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The EU Insolvency Regulation

DG Justice and Consumers�Unit A1 – Civil Justice

May 2017

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The Insolvency Regulation:

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  • „EIR”:
    • Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings 
    • into force as of: 31 May 2002

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  • „REIR”:
    • Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings
    • will apply from: 26 June 2017�interconnection of insolvency registers: 26 June 2019
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The Insolvency Regulation (cont’d)

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  • Does not harmonize substantive rules of domestic inslvency laws
  • Private international law instrument:
    • Uniform rules of conflict of laws and jurisdcitions
    • Recignition and enforcement of decisions taken in insolvency proceedings
    • Cooperation between various actors in cross-border insolvency proceedings

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The Insolvency Regulation (cont’d)

Normative model: mitigated universality

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Universal character

Mitigation

Jurisdiction

There is a (limited) opportunity to open territorial/secondary proceedings

Law applicable

Exceptions to the application of the lex concursus

Recognition and enforcement

Mandatory system only within EU Member States

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Main elements of the Regulation:

    • Scope
    • Jurisdiction
    • Secondary insolvency proceedings
    • Publicity of proceedings
    • Groups of companies

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Scope I�main elements of "insolvency proceedings" under the old Regulation (EIR):�

    • (i) proceedings based on the debtor's insolvency
    • (ii) collective character of the proceedings
    • (iii) entails the partial or total divestment of the debtor
    • (iv) appointment of a liquidator

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+1: these proceedings are listed in Annex A

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Scope II�amendments introduced by the recast (REIR):�

    • re (i): Extension of scope to pre-insolvency proceedings
    • re (ii): clarification of "collectivity" in recitals (12)-(14)

"includes all or a significant part of the creditors to whom the debtor owes all or a substantial proportion of his outstanding debts, provided that the claims of those creditors who are not involved in such proceedings remain unaffected"

    • re (iii)-(iv): extension of scope to debtor-in-possession proceedings (DIP)

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Scope III�amendments introduced by the recast (REIR):�

    • re +1: clarification that list of national proceedings in annex A is exhaustive and definitive – see recital (9):
    • Those insolvency proceedings are listed exhaustively in Annex A.
    • Non rebuttable presumption in favor of the compliance of the proceedings listed in Annex A with the requirements set by the Regulation.
    • If not listed in Annex A, a procedure should not be covered by the scope

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    • But: heavy system of amending annexes retained

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Jurisdiction for main insolvency proceedings I �situation under the existing Reg. (EIR)

    • Centre of main interest (COMI)

"COMI shall be the place where the debtor conducts the administration of his interests on a regular basis and which is ascertainable to third parties" (Recital 13)

    • Presumption for companies: registered office
    • Presumption rebuttable but comprehensive assessment of relevant factors needed
    • ECJ: Eurofood, Interedil

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Jurisdiction for main insolvency proceedings II�amendments by the recast (REIR)

    • Concept of COMI maintained and clarified
    • Procedural framework for examining COMI reinforced
      • Examination ex officio
      • Right to judicial review
    • Reducing forum-shopping/insolvency tourism
      • Presumptions only kick in after certain period of time (3/6 months)

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Secondary insolvency proceedings I. �now

    • Possibility to open secondaries in MS of establishment
    • Secondaries must be winding-up proceedings
    • Duty to cooperate between liquidators
    • Powers of main liquidator in secondaries (e.g. request of stay)

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Secondary insolvency proceedings II�in the future:

    • Limitation to winding-up abolished
    • Cooperation duties extended to courts
    • Possibility of synthetic secondary proceedings
    • If main insolvency practitioner gives undertaking to local creditors
    • Possibility of stay of secondary proceedings
    • If temporary stay of individual enforcement proceedings granted in main proceedings

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Publicity of proceedings I�state of play today

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  • Publication or registration in other MS:
    • Voluntary in principle but may be mandatory in MS of establishment or MS of registers

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Publicity of proceedings II�Reform: system of interconnected insolvency registers

    • Composed of national insolvency registers
    • E-justice Portal as central public electronic access point to national DB
    • Accessible free of charge (mandatory information)
    • Opportunity of a MS to restrict access to information is strongly limited and only in terms of individual persons as debtors (consumers or self-employed)

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Insolvency of members of a group of companies

    • Present regulation: Entity-by-entity approach
    • Practical solutions: "procedural consolidation"
    • Reform: Legal framework for group insolvency
      • Cooperation and communication between courts and IPs
      • Powers of the IP in proceedings concerning the other members of the group
      • Group coordination proceedings

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Lodging of claims�

    • Duty to inform foreign creditors of opening
    • Right of foreign creditors to lodge claim
    • Reform introduces:
      • Standard forms for lodging claims
      • minimum deadline for lodging claims

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