Abstract Opportunities in developing countries draw multinational companies, which include but are not limited to low‐cost labour and abundant raw materials. As with any enterprise in any part of the world, there is a risk of business failure when multinational companies operate in developing countries. Consequently, the issue that arises is where insolvency proceedings should commence due to the multinational nature of these organisations. There is no international rule about where insolvency proceedings should open, with this being a matter for each country's laws. As a strategy, multinational companies may bypass developing countries' insolvency systems in favour of other jurisdictions with potentially favourable outcomes. For example, there may be a preference for the members of a multinational group to be handled under insolvency proceedings in one particular country, which may be far from the jurisdiction where the companies operated. This article is centred on why laws in developing countries may not be suitable for multinationals and what can be done to ensure cases do not end up in a court far away, in the United States of America (US) or in the United Kingdom (UK). The aim is to identify ways in which developing countries may reform their laws to encourage their use by multinational companies. The following are the key features to be examined to address the aim of the article: (i) to examine some of the justifications provided by multinational companies as to why developing countries are not suitable forums to commence insolvency proceedings; (ii) to make a general assessment of a selection of developing countries' insolvency laws and institutions; and (iii) to identify what essential values should be incorporated in developing countries' insolvency law reforms for effective insolvency laws.
Phoebe Gatoto (Mon,) studied this question.