We reported in December 2014 that the amendments to the EC Regulation on Insolvency Proceeding (the Recast Regulation) were virtually finalised and agreed between the various legislative organs of the European Union.
Finally after several years, the debate is now over and the European Parliament has now approved the final text – broadly as it was in December 2014. The outcome is good news for cross border corporate restructurings and insolvencies around Europe, but it will not come into force for over two years.
Next is for the text to be published in the Official Journal of the European Union, which can take up to three months. The Recast Regulation will come into force 20 days after that publication – i.e. probably around September 2015.
However, there is a further wait, as most provisions in the Recast Regulation will only apply 2 years later, i.e. around September 2017.
Key points you should know
Since our report in December 2014, there have not been any material changes. The key points therefore remain:
- COMI for corporates: COMI shifting not prohibited but increased scrutiny where there has been a recent COMI shift
- Schemes of arrangement: do not form part of the Recast Regulation
- Main proceedings broadened: more pre-insolvency rescue proceedings are included within the scope of the Recast Regulation
- Secondary proceedings broadened: these are no longer restricted to winding up proceedings but will now include rescue proceedings
- Synthetic secondary proceedings: protecting local creditors without competing secondary proceedings
- Group insolvencies and communication: new regimes for better coordination and better communication
While most provisions will not apply until around September 2017, it will be interesting to see whether the Recast Regulation will influence the behaviour of stakeholders, officeholders and the courts in advance of that date. If so, that will be good news.
To access our December bulletin, please click here.