UNCITRAL guidance on MSE insolvency – Insolvency Law Bulletin article

An article in the latest Insolvency Law Bulletin[1] reports on the progress of UNCITRAL Working Group V[2] in developing law reform guidance on the resolution of the insolvency of micro and small-sized enterprises (MSEs), an issue for Australia and comparable jurisdictions, now heightened as a priority in light of the impact of COVID-19.

As the authors explain, MSE insolvencies generally have few employees or remaining funds and closely intermingled business and personal debts and assets. The aim of the guidance being settled is on faster, simpler, accessible and affordable insolvency proceedings, in particular to encourage MSEs to address their financial difficulties earlier. The focus is on short time limits, reduced formalities, online templates and simplified communication. The guidance covers MSEs with assets and the potential for reorganisation and extends to what are termed ‘zero asset proceedings’, allowing a prompt discharge with ‘proportionate’ rights of creditor challenge.

A ‘competent authority’ – a state or judicial agency, a model suggested being the Official Trustee – would oversight the ‘independent parties’, being those conducting the insolvency processes but with other roles being to assist MSEs in the pre-insolvency process, including to assess solvency and to prepare and implement a liquidation or a reorganization plan.

The next session of UNCITRAL WGV, which was due in May 2020 in New York, is postponed but work of the group is continuing, with its deliberations and drafting no doubt informed by MSE financial difficulties confronting many jurisdictions.


[1] Guiding the way: Recent developments in UNCITRAL’s Simplified Insolvency Regime (2020) 20(6) INSLB 97, Samantha Pacchiarotta and Cassandra Heaslip. Both authors attended the last session of WGV in Vienna, in December 2019 on behalf of UNCCA and LAWASIA.

[2] United Nations Commission on International Trade Law Working Group V – Insolvency Law

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