On 5th of June 2015 REGULATION (EU) 2015/848 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 20 May 2015 on insolvency proceedings (recast) has been published in Official Journal of EU.
The new rules are aimed at making cross-border insolvency proceedings more efficient and effective, benefiting debtors and creditors, facilitating the survival of businesses and presenting a second chance for entrepreneurs. They also bring the current insolvency regulation into line with developments in national insolvency laws introduced since its entry into force in 2002.
Some of the key changes include:
- Extension of scope of the regulation so called hybrid and pre-insolvency proceedings like proceedings which provide for the restructuring of a debtor at a stage where there is only a likelihood of insolvency, proceedings which leave the debtor fully or partially in control of his assets and affairs proceedings providing for a debt discharge or a debt adjustment of consumers and self-employed persons.
- Improvement of the procedural framework for determining jurisdiction. The concept of centre of main interest (COMI) is clarified to provide useful guidance to all those concerned and increase legal certainty. Moreover, the new rules contain a set of safeguards aimed at preventing abusive forum shopping.
- Determination of specific situations in which the court seized with a request to open secondary proceedings should be able to postpone or refuse the opening of such proceedings. The court can do so on request of the insolvency practitioner in main proceedings. A number of rules of cooperation and communication between the actors involved in the main and in the secondary proceedings are also added.
- Closely linked actions – the courts of the member state where main insolvency proceedings are opened will also have jurisdiction to hear actions derived directly from the insolvency proceedings that are closely linked, such as avoidance actions, to avoid the risk of irreconcilable judgments resulting from separate proceedings.
- Registers of insolvency proceedings – Member states will be required to publish relevant information in cross-border insolvency cases in a publicly accessible electronic register. This will improve the information of creditors and courts involved and will prevent the opening of parallel insolvency proceedings. The insolvency registers will be interconnected via the e-Justice portal to facilitate access to that information for creditors and courts located in other member states.
- Group Companies – the recast Regulation introduces contains a set of procedural rules aimed at ensuring the efficient administration of insolvency proceedings relating to different companies forming part of a group of companies.
The majority of the provisions apply from 26 June 2017 and the original European Regulation on Insolvency (EC) 1346/2000 will continue to apply to proceedings opened before this date. The establishment of national insolvency registers will not come into force until 26 June 2018, with the requirement for an EU interconnected register by 26 June 2019.