Legal Vice Presidency The World Bank Seventh Multinational Judicial Colloquium on Insolvency Cape Town, South Africa, March 17-18, 2007 SURVEY Insolvency

Seventh Multinational Judicial Colloquium on InsolvencyCape Town, South Africa, March 17-18, 2007

Legal Vice PresidencyThe World Bank

SURVEYSURVEYInsolvency PracticesInsolvency Practices

Alternative Dispute Resolution Alternative Dispute Resolution in Insolvencyin Insolvency



ALL REGIONS REPRESENTED

6 Africa (Sub Sahara)

3 Eastern Europe & Central Asia

3 East Asia & Pacific

5 Latin America & Caribbean

1 North Africa & Middle East

1 South Asia



1 South AsiaPakistan

1 North Africa & Middle East

Tunisia

3 East Asia & PacificChina, Malaysia, Nepal

3 Eastern Europe & Central Asia

Azerbaijan, Croatia, Poland

5 Latin America & CaribbeanArgentina, Brazil, Chile, Dominican Republic, Paraguay

19 COUNTRIES REPRESENTED

6 Africa (Sub Sahara) Burkina Faso, Cameroon, Nigeria, Senegal, Tanzania, Uganda



Non-Insolvency Consensual Resolution

33 % Routine standard operating procedures for lawyers

50 % Court encouraged

22 % Rule mandated

17 % Other

Mechanisms encouraging negotiated settlement




79% Arbitration

79% Mediation

26% Other

00% None

Alternative dispute resolution mechanisms




27% Judges have power to order parties to undergo mediation.

Judicial use of said power

80%

20%

YesNo

Judges power to order parties to undergo mediation



Arbitration and InsolvencyCommencement of insolvency proceedings & arbitration

28% Law establishes relevance that commencement of insolvency proceedings may have for arbitration.

26% Commencement of reorganization proceedings influence the validity of previously-concluded arbitration agreements.

37% Commencement of liquidation proceedings influence the validity of previously-concluded arbitration agreements.



Arbitration and Insolvency Arbitration agreements entered during insolvency proceedings

Liquidation proceedings:– 11% Debtor may conclude arbitration agreements

enforceable against the estate.

– 61% Insolvency administrator may enter arbitration agreements concerning assets of the estate.

Reorganization proceedings:– 53 % Debtor may conclude arbitration agreements

enforceable against the estate.

– 58% Insolvency administrator may enter arbitration agreements concerning assets of the estate.



Arbitration and InsolvencyMatters Capable of Settlement by Arbitration

74% Law generally defines matters capable of settlement by arbitration.

33% Law defines matters capable of settlement by arbitration in insolvency proceedings.

67% The insolvency court jurisdiction does not exclude arbitration of issues arising in insolvency proceedings.

Matters capable of settlement by arbitration:– 17% Verification disputes.

– 33% Unsecured claims.

– 17% Labor conflicts.

– 42% Claims against third parties filed by the insolvency administrator.



Arbitration and Insolvency Application of stays

Liquidation proceedings:– 35% Stay applies to arbitration agreements when no arbitral

proceedings have been initiated.

– 47% Stay applies to arbitral proceedings initiated before commencement.

Reorganization proceedings:– 41% Stay applies to arbitration agreements when no arbitral

proceedings have been initiated.

– 47% Stay applies to arbitral proceedings initiated before commencement.



Arbitration and Insolvency Frequency of use of arbitration to resolve insolvency disputes

35%0%

24%

41%Never

Infrequently

Sometimes

Frequently



Mediation and InsolvencyUse of mediation in insolvency proceedings

41% Legislation allows use of mediation to facilitate insolvency proceedings.

35% Legislation allows use of mediation as a mechanism to facilitate “workouts”.

29% Legislation allows use of mediation to solve disputes arising in the course of insolvency proceedings.



Mediation and InsolvencyInsolvency Courts Power to Order Parties to Undergo Mediation

22% have power to order parties to undergo mediation.

Judicial use of said power

50%50%

YesNo



Need for ReformExpansion of Arbitration & Mediation in Insolvency Proceedings

22%

39%

22%17%

22%

11%

33%28%

0%

10%

20%

30%

40%

50%

Arbitration Mediation

Not necessary

Convenient

Necessary

Indispensable



SURVEYSURVEYInsolvency PracticesInsolvency Practices

Alternative Dispute Resolution Alternative Dispute Resolution in Insolvencyin Insolvency

Documents

Legal Vice Presidency The World Bank Seventh Multinational Judicial Colloquium on Insolvency Cape Town, South Africa, March 17-18, 2007 SURVEY Insolvency