Delegates tackling the problem of receivers in different countries being unable to agree on how to rescue a troubled multinational are trying to break a 20-year deadlock that has prevented agreement on a European code. The third draft of a European Union Bankruptcy Convention will be top of the agenda in Vienna, where Steve Hill, technical partner with Coopers & Lybrand, which has Britain's biggest receivership practice, and Michael Prior, international law expert with the solicitors Nabarro Nathanson, are arguing the case for Britain's receivers.
The urgent need for such a convention, which would give British receivers official status in continental courts, has been vividly shown by a series of cross-border insolvencies in recent years:
When receivers were appointed to Lancer Boss, the British forklift truck maker, this month, its problems were made worse by the fact that it had a large subsidiary in Germany, Steinbock Boss. The concept of receivership simply does not exist under German law, so the lawyer appointed by the Bavarian courts was able to ride roughshod over the wishes of the British receiver.
Robert Maxwell's business empire had more than 800 companies based mainly in 12 countries when the edifice collapsed. Four teams of UK liquidators, receivers and administrators have had to construct ad hoc agreements, particularly with the US courts, in order to sell the companies on, saving thousands of jobs in the process.
Leyland Daf was an extremely complicated business rescue where the UK and Dutch operations were completely intertwined. The UK receivers managed to sell the British side on only because the Dutch government was determined to achieve the same result.
A pounds 1.7bn payout to thousands of creditors of Bank of Credit and Commerce International (BCCI) was scuppered last year by the Luxembourg courts, despite previous backing for the deal from courts in London and the Cayman Islands.
In all four cases British insolvency specialists faced an uphill task because no legal agreement on dealing with troubled companies exists between the countries concerned.
British receivers are keen to see a European convention that will give them power over Continental offshoots. Lancer Boss's receiver, Allan Griffiths of Grant Thornton, said last week: 'I would have preferred to be in control of all the group's subsidiaries, but this was not possible. The lack of harmony in insolvency legislation among the various EEC members is a matter of concern to me and the insolvency profession.'
Under British law, Mr Griffiths was supposed to be in control of all Lancer's assets and operations, in the UK and anywhere else in the world. In the event the Gernman banks backing Steinbock persuaded the Bavarian lawyer to sell Steinbock to another German firm, despite the frantic objections of Mr Griffiths. Indeed, Mr Griffiths had some trouble in contacting the German lawyer at all. He is convinced selling the German and British sections together would have raised the most money.
The case of Leyland DAF could have been a problem, split as it was between the UK and the Netherlands. But the Dutch government and the British receivers had the same aim - to save as many jobs as possible.
John Talbot of Arthur Andersen, the administator of Leyland Daf, stresses that even where there is no common legal ground at all, if both sides have a similar commercial aim then they get together and construct an ad hoc rescue scheme from scratch.
Observers might think that, with the accelerating globalisation of business, countries with different legal systems would have worked out treaties to deal with company rescues. After all, saving jobs is supposed to be a priority with most governments.
But governments have been the main obstacle to progress towards a convention, for the reason that they are often the main creditors in cross-border insolvencies.
Demands for back taxes usually take priority in payouts from company collapses, and a big problem British receivers face is preventing continental governments from demanding first payment before any recoveries from businesses under their jurisdiction can be paid back to the UK.
The key word is 'recognition'. No one seriously believes it would be possible to produce a code for business rescues that could straddle British common law, Napoleonic law, and Roman law and all the other traditions on the Continent.
But it should be possible to construct an EU convention that provides recognition between receivers and administrators in all countries, whatever their particular rescue systems.
In other words, as soon as a receiver is sent into a British company with German and French subsidiaries, he can go to the Continental courts and immediately establish his claim over assets in their countries.
French and German courts will have to co-operate fully with UK receivers, and creditors of the overseas subsidiaries will not be able to seize assets.
Ideally, British experts would prefer the EU bankruptcy convention to go even further, and give receivers over the biggest part of a business the right to lead the rescue in all other countries where there are subsidiaries.
Getting agreement from the French and German governments on this level of recognition, however, looks a long way off.
The history of such endeavours is not good. The US and Canada tried for 10 years to agree on a recognition treaty, to no avail. The only existing treaties stem from before the Second World War - a Scandinavian treaty and another two agreements between South American and Central American countries.
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