Globalization has led to a marked increase in international components to insolvency proceedings. Cross-border issues add a new layer of complexity to what is often a situation already fraught with obstacles. Courts and practitioners alike face additional difficulties communicating with other courts, resolving issues consistently in jurisdictions with different laws and policy objectives, and enforcing rulings and implementing orders adjudicated extraterritorially.
Historically, coordination between courts of different jurisdictions was executed on an ad hoc basis—an uncertain, expensive, and time consuming process that potentially reduced the value of the business and recoveries of stakeholders. Congress took note of the difficulty inherent with parallel insolvency proceedings, and in 2005, added Chapter 15 to the Bankruptcy Code. Chapter 15 is a significant revision to its predecessor, section 304 of the Code, and addresses issues with the enforcement of insolvency proceedings rooted outside the United States. However, the addition of Chapter 15 merely addressed some of the difficulties with cross-border insolvencies and only in the United States. A larger, global resolution was yet to be had.
In October 2016, judicial officials from key commercial insolvency jurisdictions met at the first ever Judicial Insolvency Network conference to address the issues plaguing cross-border insolvency proceedings. The solution they created was 14 guidelines, or best practices, as well as an annex on joint hearings (the “Guidelines”), all of which were crafted to aid courts and practitioners in cross-border insolvency cases. In February 2017, the United States Bankruptcy Court for the District of Delaware (via Local Bankruptcy Rule 9029-2) and the United States Bankruptcy Court for the Southern District of New York (via General Order M-511) along with the Supreme Court of Singapore (via Registrar’s Circular No. 1 of 2017) moved the ball forward by adopting the Guidelines.
The Guidelines focus on three primary areas beyond their own implementation and interpretation: communication between courts, the process by which rulings are submitted for recognition between courts, and joint hearings. The primary issue the Guidelines address is communication. They establish the bounds of inter-court communication and help to resolve issues about the propriety of ex parte communication between courts. The ex parte communication the Guidelines list as appropriate is generally limited to the forwarding of court documents and clerical coordination between support staff. Guidelines 7 and 8. However, when ex parte communication between courts may not be avoided and counsel is entitled to be present, those communications should be recorded and transcribed. Guideline 8(ii). The primary purpose of this kind of communication is clear: to keep sister courts apprised of concurrent proceedings.
The Guidelines also anticipate joint hearings; that is, hearings conducted by video conference to limit the costs associated with conducting multiple proceedings for the same issue. Guidelines at Annex A. Interestingly, the guidelines are entirely procedural—they specifically exclaim any effect on the substantive laws of their subscribing jurisdiction. Guideline 5. So, while a hearing may be conducted in front of multiple courts at once, it is up to the practitioner to establish a sufficient record for each jurisdiction.