The MLCBI, the COMI and Emerging Markets: Is It Time for Amendments?

Revised draft in 98:2 Chi.-Kent L. Rev. 509 (2023)

22 Pages Posted: 13 Sep 2022 Last revised: 17 Jan 2024

See all articles by Rosa Rojas-Vertiz

Rosa Rojas-Vertiz

Instituto Tecnológico Autónomo de México (ITAM) - Law School

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Date Written: July 13, 2022

Abstract

We celebrate 25 years of adopting the Model Law on Cross-Border Insolvency (MLCBI) by UNCITRAL. To date, it has been incorporated in the legislation of 51 states, although its rules have been applied mainly in countries with common law jurisdictions. The Centre of Main Interests (COMI) is a crucial concept in the MLCBI, as it determines the jurisdiction where the main insolvency proceeding must take place. To avoid forum shopping, the MLCBI provides a rebuttable presumption that the COMI is where the debtor’s registered office is. However, this presumption infers that all jurisdictions have fully-developed insolvency systems and that any jurisdiction would render an equivalent result. It ceases to consider that, in some cases, forum selection is necessary to achieve the goals of an insolvency proceeding. By providing that the main insolvency proceeding must necessarily take place in the jurisdiction where the debtor has its COMI, the MLCBI risks the recognition of the main proceeding held in another jurisdiction. Due to the foregoing, this paper questions whether the current rules to determine COMI are the best approach in emerging markets, particularly in Latin America. This study discusses the cases of big Latin American companies that select a forum that is not their COMI but with which they have connections to hold their insolvency proceeding as the only reasonable possibility to achieve a rescue. It analyses the problems that may arise for such debtors in enforcing the approved reorganization plan and in recognition of such main foreign proceedings in the jurisdiction where they have their COMI. This paper also examines the alternatives available for such debtors to achieve a successful reorganization and discusses more flexible rules consistent with the targets pursued by the MLCBI for the filing and recognition of foreign main proceedings.

Keywords: MLCBI, Latin America, COMI, forum shopping

Suggested Citation

Rojas Vertiz Contreras, Rosa, The MLCBI, the COMI and Emerging Markets: Is It Time for Amendments? (July 13, 2022). Revised draft in 98:2 Chi.-Kent L. Rev. 509 (2023), Available at SSRN: https://ssrn.com/abstract=4190677 or http://dx.doi.org/10.2139/ssrn.4190677

Rosa Rojas Vertiz Contreras (Contact Author)

Instituto Tecnológico Autónomo de México (ITAM) - Law School ( email )

Río Hondo No.1
Álvaro Obregón, Mexico City
Mexico

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