Search for other papers by International Monetary Fund in
Current site
Google Scholar
Abstract
The differences in national insolvency laws have important consequences in the case of enterprises with assets and liabilities in different countries. If a branch of an enterprise located in one country becomes insolvent, should creditors in that country be allowed to initiate insolvency proceedings while the enterprise as a whole is still solvent? If the enterprise as a whole is insolvent, should there be separate proceedings in the various countries where its branches are located? This approach is referred to as the “territorialist principle.” Alternatively, should there be a single procedure, based in the country where the head office or place of incorporation is situated? This approach is referred to as the “universalist principle.” Should there be a single liquidator or administrator, or one for each country where the enterprise has a place of business or assets? Should the liquidator or administrator appointed in one country be able to recapture assets fraudulently transferred by the debtor to another country? A review of national laws finds that countries take divergent positions on these issues.
International Monetary Fund Copyright © 2010-2025. All Rights Reserved.