Annex I

Treatment of secured creditors in insolvency proceedings

The UNCITRAL Legislative Guide on Insolvency Law does not include a separate chapter addressing the treatment of secured creditors throughout insolvency proceedings, but rather deals with treatment of secured creditors in the context of each topic. In respect of some issues, the Guide makes specific reference to secured creditors and the manner in which they may be affected by the commencement of insolvency proceedings, for example, constitution of the insolvency estate, application of the stay and post-commencement finance. In respect of other issues, secured creditors will be treated in the same manner as all other creditors, for example, with respect to treatment of contracts, avoidance provisions and claims procedures. The references (to both paragraphs of the commentary and recommendations) set forth below list certain sections specifically relating to secured creditors. For a complete picture of how secured creditors are affected by commencement of insolvency proceedings, however, the Guide should be read as a whole.

Part One. Designing the key objectives and structure of an effective and efficient insolvency law

Part Two. Core provisions for an effective and efficient insolvency law

I.Application and commencement

II.Treatment of assets on commencement of insolvency proceedings

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Annex II

Decision of the United Nations Commission on International Trade Law and General Assembly resolution 59/40

A.Decision of the Commission

1.At its 792nd meeting, on 25 June 2004, the United Nations Commission on International Trade Law adopted the following decision:a

The United Nations Commission on International Trade Law,

Recognizing the importance to all countries of strong insolvency regimes,

Recognizing also that it is demonstrably in the public interest to have an effective and efficient insolvency regime as a means of encouraging economic development and investment,

Noting the growing realization that reorganization regimes are critical to corporate and economic recovery, the development of entrepreneurial activity, the preservation of employment and the availability of venture capital,

Noting also that the effectiveness of reorganization regimes affects the availability of finance in the capital market, with comparative analysis of such systems becoming both common and essential for lending purposes, which affects countries at all levels of economic development,

Noting further the importance of social policy issues, including the interests of stakeholders in an insolvent debtor, to the design of an insolvency regime,

Recognizing that solutions to the key economic, legal and legislative issues raised by insolvency that are negotiated internationally through a process involving a broad range of constituents will be useful both to States that do not have an effective and efficient insolvency regime and to States that are undertaking a process of review and modernization of their insolvency regimes,

Noting that the UNCITRAL legislative guide on insolvency law (to which the UNCITRAL Model Law on Cross-Border Insolvencyb and Guide to Enactmentc are annexed) and an UNCITRAL legislative guide on secured transactions, which is

aOfficial Records of the General Assembly, Fifty-ninth Session, Supplement No. 17 (A/59/17), para. 55.

bIbid., Fifty-second Session, Supplement No. 17 (A/59/17), annex I. cA/CN.9/442, annex.

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B.General Assembly resolution 59/40

2.On 2 December 2004, the General Assembly adopted the following resolution:

Legislative Guide on Insolvency Law of the

United Nations Commission on International Trade Law

The General Assembly,

Recognizing the importance to all countries of strong, effective and efficient insolvency regimes as a means of encouraging economic development and investment,

Noting the growing realization that reorganization regimes are critical to corporate and economic recovery, the development of entrepreneurial activity, the preservation of employment and the availability of finance in the capital market,

Noting also the importance of social policy issues to the design of an insolvency regime,

Noting with satisfaction the completion and adoption of the Legislative Guide on Insolvency Law of the United Nations Commission on International Trade Law by the Commission at its thirty-seventh session, on 25 June 2004,g

Believing that the Legislative Guide, which includes the text of the Model Law on Cross-Border Insolvency and Guide to Enactment recommended by the General Assembly in its resolution 52/158 of 15 December 1997, contributes significantly to the establishment of a harmonized legal framework for insolvency and will be useful both to States that do not have an effective and efficient insolvency regime and to States that are undertaking a process of review and modernization of their insolvency regimes,

Recognizing the need for cooperation and coordination between international organizations active in the field of insolvency law reform to ensure consistency and alignment of that work and to facilitate the development of international standards,

Noting that the preparation of the Legislative Guide was the subject of due deliberations and extensive consultations with Governments and international intergovernmental and non-governmental organizations active in the field of insolvency law reform,

1.Expresses its appreciation to the United Nations Commission on International Trade Law for the completion and adoption of its Legislative Guide on Insolvency Law;g

2.Requests the Secretary-General to publish the Legislative Guide and to make all efforts to ensure that it becomes generally known and available;

gOfficial Records of the General Assembly, Fifty-ninth Session, Supplement No. 17 (A/59/17), chap. III.