Vol 8 (2011) - Issue 4

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The Emerging Framework of Cross-Border Insolvency in and around Australia: Saad Investments, Japan Airlines and Lehman Brothers – Part One

Recent decades have witnessed a global acceleration of legislative and private sector initiatives to deal with Cross-Border insolvency. Legislative institutions include the various national implementations of the Model Law on Cross-Border Insolvency (Model Law) published by the United Nations Commission on International Trade (UNCITRAL). Private mechanisms include Cross- Border protocols developed and utilised by insolvency professionals and their advisers (often with the imprimatur of the judiciary), on both general and ad hoc bases.

The Asia Pacific region has not escaped the effect of those developments, and the economic turmoil of the past few years has provided an early test for some of the emerging initiatives in that region. This two-part article explores the operation of those institutions through the medium of three recent cases.

In this first part, Scott Atkins considers Ackers v Saad Investments Co Limited (in official liq) (Ackers v Saad), examining the Model Law jurisprudence in Australia since the enactment of the Cross-Border Insolvency Act 2008 (C’th) (CBIA).

In the second part, Stewart Maiden uses the turnaround of the Japan Airlines group to show how the Model Law was used to protect the value of a complex international business as a going concern. Professor Rosalind Mason discusses the liquidation of Lehman Brothers, which demonstrates how private arrangements can provide solutions to cross-border problems that might be beyond the reach of existing legislation.

Together, those three discussions show how both the Model Law and private initiatives have found a place in assisting the winding up and restructuring of large and complex multinational organisations in the Australian neighbourhood.



A. Saad Investments

The global financial crisis has been in full swing since 2008. Anecdotally, its impact in Australia and many parts of Asia is often said by economic commentators to have been less intense than elsewhere, especially when compared to the economic performance of the US, the UK and much of Europe. That has not, however, insulated the Asia-Pacific region from exposure to a high level of restructuring and workout activity in recent times.