Introduction and purpose of section one

• Author: United Nations Commission on International Trade Law
• Pages: 3-3

3

Section one

Obligations of directors of an enterprise

in the period approaching the insolvency

of that enterprise

Introduction and purpose of section one

1. is section focuses on the obligations that might be imposed upon those

responsible for making decisions with respect to management of an enterprise

when that enterprise faces imminent insolvency or insolvency becomes unavoid-

able. e aim of imposing such obligations, which are enforceable once insolvency

proceedings commence, is to protect the legitimate interests of creditors and other

stakeholders and to provide incentives for timely action to minimize the eects of

nancial distress experienced by the enterprise.

2. e key elements of provisions imposing such obligations are addressed,

including (a) the nature and extent of the obligations, (b) the time at which the

obligations arise, (c) the persons to whom the obligations would aach, (d) liability

for breach of the obligations, (e) enforcement of the obligations, (f) applicable

defences, (g) remedies, (h) the persons who may bring an action to enforce the

obligations, and (i) how those actions might be funded.

3. is section uses terminology common to other parts of the Guide and other

insolvency texts prepared by UNCITL.1 To provide orientation to the reader,

this section should be read in conjunction with terms and explanations included

in the glossary contained in the Introduction to the Guide.2

 Available from uncitral.un.org under “Texts and Status”.

 United Nations publication, Sales No. E.05.V.10.