The Implementation of the New Insolvency Regulation (eBook)

Cover 1
Introduction 25
I. Genesis of the Study 26
II. Methodology, scope and objective of the Study 26
III. Outline of the Study 27
1. Widening the scope of the Regulation: opening up for rescue culture (Part 1) 28
2. Coordination between main and secondary proceedings (Part 2) 28
2.1 Judicial cooperation: from soft law to innovative hard law 29
2.2 Synthetic proceedings: from practice to regulation 29
3. Group of companies: contractual flexibility versus procedural overregulation (Part 3) 30
IV. Distribution of responsibilities 31
Part 1: Scope of application 33
Università degli Studi di Milano 33
I. The scope of the Regulation 33
Article 1(1) EIR 33
1. Legal framework 33
1.1 A new European approach to business failure and insolvency 33
1.2 Pre-insolvency and hybrid proceedings 36
1.2.1 Article 1(1) EIR 39
1.2.2 Proceedings ‘based on laws relating to insolvency for the purpose of rescue, adjustment of debt, reorganisation or liquidation’ 40
1.2.3 ‘Public’ 42
1.2.4 ‘Collective’ 43
1.2.5 Which entail some kind of ‘interference’ upon the individual rights of the debtor and/or its creditors… 44
1.2.6 …and which may leave the debtor in possession 45
1.3 Territorial scope 46
2. Evaluation 47
2.1 Legal issues 47
2.1.1 The title of the EIR: is it still up-to-date? 47
2.1.2 The notion of insolvency (recital 17 EIR) 47
2.1.3 Scope of secondary proceedings 50
2.1.4 The COMI presumption for pre-insolvency proceedings 51
2.2 Practical problems 52
2.2.1 Pre-insolvency and hybrid proceedings before a ‘judgment opening insolvency proceedings’ is rendered 52
2.2.2 Article 34, 2nd s. EIR 55
2.2.3 The territorial scope 56
3. Theses and recommendations 61
II. The relationship between Article 1(1) of the Regulation (EU) No 2015/848 and Annex A 64
Articles 1(1), (3), 2(4), recital 9, Annex A 64
1. Legal framework 64
1.1 The framework under the EIR 2000 64
1.2 The proposals to amend the EIR 2000 66
1.3 The framework under the EIR 67
1.3.1 As to the nature of Annex A... 67
1.3.2 …and as to the amendment of Annex A 68
2. Evaluation 68
2.1 Legal issues 68
2.1.1 The underlying policy 68
2.1.2 The role of Article 1(1) EIR 69
2.1.3 Amendments to Annex A 70
2.1.4 A tentative alternative interpretation 71
2.2 Practical problems 72
2.2.1 The shortcomings of ordinary legislative procedure 72
2.2.2 How to deal with the difficulty to amend Annex A 73
2.2.3 Two problematic cases 73
2.2.4 The ‘duty’ to notify new national procedures 74
3. Theses and recommendations 75
III. The boundary between the European Insolvency Regulation and the Brussels Ibis Regulation 77
Article 1(1), recitals 7, 16 EIR Article 1(2) lit. b) Brussels Ibis
1. Legal framework 77
1.1 Introduction 77
1.2 Obstacles to the dovetailing 79
1.2.1 Pre-insolvency proceedings and hybrid proceedings 79
1.2.2 Annex A EIR 81
1.2.3 The notion of ‘insolvency-related’ actions 82
1.3 The EIR 2015 84
2. Evaluation 85
2.1 Legal issues 85
2.1.1 Setting-up the relationship between Brussels Ibis and the EIR 85
2.1.2 Loopholes 87
2.1.3 Overlaps 91
2.2 Practical problems 91
2.2.1 Circumvention of the scope of the EIR by putting insolvency rules in general company law 91
2.2.2 Recital 16 and insolvency-related actions 92
3. Theses and recommendations 92
IV. Insolvency-related proceedings 94
Article 6, recital 35 EIR Article 1(2) lit. b) Brussels Ibis
1. Legal framework 94
2. Evaluation: legal issues and practical problems 96
2.1 The notion of ‘insolvency-related’ actions 96
2.2 Recital 16 EIR and insolvency-related actions 99
2.3 Overlaps between the EIR and Brussels Ibis 100
2.4 Insolvency-related actions and secondary proceedings 101
2.5 Insolvency-related actions against third state defendants 102
3. Theses and recommendations 103
Part 2: Cooperation between main and secondary proceedings 106
Max Planck Institute Luxembourg 106
I. Instruments to avoid or postpone secondary proceedings 106
Articles 36 ff EIR 106
1. Legal framework 106
1.1 Introduction 106
1.2 The undertaking (‘synthetic proceedings’) 107
1.2.1 Procedural function and conflict of laws mechanism 107
1.2.2 Scope 110
1.2.2.1 Local assets and liabilities (scope ratione materiae) 110
1.2.2.2 Personal scope 112
1.2.2.3 Law referred to by an undertaking and third parties’ rights in rem 112
1.2.3 Proposal and formal requirements 114
1.2.4 Approval 115
1.2.5 Effects 115
1.2.5.1 Direct effects of the undertaking as to the estate and the applicable law 115
