered the Cross-Border Insolvency Regulations 2006 [20th Report from the Joint Committee]. The noble Lord said: These regulations, which we will introduce from April 2006, implement the main measures of a model law formulated by the United Nations Commission on International Trade Law—UNCITRAL—in 1997. The model law is designed to assist countries to equip their insolvency laws with a modern, harmonised and fair framework to deal with insolvencies that cross international borders. National insolvency laws are often not designed to cope with instances of cross-border insolvencies and the problems that may arise. That makes it difficult to deal with insolvencies quickly and effectively. Any conflict between national laws can lead to the loss of assets and of a potential opportunity to rescue a viable business. The Government are committed to the promotion of a rescue culture, and recognise that such uncertainties can be a barrier to trade and have a negative impact on the flow of investment between countries. The regulations will provide a legislative framework that will facilitate the global approach to the administration of cross-border insolvencies promoted by the UNCITRAL model law. For example, it would cover cases where a debtor had assets in more than one country or where the creditors were located in a different country from the one in which the insolvency proceedings were taking place. In May 2002, the European Union adopted its own regulation on insolvency proceedings. There is an element of overlap between these regulations and the EC insolvency regulation. Although the latter covers only the co-ordination of insolvency proceedings within the EU, its underlying principles and approaches have been extremely influential in the international community outside Europe. However, although influential, the EC regulation does not provide a framework for dealing with cross-border insolvency matters which extend beyond the member states. When these regulations are introduced, they will provide a complementary regime of practical value on a wider international stage. That will place Great Britain, by virtue of the operation of Section 426 of the Insolvency Act 1986, in the unique position of having a suite of statutory procedures available to officeholders in cross-border insolvency cases. In addition, implementation of the model law will provide encouragement to other countries that may be contemplating their own introduction of the legislation. In this way, insolvency officeholders in Great Britain will be able to enjoy the same benefits abroad as their international counterparts will enjoy here. That should reduce costs incurred in realising assets and increase funds available to creditors. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Cross-Border Insolvency Regulations 2006 [20th Report from the Joint Committee].—(Lord McKenzie of Luton.)