The recast Insolvency Regulation of 20 May 2015 embodies a further step towards the harmonisation of European Union insolvency law. The main provisions are set to apply to insolvency proceedings as of 26 June 2017.
The key changes relate to a broader scope, the “centre of main interests” (COMI) concept, secondary proceedings, group insolvencies and the introduction of insolvency registers. Overall, the new elements will increase the chance of a positive outcome in complex cross-border insolvencies and offer better cooperation and transparency.
- The scope of the recast Regulation is broadened to pre-insolvency or hybrid proceedings, such as, on a Belgian level, judicial reorganisation by way of amicable settlement and judicial/voluntary winding-up proceedings. It is clear that the recast Regulation brings an improved focus on continued viability of enterprises.
- The recast Regulation also introduces much-needed clarification (in line with jurisprudence) of the COMI, which is the trigger to determine jurisdiction for the opening of main proceedings and applicability of the recast Regulation to debtors. The presumption that the COMI is situated at the registered office of a company will no longer apply in case insolvency proceedings are opened within three months subsequent to a move of the registered office to another Member State. Long-standing concerns of forum shopping by debtors are hereby (at least partially) addressed.
- Secondary proceedings may now also be opened for reorganisation proceedings. While this broadens the scope, the introduction of so-called “synthetic proceedings” has made it more difficult to open secondary proceedings, aiming to resolve the issue of a multitude of local proceedings bogging down the main proceedings.
- Group insolvencies can now be resolved under a new framework involving the proposition of a group coordination plan, to be implemented by way of consensual cooperation between insolvency practitioners and the “group coordinator”. This framework will be particularly useful in cross-border insolvencies involving many stakeholders with no (group-level) plan in place.
- Lastly, in view of enhanced transparency and exchange of information, Member States will be required (as of 26 June 2018) to create national insolvency registers, which are to be linked and centralised via the European e-Justice Portal. These new registers will be a useful tool for creditors and insolvency practitioners alike.