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Cross-border insolvency: what’s on the radar?

Recent research by South Square & Grant Thornton UK has predicted a rise in cross-border insolvency work – Felicity Toube QC, of South Square, looks at what form that rise will take.

Felicity Toube QC
South Square

Co-authored with Steve Akers, Head of Complex and International Insolvency, Grant Thornton UK LLP

With recent high-profile decisions in mind, including the Privy Council in Saad Investments and Singularis, South Square and Grant Thornton UK LLP decided to commission joint research into the perceptions of leading UK and offshore insolvency lawyers and other professionals on undertaking cross-border insolvencies in major offshore jurisdictions.

Findings clearly suggest our respondents are anticipating an increase in cross-border insolvencies.
The full results are set out in a newly published report, From discord to harmony: the future of cross-border insolvency.

When asked about activity levels, 63% of respondents say the number of insolvencies involving offshore jurisdictions will increase over the next three years. This includes one in five respondents (19%) who say the level of activity will ‘increase considerably’ over this period, predominantly driven by an uplift in the financial services sector.

The majority of research respondents also want to see collaboration between offshore jurisdictions rise further up the agenda. 85% say that courts in different jurisdictions should collaborate more to make multi-jurisdictional insolvencies fairer and more efficient. Suggestions for fostering further collaboration range from formal mechanisms such as enacting the UNCITRAL Model Law through to informal channels for greater dialogue and information sharing between judges.

The top three factors when evaluating the attractiveness of a jurisdiction are: its legal process and infrastructure (84%), cross-border assistance provisions (63%) and enforceability of foreign court orders and judgments (40%).

The research points to the Cayman Islands as a preferred offshore jurisdiction for having the most effective insolvency laws. Almost two-thirds of respondents (63%) place the Cayman Islands among the three most effective offshore jurisdictions. It is followed by the British Virgin Islands (48%) and Hong Kong (37%).

Singapore emerged as a very effective location for cross-border insolvency for those with direct experience of multi-jurisdictional insolvency in the territory (75%). However, Singapore was not ranked very highly by respondents who provided feedback on the jurisdiction without direct experience there. This indicates a potential gap in perception and that Singapore might have a PR battle to wage.

With an anticipated uptick in cross-border insolvencies on the horizon, jurisdictions need to ensure their basic legal process and infrastructure is fit for purpose. Clearly, no single jurisdiction has got everything absolutely right, so we should be encouraging a wider debate about how all those involved in the legislative and judicial process might learn from each other and work more closely together to help ensure consistent and reliable standards are in place around the world.

The research was undertaken by an independent consultancy who gathered the views of 81 UK and offshore insolvency professionals, together representing views from 50 of the leading firms involved in cross-border insolvency. We are extremely grateful to everyone who took part in our research and look forward to discussing the findings with our clients and other colleagues in the international insolvency community.

For more information and a copy of the full report, contact Joanna Colton at

Posted on 17th September 2015 by Fred Crawley



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