1.2.5.2 Effects on the opening of secondary proceedings 116
1.2.5.3 Removal of local assets 116
1.2.6 Procedural safeguards 117
1.2.6.1 Remedies 117
1.2.6.2 Liability of an insolvency practitioner under Article 36(10) EIR 120
1.2.6.3 Information of creditors and publication 121
1.3 The stay of proceedings 121
2. Evaluation 122
2.1 Legal issues 123
2.1.1 Article 36 EIR as a non-mandatory rule? 123
2.1.2 Deferred and concerted secondary proceedings as an alternative option 124
2.1.3 Approval of an undertaking 125
2.1.3.1 Approval by the known local creditors 125
2.1.3.2 Voidability and replacement of an approved undertaking 126
2.1.3.3 Approval by the creditors of the main proceedings? 128
2.1.3.4 Approval of an undertaking after the opening of secondary proceedings 129
2.1.4 Undertaking and secondary proceedings 129
2.1.4.1 The start of time limit to request the opening of secondary proceedings 129
2.1.4.2 The court’s criterion to reject the opening of secondary proceedings, Article 38(2) EIR 131
2.1.5 Undertaking and corporate group insolvencies 132
2.2 Practical problems 132
2.2.1 Criteria to be taken into account by an insolvency practitioner when giving an undertaking 132
2.2.2 Identification and information of local creditors / publication 132
3. Theses and recommendations 134
3.1 Scope of undertakings 134
3.2 Giving of an undertaking 134
3.3 Assessing the adequacy and efficacy of Article 36 EIR 135
3.4 Identifying and informing (local) creditors 136
3.4.1 Creditors should be informed of… 136
3.4.2 Means of communication 136
3.4.3 Creditors’ information on the (dis-)approval of the undertaking 136
3.5 The start of time limit to request the opening of secondary proceedings (Article 37(2) EIR) 137
3.6 Temporary stay of the opening of secondary proceedings 137
3.7 Implementing Regulation 137
II. Cooperation, Communication, Coordination 139
Articles 41-44 EIR (single debtor) 139
1. Introduction 139
2. Legal framework 141
3. Recommendations 142
3.1 To the European Commission 143
3.1.1 Introducing and explaining the rules 144
3.1.2 Raising awareness and promoting the use of soft law instruments 145
3.1.3 Spreading the knowledge about case law 147
3.2 To the national lawmaker 147
3.2.1 Taking stock 148
3.2.2 Removing obstacles, paving the way 149
3.2.3 Valuable clarifications pro-cooperation orientations
3.3 To the national interpreter and authorities applying the law 152
3.4 To the academia 155
III. Protocols 156
Articles 41 f EIR 156
1. Introduction 156
2. Legal and economic framework 157
2.1 ‘Agreements or protocols’: scope of the analysis 157
2.2 Cooperation ‘not incompatible with the rules applicable to each of the proceedings’ – legal basis for the conclusion of agreements or protocols 158
2.3 Content of an insolvency protocol: derogation from the coordination rules of the EIR? 160
2.4 Insolvency protocols and protection of local creditors’ interests 162
2.5 Protocols and Article 36 undertakings: comparative advantages and disadvantages 163
3. Recommendations and guidelines 167
3.1 Circumstances supporting the use of insolvency agreements or protocols 169
3.2 Negotiations 170
3.3 Authorization and parties to an insolvency agreement or protocol 171
3.4 Language of the insolvency agreement or protocol 172
3.5 Terminology and interpretative rules 173
3.6 Determining the purpose of the insolvency agreement or protocol 174
3.7 Issues to be addressed in insolvency agreements or protocols under the EIR 175
3.7.1 Communication 176
3.7.2 Preservation of the debtor’s assets 177
3.7.3 Notification of the debtor’s creditors 177
3.7.4 Lodgement of the creditors’ claims by insolvency practitioners 177
3.7.5 Verification of the debtor’s liabilities 178
3.7.6 Administration of the insolvency estate 178
3.7.7 Preventing conflict of powers among insolvency practitioners 179
3.7.8 Distribution of the proceeds 179
3.7.9 Conflict-of-laws issues 180
3.7.10 Costs of the proceedings 181
3.8 Legal effects and effectiveness of insolvency agreements or protocols 182
3.9 Flexibility of insolvency agreements or protocols 182
3.10 Safeguards 183
3.11 Dispute resolution clauses 183
Part 3: Insolvencies of groups of companies 185
University of Vienna Articles 56 ff EIR 185
I. Introduction 185
II. Jurisdiction with respect to insolvencies of groups of companies 187
1. Determining the COMI of a member of a group of companies 187
1.1 Legal framework 187
1.2 Recommendations and guidelines 188
1.2.1 Recommendations 188
1.2.2 Guidelines 192
