Cross-Border Insolvency in East Asia: Cooperation and Convergence

Despite the economic interconnectivity of many East Asian markets and an increase in the number and significance of multinational corporations, domestic insolvency laws in East Asian nations remain diverse. While laws may represent the economic and social priorities of individual jurisdictions, this diversity often provides an impediment to restructuring companies with assets or debts in multiple jurisdictions. This chapter provides an overview of the primary legal approaches to cross-border corporate insolvency in East Asia and their corresponding challenges. The chapter begins with an overview of common corporate restructuring regimes, including approaches modelled on English schemes of arrangement and US Chapter 11 bankruptcy, receiverships and judicial management. Approaches are examined on the recognition of, and assistance in cross-border proceedings within the framework of the theoretical models of territorialism and universalism. While reference is made to several jurisdictions, the focus is on China, Japan, Indonesia and Singapore. Challenges to cross-border corporate insolvency are examined with the chapter addressing reforms that seek to harmonize laws or facilitate cooperation in the East Asian context.