The World Bank and the United Nations Commission on International Trade Law (UNCITRAL), in consultation with the International Monetary Fund (IMF), designed the Insolvency and Creditor Rights Standard (the “ICR Standard”) to represent the international consensus on best practices for evaluating and strengthening national insolvency and creditor rights systems. The ICR Standard does this by combining the World Bank Principles for Effective Insolvency and Creditor/Debtor Regimes (the “Principles”) and the UNCITRAL Legislative Guide on Insolvency Law (the “Legislative Guide”). The Financial Stability Board has recognized and designated the ICR Standard as one of the key standards for sound financial systems and deserving of priority implementation depending on country circumstances.
The World Bank Principles for Effective Insolvency and Creditor/Debtor Regimes
The Principles were originally developed in 2001 in response to a request from the international community in the wake of the financial crisis of the late 1990s. At that time, the principles constituted the first internationally recognized benchmarks to evaluate the effectiveness of domestic creditor/debtor rights and insolvency systems.
Based on the practical experience gained from using of the Principles, and following extensive consultations, the Principles have been revised in 2005, 2011 and 2015. While the 2005 revisions grouped the principles under relevant headings to provide a streamlined approach, the 2011 revisions incorporated the updates made to the UNCITRAL Legislative Guide on Insolvency Law. In this regard, two new Principles (C16 and C17) were added to reflect best international practice in the regulation of the insolvency of enterprise groups.
In 2015, changes were made to Part A and B the Principles, which highlight the relationship between the cost and flow of credit (including secured credit) and the laws and institutions that recognize and enforce credit agreements. In this regard, the Sections A4 and A5 of the 2011Principles dealing with Registries and Enforcement mechanisms are addressed in a more detailed manner in the 2015 revised draft. Similarly, Section B2 of the Principles received a much anticipated change which widened the scope of duties and responsibilities of the directors in an insolvency.
- Download: World Bank Principles for Effective Insolvency and Creditor/Debtor Regimes (Revised, 2015)
UNCITRAL Legislative Guide on Insolvency Law
The UNCITRAL Legislative Guide provides a comprehensive statement of the key objectives and principles that should be reflected in a State's insolvency law. It is intended to inform and assist insolvency law reform around the world, providing a reference tool for national authorities and legislative bodies when preparing new laws and regulations or reviewing the adequacy of existing laws and regulations. Part one and two of the Legislative Guide was completed in 2004 discusses the key objectives and effectiveness of an insolvency law. Part three of the Legislative Guide was adopted in 2010 and it focuses on the treatment of enterprise groups in insolvency, both nationally and internationally. Part four established in 2013 focuses on the obligation of the decision makers of the enterprise in an insolvency. Each part of the Legislative Guide presents a detailed series of legislative recommendations, which include a discussion of various options and approaches. All components of the Legislative Guide is available on the UNCITRAL website.