The urgency of adopting SOS mechanisms in international insolvencies

The acronym SOS has been used since the early 20th century as an international call for help, a recognized emergency signal in various contexts, from maritime to aerial. However, in the world of finance, especially in situations of international insolvency, SOS mechanisms are also required for companies in bankruptcy with assets in multiple jurisdictions. These tools are key to prevent the depletion of the debtor's assets and allow for a successful international recovery. In the case of the Model Law on Cross-Border Insolvency established by the United Nations Commission on International Trade Law (UNCITRAL) in 1997, this regulation seeks to provide a legal framework for handling insolvency situations globally and promote cooperation between courts from different countries. More than 60 nations, including neighbors like Colombia and Chile, have adopted this law into their domestic legislation, but so far, Peru has not done so. The United States, on the other hand, is one of the countries with the most experience in handling SOS mechanisms in cases of international insolvency. Although it adopted the Model Law only in 2005, since 1978 it had procedures to assist foreign insolvency courts known as "Ancillary Proceedings." The incorporation of Chapter 15 into the American Insolvency Code has allowed for expedited recognition of foreign procedures, promoting cooperation between courts and ensuring an automatic stay of collection actions in the United States. In the Peruvian context, despite not currently having a regulation on cross-border insolvency, there is a proposed amendment to the General Insolvency System Law that includes the incorporation of a chapter on cross-border insolvency based on the Model Law. This project aims to establish the necessary mechanisms for Peru to provide international cooperation in insolvency cases, allowing for the recognition of foreign procedures and avoiding the impact on assets of foreign companies in the country. The approval of this project is crucial to strengthen Peru's position in the field of international insolvencies and to attract foreign investments that require a clear and efficient regulatory framework in crisis situations. The lack of an international SOS regulation leaves us out of the global context and limits our ability to contribute to the recovery of international companies with a presence in the country. It is essential to understand that investors evaluate not only a country's regular regulatory environment but also its legal framework in insolvency cases. In this sense, the approval of the bill that includes a chapter on cross-border insolvency is urgent to ensure Peru's competitiveness in the international arena and to provide legal certainty to foreign companies operating in our territory. Time is of the essence, and it is necessary to approve the necessary reforms in the field of international insolvencies as soon as possible. Peru cannot afford to lag behind in such an important aspect for attracting investments and strengthening its position in the global economic landscape. The adoption of SOS mechanisms is an urgent need that cannot wait for "frogs to start dancing flamenco" to be addressed.