Financial Institutions in Distress: Recovery, Resolution, and Recognition

Political boundaries are often porous to finance, financial intermediation, and financial distress. Yet they are highly impervious to financial regulation. When inhabitants of a country suffering a deficit of purchasing power are able to access and deploy funds flowing in from a country with a surfeit of such power, the inhabitants of both countries may benefit. They may also benefit when institutions undertaking such cross-border financial intermediation experience economies of scale and are able to innovate and to offer funds and services at lower costs.

Inevitably, however, at least some such institutions will sometimes act imprudently, some of the projects in which such funds are deployed may be unwise, and other such projects can suffer from unforeseen circumstances. As a result of such factors, a financial institution may suffer distress in one country, and may then transmit such distress to other countries in which it operates. The efficacy of any response to such cross-border transmission of distress may turn on the response being given due effect in both (or all) the territories in which the distressed financial institution operates. This situation creates a conundrum for policymakers, legislators, and regulators who wish to enable those subject to their jurisdiction to access the benefits of cross-border financial intermediation, yet cannot make rules and regulations that would have effect outside that jurisdiction.

This book explores this conundrum and offers a response. It does so by drawing on and adding to the literatures on financial intermediation, regulation, and distress, and on existing hard and soft laws and regulations. The book advocates for the creation of a model law that would address the full range of financial institutions, including insurance companies, and that would enable relevant authorities to cooperate with counterparts in advance of the onset of distress and to give appropriate effect in their jurisdiction to measures taken by counterpart authorities in other jurisdictions in which the distressed institution also operates.

Ronald Davis, Associate Professor Emeritus, University of British Columbia,Stephan Madaus, Professor of Law, Martin Luther University Halle-Wittenberg,Monica Marcucci, General Counsel, IVASS,Irit Mevorach, Professor of International Commercial Law, University of Nottingham,Riz Mokal, Barrister, South Square,Barbara Romaine, Judge, Alberta Court of Queen's Bench,Janis Sarra, Professor, University of British Columbia,Ignacio Tirado, Secretary General, UNIDROIT

Professor Ronald Davis is the author of books and articles on domestic and international comparative pension law, corporate governance, insolvency law, and trust law. He was called to the Bar of Ontario in 1992, joining the pension law practice of Koskie Minsky in Toronto. Prior to joining UBC, he taught Occupational Health and Safety and Worker's Compensation Law at the University of Toronto Law Faculty and Pension and Benefits Law at the Faculty of Law, University of Western Ontario. He lectured to the Osgoode Hall Law School LL.M. Specialization in Securities Law, as well as to the Investment Management School, Schulich School of Business, York University.

Prof Stephan Madaus has held his chair at the Martin Luther University Halle-Wittenberg since April 2014, where he was the head of the Law School from 2016 to 2018. He teaches property law (including secured transactions), insolvency and restructuring law, as well as contract and tort law. Prof. Madaus is a Member of the European Commission's Expert Group on Restructuring and Insolvency. He a member of the executive at the International Insolvency Institute and at the Conference of European Restructuring and Insolvency Law (CERIL). His research interests are in dealing with debt burdens and consequently focus on insolvency and restructuring law, with a special focus on the comparative analysis of relevant regulatory approaches in jurisdictions worldwide as well as in the soft law of international organizations.

After many years in the legal department of Banca d'Italia, the national central bank of Italy, Monica Marcucci took the position of General counsel at Ivass, the Italian supervision authority for the insurance sector, in 2019. Since 2006, Monica is a member of the Italian delegation at UNCITRAL in the Working Group V on Insolvency law. Since 2013 she is contract professor at Università Cattolica del Sacro Cuore of Rome for the faculty of Economics, within the teaching programme SSG1811 Company law (IUS/04). She is registered at the Rome bar since 1992; Court of Cassation attorney since 2005.

Irit Mevorach is a Professor of International Commercial Law at the University of Nottingham, and founder of the University of Nottingham Commercial Law Centre. Between 1997-2003 Irit practiced commercial law in Israel. Since 2006, she is participating as expert adviser to the UK delegation to UNCITRAL Working Group V. In 2013, Irit was appointed Senior Counsel to the World Bank (2013-2015). Irit is an international fellow at the American College of Bankruptcy, she is on the Editorial Board of the Global Restructuring Review, the Spanish Journal of Insolvency and Restructuring, and the International Advisory Council of the Singapore Global Restructuring Initiative. Since 2020 she is a member of the Lord Chancellor's Advisory Committee on Private International Law, Ministry of Justice.

Over the past 25 years, Professor Rizwaan Jameel Mokal has researched, taught, and practised insolvency, property, and commercial law, and has advised governments on law reform. He has held the Chair of Law and Legal Theory at UCL, served as Senior Counsel to the World Bank and headed the Bank's Global Insolvency and Creditor/Debtor Initiative, has been a member of the Bank's and subsequently the United Kingdom delegations to the United Nations Commission on International Trade Law, and belongs to several invitation-only international professional organisations. His work has influenced law reform in several jurisdictions and has been cited with approval by courts around the world.

Justice Romaine was appointed to the bench in 1997. Prior to that, she was a partner of McCarthy Tétrault, involved with national and international project development. She was a bencher of the Law Society, serving as President in 1997. Justice Romaine is often assigned to commercial insolvency and complex commercial matters. She co-edited the Annual Review of Insolvency Law between 2012 and 2018, was a member of its Editorial Advisory Board, and of the board of the International Insolvency Institute until 2022. She is a member of INSOL International, IWIRC and the International Exchange of Experience on Insolvency Law. She has participated as a faculty member and panelist in a number of programs for the National Judicial Institute and for the international associations to which she belongs.

Dr Janis Sarra, BA, MA, LLB, LLM, SJD (University of Toronto) is Professor of Law at the University of British Columbia (UBC) and held the position of the UBC Presidential Distinguished Professor from 2014 to 2019. She served as Associate Dean of the Faculty of Law, founding Director of the National Centre for Business Law, and a Senator of the University. She has researched and taught in the areas of corporate and securities law, banking and finance law, corporate governance, ESG and climate risk management, fiduciary obligation, insolvency law, economics and contract law. She is a member in good standing of the Law Society of Ontario. She is a member of the Canadian Delegation to the United Nations Commission on International Trade Law WG V.

Dr (UAM) Dr (Bologna) Ignacio Tirado LLM (London) is currently Secretary General of UNIDROIT and professor of Commercial Law at Universidad Autónoma de Madrid. Ignacio has worked in legal reform with the World Bank for a decade. Ignacio has served as Member of the Executive Committee and as Director of the International Insolvency Institute, where he has also been co-Chair of the Academic Committee. He is the Vice-Chair of the pan-European think tank Conference of European Restructuring and Insolvency Law. He has represented the World Bank in UNCITRAL´s Working Group V (insolvency) and Spain in Working Group VI (secured transactions). The representative of one of the founding members of the European Banking Institute, Ignacio is International Fellow of the American College of Bankruptcy, a member of the Spanish Law Commission, and a member of the Expert Group on Restructuring and Insolvency of the European Commission.