2. COMI migration 193
2.1 Legal framework 193
2.2 Evaluation 194
2.3 Recommendations and guidelines 195
2.3.1 Recommendations 195
2.3.2 Guideline 197
3. The definition of ‘group of companies’ in Article 2 EIR 197
3.1 Legal framework 197
3.2 Evaluation 199
3.3 Recommendations and guidelines 200
3.3.1 Recommendations 200
3.3.2 Guidelines 203
III. Coordination between insolvency proceedings relating to group members 205
1. Legal framework 205
2. Evaluation 207
3. Recommendations and guidelines 208
3.1 Recommendations 208
3.2 Guidelines 212
IV. The new group coordination proceedings 214
1. Legal framework 214
2. Evaluation 217
3. Recommendations and guidelines 218
3.1 Recommendations 218
3.2 Guidelines 221
V. Conflict of laws 223
1. Legal framework 223
2. Recommendations and guidelines 224
2.1 Recommendations 224
2.2 Guideline 226
Annex: Expert Contributions 227
Annex I: Interpreting and amending Annex A to Regulation 848/2015 228
Avv. Giorgio Corno 228
1. Insolvency proceedings which fall within the scope Annex A of Regulation 848/2015 228
2. Italian insolvency proceedings which fall within the scope of Regulation 848/2015 229
3. Italian proceedings which may be included or qualified as a sub-category of insolvency proceedings listed in Annex A 233
4. Does ‘convenzione di moratoria’ fall within the scope of insolvency proceedings as defined in Article 1(1) Regulation 848/2015? 235
5. Effects of a ‘convenzione di moratoria’ on foreign dissenting banks and financial institutions 237
Annex II: The system of insolvency registration in the EU Insolvency Regulation (Recast) 239
Professor Dr. Bob Wessels 239
1. Introduction 239
2. Aim of interconnected insolvency registers 241
3. Part of existing effort in building EU-wide interconnection of national insolvency registers 242
4. Establishment of insolvency registers 243
5. Mandatory information 244
6. Consumers 247
7. Legal effect of information in the registers 248
8. Interconnection of insolvency registers 249
9. Conditions of access to information via the system of interconnection 250
10. Conclusion 252
Annex III: Opening statement on the coordination and cooperation of main and secondary proceedings 253
Professor Dr. Christoph Thole 253
1. Key features of the new law 253
2. Are secondary proceedings useful? 254
3. The undertaking (Articles 36 ff EIR) 255
4. The new law on cooperation and communication (Articles 41 ff EIR) 257
Annex IV: From ‘prisoner’s dilemma’ to reluctance to use judicial discretion: the enemies of cooperation in European cross-border cases – the situation of Italy, and beyond 259
Professor Dr. Renato Mangano 259
1. Introduction 259
2. Article 31 EIR 2000, and its application in Italy 261
3. Taking lessons from the Illochroma and Eurofood cases: legal uncertainty produces ‘prisoner’s dilemmas’ 266
4. Taking lessons from reluctance to conclude agreements and protocols: accepting that these forms of cooperation require courts and insolvency practitioners to make a choice between alternative rulings and activities 269
5. Explaining Articles 41-44 EIR within legal reasoning 272
5.1 Improvements aimed at specifying the logic of the duty of cooperation and information 274
5.2 Improvements aimed at specifying the limits of the duty of cooperation and information in terms of consistency with the system as a whole 276
6. Concluding remarks: from cooperating ‘in the shadow of soft-law’ to cooperating ‘in the shadow of hard-law’. Corollaries 276
7. Coda: Spontaneous comments on the relevant sections of the ‘Annotated Guidelines’ 279
7.1 Article 36 EIR 279
7.2 Articles 41-44 EIR 282
7.3 Protocols 283
Annex V: Opening statement on the new rules for the insolvency of groups of companies 284
Professor Dr. Reinhard Bork 284
Annex VI: Insolvency of corporate groups under the recast Insolvency Regulation: progress or reason for concern? 290
Professor Irit Mevorach 290
1. Introduction 290
2. The European Insolvency Regulation (2000): no provisions for groups 291
3. The practice since 2002: group centralizations 291
4. The case of Interedil (2011): adoption of central administration as a key connecting factor 293
5. The parliament proposals (2011): centralization as the primary solution 295
6. The recast Insolvency Regulation (2015): a shift to cooperation and coordination 296
7. Progress or concern? 297
8. Conclusion and a way forward 299
Bibliography 301
1. CJEU case-law 301
2. National case-law 301
3. Literature 304
4. Legal texts 318
5. Other 319