By Gary F. Seitz, Esq., Trustee, Gellert Seitz Buskenkell & Brown, Philadelphia, PA
and Jolene Wee, CIRA, CDBV, Trustee, JW Infinity Consulting, New York, NY and Washington, DC
Published 2024 in the NABT American Bankruptcy Trustee Journal – Volume 40, Issue 02
WHAT IS GOING ON?
The National Association of Bankruptcy Trustees International Committee in its capacity as an invited international non-governmental organization (“NGO”) with observer status, assembled an Expert Advisory Team to attend the working session of the United Nations Commission on International Trade Law (UNCITRAL)’s Working Group V – Insolvency (“WGV”), held at the United Nation’s offices in Vienna, Austria in mid-December, 2023.
WHO IS INVOLVED?
NABT’s team of experienced and dedicated lawyers and financial advisers comprised of Fred Stevens, Leslie Gladstone and Alex Moglia, co-led by Chair Jolene Wee and Gary Seitz. On short notice, the team generously donated their time and travel in support of this worthy cause. In addition, a team of observers participated remotely including President Marc Albert, Past President Neville Reid, and International Committee Members Gregory Grossman, Robert Elgidely and Candice Kline.
In addition to attendance by delegates from around 70 countries, other NGO observers participating in the session included: American Bar Association (ABA), Centre for International Legal Studies (CILS), China Council for the Promotion of International Trade (CCPIT), Conference on European Restructuring and Insolvency Law (CERIL), Conseil National des Administrateurs Judiciaires et des Mandataires Judiciaires (CNAJMJ – the French Trustee’s association), INSOL International, International Bar Association (IBA), International Insolvency Institute (III), and International Women’s Insolvency and Restructuring Confederation (IWIRC).
UNCITRAL is a subsidiary body of the U.N. General Assembly responsible for helping to facilitate international trade and investment. The WGV’s session is examining civil asset tracing and recovery, and the applicable law, both in the context of insolvency proceedings. These topics are particularly relevant to NABT members.
HOW DID THIS HAPPEN?
Although the National Association of Bankruptcy Trustees International Committee was a recent development, the combined depth of knowledge and experience has caused the NABT to be internationally recognized as a resource to participate in international law matters related to our industry. In August of 2023, the Secretary of UNCITRAL, the Honorable Anna Joubin Bret, granted NABT’s request for observer status with UNCITRAL WGV.
Established in 1966, UNCITRAL is a subsidiary body of the General Assembly of the United Nations with the general mandate to further the progressive harmonization and unification of the law of international trade. Currently, UNCITRAL has six “working groups” that formulate conventions, model laws and legislative guides designed to harmonize the commercial laws of different countries. One of the working groups, WGV, focuses on bankruptcy and reorganizations.
Since 1995, WGV debated and considered issues in relation to international and cross-border insolvency law and has produced several core documents, including UNCITRAL Model Law on Cross-Border Insolvency (1997) that forms the basis of our Chapter 15 of Title 11 of the U.S. Code, UNCITRAL Legislative Guide on Insolvency Law, as well as practice guides and other model laws adopted by countries around the globe.
WGV meets twice a year, once in Vienna, Austria, and again in New York. Meetings usually last four days and involve lively discussions among representatives of member-states and NGO observers. The UNCITRAL secretariat produces and circulates draft summaries of the discussions. Once a project is in final form, it is reviewed and voted on by the full commission.
As mentioned, two current projects have been taken on by the Working Group. These are: (1) processes for tracing and recovering assets across borders; and (2) the difficult private international law question of the applicable law in crossborder proceedings.
WHY IS NABT PARTICIPATING?
Everyday, Trustees encounter evidence of relentless economic globalization. Trustees face various challenges amid globalization and digital transformation. One way to describe globalization is the changing connectivity of the world, where information, knowledge, technology and culture are shared and are accessible internationally. The result is the merging of culture and finance globally as technology and connectivity transcend time zones, locality and domestic markets. Recent decades have seen a rise in globalization with the world changing at an increasing rate. This has resulted in the removal of barriers, thus creating opportunities for businesses and individuals to move beyond local or domestic borders to pursue international trade, customers, and investments.
Cross-border business failures and a search for assets abroad are inevitable as a result of rapidly increasing globalization, international commerce, electronic assets, global digital communication and the global transfer of assets. This creates complexities in the administration of cases by trustees.
Whether we like it or not, NABT members are part of the globalized business and investment eco-system and are therefore subject to the demands and constraints of the modern global market.
As trade and commerce between businesses have greatly expanded to become truly global over the last several decades, uniform choice of law rules in insolvency and collective recognition of tools to locate and recover assets are needed now more than ever. The coordination of choice of law rules is acknowledged as a necessary component of a modern society, but the issue of how that is accomplished, in what manner and by whom, is the subject of much ongoing debate. That debate is centralized globally at UN WGV. It is natural that Trustees would participate.
The focus of the current project is to develop a “toolbox” to assist states in developing or enhancing their current laws to trace and recover assets fraudulently or improperly transferred by a Debtor in an insolvency proceeding to third parties or to other jurisdictions and to be able to recover the transferred proceeds in an expeditious manner at a reasonable cost and expense so that creditors will be able to achieve a meaningful recovery and ultimate distribution of dividends from the insolvency proceeding.
WHERE CAN I LEARN MORE?
