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Endnotes

^[1] We utilise the word "state" as it is the terminology used by the UNCITRAL Model Law on Cross-Border Insolvency and because cross-border insolvency issues may arise not only between different countries but also between different states within a federal system.

^[2] Although we use the term "business enterprise", a non-trading individual or corporation is subject to the same considerations; we restrict consideration to trading entities for practical reasons only. For a summary of formal insolvency regimes see Laws NZ, Insolvency, para 3.

^[3] See also Folliott v Odgen (1789) 1 H Bl 123, Jollet v Deponthieu (1769) 1 H Bl 132n and Neale v Cottingham (1770) 1 H Bl 132n. For a case of even older vintage see Mackintosh v Ogilvie (1747) 3 Swans 380n.

^[4] Generally, see the Report of the National Bankruptcy Review Commission, Bankruptcy: The Next Twenty Years (Washington DC, 1997).

^[5] Black's Law Dictionary defines exequatur as a written official recognition and authorisation of a consular officer, issued by the government to which he or she is accredited (citing Doyle v Flemming 219 F Supp 277, 283 (District Court, Canal Zone) (1963)). Exequatur is similar to the common law notion of enforcement of the orders of foreign courts (see Harmer 1994, 149).

^[6] See also Banque de Financement SA v First National Bank of Boston 568 F 2d 911, 920_921 (2d Cir 1977); Re Culmer 25 BR 621, 629 (Bankr SDNY 1982); and Riesenfeld, The Status of Foreign Administrators of Insolvent Estates: A Comparative Survey 24 (1976) Am J Comp L 288 at 305.

^[7] Ross, "Political Expediency and Misguided Insolvency Reform _ The New Zealand Experience with the Corporations (Investigation and Management) Act 1989" (1994) 2 Insolvency LJ 25, 27. In this article Ross argues cogently that the "creditors' bargain" is the implicit agreement between creditors that there are economies of scale in having one office, the liquidator [of a company in a company situation] to handle administration of the liquidation and pay creditors under a pre-defined set of statutory rules.

^[8] See Wood 1995, 4_7, for an interesting ranking of some specific jurisdictions based on "pro-debtor" or "pro-creditor" approach. Note that Wood's rankings bear no correlation to the nature of the legal system under consideration nor the degree of industrialisation of a particular state.

^[9] Justification for the common law principles of comity being applied in this country can be found in ss 3 and 16 of the Judicature Act 1908 which, inter alia, gave the High Court all judicial jurisdiction necessary to administer the laws of New Zealand. Generally, see Laws NZ, Courts, para 11.

^[10] This part of the paper derives from Heath, International Insolvencies: A New Zealand Perspective (1998) 6 Insolv LJ 90 a paper delivered to the Insolvency Law Conference held at the Park Royal Hotel in Wellington on 6 March 1998. See also Brooker's Insolvency Law, BL 1_BQ 3.06 and Laws NZ, Insolvency, paras 552_560.

^[11] The definition of "action in personam" excludes any proceedings in connection with, amongst other things, bankruptcy and the winding-up of companies: s 2(2) Reciprocal Enforcement of Judgments Act 1934. See: Laws NZ, Insolvency, para 553; and, more generally Laws NZ, Conflict of Laws: Jurisdiction and Foreign Judgments.

^[12] In this context, the term "bankruptcy" is limited to a formal insolvency proceeding involving an individual or a partnership.

^[13] Re Peebles (Supreme Court, Auckland, 8 May 1973, B 52/73). While the Insolvency Act 1967 had, by then, come into force, the case involved the transitional provisions of the Act.

^[14] See the case note on this decision by Smart in (1998) 114 LQR 46.

^[15] Some examples of cases where such orders were made (without reasons being given) are: Re Ayres (HC Auckland, 30 July 1980, B472/79); Re Batty (HC Tauranga, 21 November 1988, B13/87); Re Cranston (HC Hamilton, 30 March 1992, B156/91); Re Wood (HC Hamilton, 8 March 1998, 133/87). See also Re Hemming (HC Hamilton, 21 January 1997, M11/87) which is the only case in which reasons were given.

^[16] The term "overseas company" is defined by s 2 of the Companies Act 1993 as meaning a body corporate which is incorporated outside New Zealand; there is no further requirement for that overseas company to be registered in New Zealand.

^[17] These issues were raised by the Joint Insolvency Committee in response to Australian Law Reform Commission, Legal Risk in International Transactions (ALRC, Report 80, Canberra 1996), a paper on cross-border civil remedies.

^[18] Gavigan v Australasian Memory Pty Limited (1997) 8 NZCLC 261,449 at 261,452_261,453.

^[19] A creditor who not only obtains payment in respect of a debt in a foreign court but also claims in a domestic bankruptcy or liquidation must, in general, bring into the common fund any sum recovered abroad (Smart 1991, 173; see also 95).

^[20] Note that as a matter of New Zealand domestic law the issue of domicile would be resolved by reference to the Domicile Act 1976.

