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Luiza-Cristina GAVRILESCU: Global strategies for the regulation of crossborder insolvency of credit institutions

Abstract:  The lack of an international legal framework actually referring to the cross-border insolvency of multinational corporations or credit institutions has dramatic effects on the security of international transactions. In this context, the beneficiaries of letters of credit are confronted with a certain difficulty in following the claims against an insolvent multinational bank, as the competent authorities in each relevant state are interested in protecting the national economy and the local creditors. Since most states adhere to a form of the territoriality principle in dealing with cross-border insolvency and they are less inclined to cooperate in such proceedings regarding credit institutions, the beneficiaries may be forced to follow their claims into a number of foreign jurisdictions and they are to bear considerable costs and face various procedural obstacles. Although the international community has recently made some progress with regard to the cross-border insolvency of collective entities through the UNCITRAL Model Law and the EC Regulation, such documents either lack a legally binding character, or their scope is restricted to a limited geographical area. The situation in the field of cross-border insolvency of banks is even more complicated, as each international insolvency agreement excluded the credit institutions from its scope. 

Key-words: credit institutions, single entity, separate entity, home country, host member state


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