As with other UN Working Groups, WGV maintains an online record of its latest work and agendas for forthcoming meetings and colloquia. The relevant information is available at Working Group V: Insolvency Law | United Nations Commission on International Trade Law.1 The participation of the NABT in WGV is a task of the International Committee. You can join the International Committee by reaching out to the Chair, Joleen Wee at jwee@jw-infinity.com.
For more details on the working methods of UN WGV, NABT Member and member of the United States Delegation, Christopher Redmond, published an informative law review article.2 NABT member and member of the IBA delegation, Richard J. Mason, also has an informative article published by the American Bankruptcy Institute.3
WILL RECENT UNCITRAL PROJECTS IMPROVE BANKRUPTCY TRUSTEE’S ABILITY TO LOCATE AND RECOVER ASSETS ABROAD?
As an invited NGO, NABT plans to continue to participate in and monitor the activities of WGV with its NABT Expert Advisory Team. A team was assembled and as of publication of this article, attended the May 2024 Working Group Session held at the UN facilities in New York. The current work is of direct relevance to trustees due to its focus on improving the effectiveness of tracking and recovering assets from foreign jurisdictions and determining the applicable law. The continuing work of UNCITRAL WGV aims to enhance the ability of bankruptcy trustees and other insolvency practitioners to locate and recover assets abroad in cases of international insolvency. The specific impact and developments involve the collection of a range of methods or tools to track assets, development of model laws, guidelines, or recommendations that countries can adopt to facilitate asset tracking and recovery for foreign insolvency proceedings. These instruments aim to address issues such as recognition of foreign insolvency proceedings, cooperation between courts and authorities in different jurisdictions, and the treatment of creditors’ claims in cross-border cases.
If UNCITRAL’s work is successful and widely adopted by member states, it would improve the ability of bankruptcy trustees to locate and recover assets abroad by providing recognized and clearer legal frameworks and mechanisms for cooperation between jurisdictions. However, the effectiveness of these improvements will depend on the extent to which countries implement UNCITRAL’s recommendations and the level of cooperation among relevant stakeholders in crossborder insolvency cases.
The NABT’s participation in the work of UNCITRAL WGV gives trustee members a seat at the table to provide their reallife experience and lend an element of practicality to the proposals discussed. In addition, the work opens the NABT up to a wide network of international connections that will serve as valuable contacts to assist our members in tracking, recovering and repatriating assets from abroad.
If you have any questions about NABT’s participation in the work of UNCITRAL WGV, please contact International Committee Chair, Jolene Wee at jwee@jw-infinity.com or Gary Seitz at gseitz@gsbblaw.com.
Established in 1966, UNCITRAL is a subsidiary body of the General Assembly of the United Nations with the general mandate to further the progressive harmonization and unification of the law of international trade. Currently, UNCITRAL has six “working groups” that formulate conventions, model laws and legislative guides designed to harmonize the commercial laws of different countries. One of the working groups, WGV, focuses on bankruptcy and reorganizations.
ENDNOTES:
1 https://uncitral.un.org/en/working_groups/5/insolvency_law
2 Christopher J. Redmond, Working Methods of UNCITRAL Working Group V (Insolvency) and Choice of Law, 9 Brook. J. Corp. Fin. & Com. L. (2014). Available at: https://
brooklynworks.brooklaw.edu/bjcfcl/vol9/iss1/11 – Methods of Working Group V and Choice of Law, 9 Brook.J.Corp.Fin.& Com.L.
3 Richard J. Mason, Will Recent UNCITRAL Projects Impact U.S. Bankruptcy Practice? ABI Journal (October 2019) p. 34.
About the Authors
Gary F. Seitz is a Partner in the Philadelphia office of Gellert Seitz Buskenkell & Brown. He concentrates his practice in the areas of commercial bankruptcy, commercial litigation and transportation including admiralty and maritime law. Gary serves as a Chapter 7 Panel Trustee in the United States Bankruptcy Court for the Eastern District of Pennsylvania and has served as Trustee in Chapter 7 and Chapter 11 cases in Pennsylvania, New Jersey and Delaware. He has extensive experience handling bankruptcy matters for creditors, asset purchasers and trustees. Gary also has expertise in admiralty and maritime litigation and transactions with particular emphasis on marine financing and vessel foreclosures. Gary is admitted to practice in the state and federal courts of Delaware, Pennsylvania and New Jersey, and the United States Court of Appeals for the Third and Fifth Circuits. He is the immediate past president of the National Association of Bankruptcy Trustees.
Jolene Wee is JW Infinity Consulting’s Managing Director and Founder. She has almost 20 years of finance and accounting experience and more than 15 years of restructuring experience. She has served in the role of Trustee, Expert Witness, Financial Advisor, Valuation Consultant and Forensic Consultant. Jolene is a trusted advisor to fiduciaries, legal counsel, corporations, high net worth individuals, and public agencies on crossborder, restructuring, bankruptcy, litigation, fraud, financing, merger, and buyout matters. Her case experience included companies in the banking, e-commerce, healthcare, insurance, manufacturing, real estate, retail, and technology industries with revenues of up to $15B. She is a Chapter 11 (Subchapter V) bankruptcy trustee in Region 2 covering the Eastern and Southern Districts of New York and Region 4 covering Maryland, the District of Columbia and the Eastern District of Virginia.