Recognition and Enforcement

Automatic recognition of judgments rendered within the course of insolvency proceedings constitutes one of the fundamental principles of the EIR, as recognition is based on mutual trust and is crucial regarding maintenance of the universality of (main) insolvency proceedings. This chapter scrutinizes the mechanism through which recognition operates pursuant to the EIR. Recognition applies only to certain judgments handed down during insolvency proceedings; therefore, we must determine which types of judgment enjoy recognition pursuant to the EIR. Discussion then focuses on the impact of recognizing foreign judgments before exploring the public policy exception, this being the only ground upon which refusal of recognition may be based. As enforcement of judgments in foreign Member States may be necessary, the manner in which the EIR ensures the enforceability of judgments handed down during insolvency proceedings will also be observed.

Group Insolvencies

This chapter deals with European cross-border issues concerning groups of companies. This chapter, after outlining the difficulties encountered throughout the world in defining and regulating the group, focuses on the specific policy choices endorsed by the EIR, which clearly does not lay down any form of substantive consolidation. Instead, the EIR, on the one hand, seems to permit the ‘one group—one COMI’ rule, even to a limited extent, and, on the other hand, provides for two different regulatory devices of procedural consolidation, one based on the duties of ‘cooperation and communication’ and the other on a system of ‘coordination’ to be set up between the many proceedings affecting companies belonging to the same group.

Scope of The EIR

This chapter analyses the situations in which the European Insolvency Regulation will be applied, as defined in its first article and in other provisions. The scope of the EIR is marked by a notable deference to the characterizations of particular insolvency situations used by individual Member States, and this is reflected in the chapter. The chapter looks first at the personal scope of the EIR. Member States categorize debtors in a range of ways: natural and legal persons, traders and consumers, bodies governed by private or public law. All of these perspectives will be taken into account, as well as the scope of the exemptions noted within the EIR and the position of groups of companies. The chapter scrutinizes the proceedings covered by the EIR, including pre-insolvency and hybrid proceedings brought into the system via reform and looks at the issues raised regarding territorial scope of the regulation.

Introduction

This chapter is an introduction to the issues involved in cross-border insolvency cases and their regulation as covered by the EIR, which recast the OR. It also provides a view-from-the-cathedral of EU Regulation 2015/848; a concise description of its history, aims, and principles; as well as a list of the other relevant sources of law, including those of soft law such as the UNCITRAL Model Law and the European Communication and Cooperation Guidelines for Cross-border Insolvency (the so-called ‘CoCo Guidelines’). Finally, the role of the Court of Justice of the European Union (CJEU) for the interpretation of European insolvency law and its judicial activism are analysed.

International Jurisdiction

This chapter examines the contents of Arts. 3-6 EIR in order to answer the following questions: which Member States have international jurisdiction; has the seized court a power and a duty to examine jurisdiction; might a creditor challenge this choice; does the jurisdiction of the seized court extend to so-called connected actions, i.e. to actions directly deriving from the insolvency proceeding and closely linked with it? For this purpose, the concept and rationale of the centre of a debtor’s main interests (COMI) is analysed, as well as the power and duty of the seized courts to examine jurisdiction. This chapter also focuses on the increasingly popular phenomenon of ‘forum shopping’, and on the theoretical and practical attempts to distinguish between forum shopping which is compliant with the acquis communautaire on the freedom of establishment across Europe and forum shopping which is fraudulent.

Secondary Insolvency Proceedings

The European Insolvency Regulation permits the opening of territorial proceedings conducted parallel to main proceedings, thereby modifying the concept of universality through the existence of so-called secondary proceedings. Secondary proceedings serve different purposes and are characterized by the fact that they are limited in their scope, as they only affect assets within the Member State in which the secondary proceedings have been opened. While the requirements for the opening of secondary proceedings as well as their effects are largely governed by the lex fori concursus secundarii, the EIR not only modifies some of these requirements but also contains an entire set of rules concerning the coordination of secondary and main proceedings to ensure efficient administration of the debtor’s assets. This chapter will therefore examine the principles of secondary proceedings, the requirements for and the effects of the opening of such proceedings, and the relationship between main and secondary proceedings.

Law Applicable

This chapter discusses which law a court with jurisdiction over cross-border insolvency proceedings (whether they constitute main proceedings or secondary proceedings) should apply in particular sets of circumstances. The general rule is that the law of the State in which the proceedings have been opened (lex fori concursus) should be the law which governs insolvency proceedings and their effects. However, there are a number of exceptions to this rule, meaning that the court with jurisdiction will have to apply the law of another Member State. This chapter outlines the general rule and discusses problems resulting from its application. It proceeds to looks at the exceptions to this rule and identifies their rationales and commonalities, before embarking on a detailed analysis of each of them.

Legal Status, Information, and Cooperation Between Participants

This chapter focuses on those involved in insolvency proceedings. In particular it deals with the courts involved, the insolvency practitioners (IPs) in charge of carrying out the proceedings, the position of creditors and their rights to lodge claims, and the legal status of the debtor. Particular attention is paid to those prescriptions which aim to establish a framework of effective communication and cooperation between courts, between IPs and courts, and between IPs themselves, and which allow IPs of main and secondary proceedings to conclude agreements and protocols of collaboration. The final part of the chapter outlines those prescriptions which establish a duty on the part of Member States to set up insolvency registers in their territory and to interconnect these at European level.