Insolvency Law Reform

About RETA 5975

The RETA involved four countries - Indonesia, Korea, Philippines, and Thailand and focused on three main areas

• cross-border insolvency recognition and co-operation,
• informal work-out procedures, and
• the interrelation between secured transactions and insolvency.

The RETA was conducted over a period of five years, with a number of conferences and workshops held within this span of time. The initial conference was held in Manila on 30 September-1 October 2002. Draft country reports were prepared following the Manila Conference. These drafts country reports were then discussed and reviewed at the second conference held in Singapore on 17-18 March 2003.

Other activities under the RETA

In 2003, the ASEAN Law Association invited ADB to make a presentation about RETA 5975 to 300 delegates at its regional conference.

In 2004, INSOL India requested ADB to attend an international conference entitled "Balancing Recovery, Restructuring and Liquidation - the Emerging Challenges in Asia" to discuss and promote the objects of RETA 5975. The conference was held in February 2004 and was attended by government and business representatives from the Asian region. Copies of the draft interim report were circulated at the conference.

In May 2004, the APEC Business Advisory Council (ABAC)/Pacific Economic Cooperation Council (PECC)/Asian Bankers' Association (ABA) invited ADB to present on insolvency issues concerning the development of a regional bond market in Asia as well as to meet with the ABA and PECC to discuss the promotion of the RETA recommendations. Subsequent to ADB's participation, two groups indicated the desire to collaborate further to promote RETA 5975's recommendations.

The ABA wished to consider adoption of the RETA's Principles of Informal Workouts. A Model Agreement to Promote Company Restructuring was also developed.

In conjunction with the ABA, a number of consultation meetings with ABA member banks were held throughout the region in 2005 to discuss the draft model agreement to promote company restructuring. As a result of feedback at those meetings, a set of guidelines for informal workouts was developed and the model agreement was further refined.

At its 22nd General Meeting and Seminar held on 17-18 October 2005 in Melbourne, Australia, ABA formally adopted a set of guidelines for informal workouts [ PDF: 42kb | 5 pages ] and endorsed a Model Agreement for Company Restructuring [ PDF: 367kb | 33 pages ] for use of financial institutions throughout the region.

In adopting the guidelines and endorsing the template agreement, the ABA stated that it sought to address the absence of an international approach to informal workouts in the Asia-Pacific region, which posed a major obstacle to the expansion of investment within the region.

During the same meeting, the ABA also released a position paper - Providing the Legal and Policy Environment to Support Effective Informal Workout Regimes in the Asia-Pacific Region. It contains recommendations that complement ABA's adoption of the guidelines for informal workouts and its endorsement of a template agreement for company restructuring. The ABA proposed five measures

1. adoption of a fast-track formal workout regime;
2. enactment of legislation providing for creditors' voluntary liquidation or voluntary administration;
3. promotion of a regional center or centers for the resolution by arbitration of cross-border disputes;
4. strengthening of cross-border cooperation and assistance in insolvency cases; and
5. the undertaking of measures to enhance institutional capacity.

ADB also co-sponsored the Forum on Regional Insolvency Law Reform in Delhi on 4-5 November 2004.