Financial Sector Insolvency Study In cooperation with INSOL International, the International Association of Insolvency Practitioners

August 1996

ISBN 1-56708-099-5

GROUP OF THIRTY - NOTE FROM THE CHAIRMAN

In the wake of the Barings collapse in February 1995, the Group of Thirty, in cooperation with the International Insolvency Practitioners Association (INSOL International), convened a small group of experts to examine the issues raised by that episode. The potential for systemic risk in the failure of a global financial institution has long been recognized by supervisors, but the Barings case made manifest the complexity of sorting out claims in a globally active financial institution.

Rather than reviewing the Barings case itself, which had already been thoroughly analyzed elsewhere, the group looked more broadly at the issues surrounding the insolvency of a global financial institution. Given the complexity of the issues and substantial variations in insolvency law and practice, the group's report and recommendations are presented in draft form, providing a basis for discussion of the impediments to expeditious settlement of international financial insolvencies.

It is our intention to seek the views and comments of experts from a range of countries and disciplines on the draft recommendations. Through this process, we hope to refine the proposals to ensure their broad applicability and utility for major financial institutions, regulators, courts and legislatures. We look forward to the continuing dialog that will be required in order to ensure that, if a global financial institution gets into serious difficulty, its insolvency can be handled with speed and certainty.

PAUL A. VOLCKER

Summary of Recommendations

Introduction

Background

Recommendations