^[21] See Knecht, "The Drapery of Illusion of Section 304 _ what lurks beneath: territoriality in the judicial application of section 304 of the Bankruptcy Code" (1992) 13 University of Pennsylvania Journal of International Business Law 287 for an interesting discussion of the differing United States interpretation of their s 304 factors.

^[22] Of course many states will have specific legislative provision for the rendering of assistance as well as the ability to render assistance based upon the doctrine of comity. For a consideration of how Asian states deal with cross-border insolvencies refer to the 1997 text by Tomasic and Little, Insolvency Law and Practice in Asia; see also Tomasic and Kamarul 1998. For a discussion of French procedures see Wood 1995, 264.

^[23] For information about the Russian financial crisis and causes of the collapse of Russia's economy see "Russia's Financial Crisis" at www.edmondsun.com/krt/russia/. For discussion of the recession in Japan see "Early Eco-

nomic Outlook: Japan: Another Recession, With the end not yet in sight" at www.emgmkts.com/research/cibcr/G7/98july/980731.htm (July 31 1998).

For information on the predicted financial crises in Latin American refer to Ortiz, "Market slide makes economics the priority at Latin America

summit" at www.foxnews.com/news/international/0905/i_ap_0905_60.sml (September 5 1998).

^[24] At present 82 countries have "voluntarily joined the IMF because they see the advantage of consulting with one another in this forum to maintain a stable system of buying and selling their currencies so that payments in foreign currencies can take place between countries smoothly and without delay" (Camdessus 1998, 3).

^[25] Statistics New Zealand, International Investment Position: 31 March 1998 states:

At 31 March 1998 New Zealand's net international investment position was negative $89.5 billion. . . . On a balance sheet presentation basis New Zealand owes the rest of the world $137.5 billion and has claims on the rest of the world of $48.0 billion. (1)

^[26] "The Role of the Reserve Bank of New Zealand in Supervising the Financial System" at www.rbnz.govt.nz/fin/sect1.htm.

^[27] The protocol is reproduced as Annex 1 to an article by Flashen and Silverman, "Maxwell Communication Corporation Plc, The Importance of Comity and Co-operation in Resolving International Insolvencies" 43 in Leonard and Besant 1994. See also Re Maxwell Communications Corporation Plc (No 2), Barclays Bank Plc v Homan [1992] BCC 757.

^[28] Re Solv-Ex Canadian Limited (Court of Queen's Bench of Alberta, Calgary, 28 January 1998, Case 970110022J) and Re Solv-Ex Corporation (US Bankruptcy Court New Mexico, 28 January 1998, Case 9714361).

^[29] See also the New Zealand Law Commission's report, The Treaty Making Process Reform and the Role of Parliament (NZLC R45), paras 40_41 and 91.

^[30] Generally, with regard to statutory management under the Corporations (Investigation and Management) Act 1989, see the April 1992 report

by the Securities Commission on Part III of that Act, Statutory Management, paras 83_101.

^[31] For example, the appointment of an examiner in Re Maxwell Communication Corporation plc by the Bankruptcy Court of the Southern District of New York on 15 January 1992; see the order set out in Leonard and Besant 1994, 48.

^[32] Section 32 provides:

[Subject to section 55 of the Apprenticeship Act 1983, upon] an adjudication being advertised, all proceedings to recover any debt provable in the bankruptcy shall be stayed, but the Court may, on application by any creditor or person interested, allow any proceedings commenced to be continued on such terms and conditions as it thinks just.

See further the guidance on the exercise of the discretion under s 32 of the Insolvency Act provided by Paterson J in Saimei v McKay (HC Auckland, 1 October 1998, CP543/96) 4_5. Section 247 provides: At any time after the making of an application to the Court under section 241(2)(c) of this Act to appoint a liquidator of a company and before a liquidator is appointed, the company or any creditor or shareholder of the company may,_ (a) In the case of any application or proceeding against the company that is pending in the Court or Court of Appeal, apply to the Court or Court of Appeal, as the case may be, for a stay of the application or proceeding: (b) In the case of any other application or proceeding pending against the company in any court or tribunal, apply to the Court to restrain the application or proceeding _ and the Court or Court of Appeal, as the case may be, may stay or restrain the application or proceeding on such terms as it thinks fit.

^[33] For example, the Montevideo Treaties of 1889 and 1940 (which governed relations among Argentina, Bolivia, Columbia, Peru, Paraguay and Uruguay respectively); the Code Bustamente (Convention on Private International Law) of 1928 which governs certain types of bankruptcies involving 15 Central and South American States; and the Nordic Bankruptcy Convention of 1933 which governs relations among Denmark, Finland, Iceland, Norway and Sweden.

^[34] DFC New Zealand Ltd is the only financial institution to have been placed in statutory management under the Reserve Bank Act. DFC New Zealand was declared subject to statutory management on 3 April 1990 by Order-in-Council dated 26 March 1990: SR1990/70. A statutory manager was appointed by further Order-in-Council on 26 March 1990 to come into force 3 April 1990: SR1990/69.