Insolvency law

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Transcript Insolvency law

Assessment of the European
Insolvency Regulation
Was EIR a step forward?
 more predictability as regards:
- jurisdiction to open proceedings
- conflict of laws rules
 Recognitions of judgments
 Recognition of powers of insolvency liquidators
Effectiveness in preventing forum shopping?
 Aftermath of the Eurofood decision  no
examination of decisions by courts of other Member
States on COMI  „race to the court”
 Lack of legal certainty as regards COMI and
competence to open main proceedings
 Incentives for forum shopping by shifting COMI
abroad and filing for insolvency in the advantageous
 On the other hand, there would be incentives for
forum shopping as long as differences between
national insolvency laws persist.
Restructuring in cross-border cases
 Better possibilities for cross-border restructuring within
main proceedings
Weak point – secondary proceedings, in particular in
cases where most assets of the debtor are situated within
the secondary jurisdiction
limitation to winding-up proceedings
problematic coordination with main proceedings  lack
of provision on cooperation between courts (useful
initiatives: protocols for cooperation, CoCo Guidelines)
Lack of specific rules for proceedings aimed specifically
at restructuring (e.g. French sauvegarde)
In general, the EIR is too liquidation-oriented.
Scope of application
 Deficiences in the functioning of the annexes to the
- amendments are triggered in practice by Member
States, without regard to the criteria of Article 1(1) of
the EIR  questionable entries in Annexes A and C
- delay in amending the Annexes following changes to
national law  lack of clarity as regards proceedings
opened following the change of national law but
before the amendment of the Annexes.
Groups of companies
 Strict approach of the EIR based on separate legal
personalities of entities within corporate groups
 Results: lack of coordination of winding-up or
reorganisation efforts within a group
 on the other hand – difficulties in developing a
sound legal framework, as issues beyond
international insolvency law would need to be
tackled (in particular arising under civil law and
company law)
Lack of easy and reliable access to
information on insolvency proceedings
 universal effectiveness of insolvency proceedings in the
EU is linked to purely national and divergent
publication procedures
no pan-European insolvency case register
national registers are not coordinated and not always
accessible on-line
national publication rules are not harmonised
language issues
there is no single access point with reliable information
on insolvency laws in force in the Member States
Reform initiative
 reform initiative triggered by the need for an
application report on the EIR due under Article 46 of
the EIR (until mid-2012 and every 5 years thereafter)
 steps taken by the Commission in 2012:
- establishment of a group of experts, regular meetings
during 2012;
- external evaluation of the EIR, conducted by a team
coordinated by the Universities of Heidelberg and
Vienna, with participation of national reporters;
- public consultation.
Reform initiative- continued
 Initiative of the European Parliament – resolution of 15.11.2011
with recommendations to the Commission on insolvency
proceedings in the context of EU company law
(2011/2006(INI)), available at
proposal to harmonise certain aspects of national insolvency
proceedings: opening of proceedings, filing of claims, avoidance
actions, some issues related to liquidators, some basic aspects of
proposal of amendments related to some cross-border issues:
scope of application, definitions of COMI and establishment,
cooperation between courts
proposal for a regulation on insolvency of groups of companies
recommendation for an EU insolvency register
Reform initiative - continued
 Influence of the case-law of the ECJ
- cf. ECJ judgment of 20.10.2011 in case C-396/09,
- judgment of 22 November 2012, C-116/11, Bank
Handlowy and Adamiak  on restructuring in
secondary proceedings
Reform initiative - results
 Documents adopted on 12 December 2012, including:
- draft regulation amending the EIR (COM(2012)
744 final);
- report on the application of the EIR;
- communication from the Commission „A new European
approach to business failure and insolvency”.
Declared purpose: a more growth-oriented insolvency
framework, second chance for honest enterpreneurs,
promoting restructuring, enhancing legal certainty
Draft amending regulation – main features
 Scope and definition – broader definition, including debt
adjustment proceedings and proceedings without a
 COMI – inclusion of some wording from the Eurofood and
Interedil judgments into the EIR, some clarification of rules
on natural persons  but no major changes in the
definition alone
 ex officio examination of jurisdiction under Article 3;
obligation to include grounds for jurisdiction in the opening
 right of foreign creditors and interested parties to challenge
the opening decision on jurisdiction grounds
Draft amending regulation – secondary
 secondary proceedings will be no longer limited to winding-
up proceedings – type of proceedings to be decided
according to the interests of local creditors
 possibility of postponment of the opening of secondary
proceedings on request of the liqudator in main
 „synthetic secondary proceedings” – creditors from a
secondary jurisdiction may be satisfied in main proceedings
as if secondary proceedings had been opened  a way to
avoid the opening of secondary proceedings while
maintaining the position of local creditors
 more detailed rules on communication and cooperation
between courts and liquidators
Draft amending regulation – groups of
 cooperation similar to the coordination between main
and secondary proceedings but on a somewhat lower
cooperation and communication between courts and
rights of the liquidator in insolvency proceedings against
other companies belonging to the same group
right to participate and be heard
right to propose restructuring measures
right to request a stay of proceedings
Draft amending regulation – insolvency
registers and information
 minimum common features for national insolvency
availability free of charge on the internet
contents: main information on the opening, conduct and
closure of insolvency proceedings
interconnection between national insolvency registers on
the EU level
European e-Justice Portal as central access point
unified search engine in all official languages
information on national insolvency laws to be made
available via the European Judicial Network
Draft amending regulation – lodgement of
 standard forms to be provided on the European e-
Justice Portal
 each Member State to indicate at least one language
(other than its official language) which it will accept
for the purposes of lodgement of claims  in
practice lodgements in English will be probably
possible across the whole EU
 Proposal for a Regulation amending Council Regulation
(EC) No 1346/2000 on insolvency proceedings, COM(2012)
744 final
 accompanying documents:
 Hess/Oberhammer/Pfeiffer, Study for an evaluation of
Regulation (EC) No 1346/2000 on Insolvency Proceedings;
to be published at
Additional reading – older documents
 Revision of the European Insolvency Regulation, proposals
by INSOL Europe, 2012:
 Presentations from the conference „The Future of the
European Insolvency Regulation”, Amsterdam 28 April
in particular:
- Bob Wessels, Revision of the EU Insolvency Regulation:
What type of facelift?
- Glenn Flannery, Shortcomings and proposals for reform
- G. Moss, Ch. Paulus, The EIR – The Case for Urgent
Reform, 2005, reproduced at