Poland – protective and secondary insolvency proceedings can run in parallel in different Member States

Secondary insolvency proceedings may be begun in the member state where the debtor has an establishment, when main proceedings with a protective purpose are already pending in another member state, according to the ECJ.

Protective proceedings (known as ‘sauvegarde’ proceedings) are those where the debtor proves that he is not insolvent but is faced with difficulties, financial and otherwise, that he cannot overcome.

Under EU law (EC Regulation 1346/2000 of 29 May 2000), the main insolvency proceedings may be opened in the member state where the debtor has the centre of his main interests. 

When this occurs, secondary proceedings against the same entity may be opened in another member state to run in parallel with the main proceedings.  Secondary proceedings are limited to the debtor’s assets located in the particular member state.  This protects the diversity of creditor interests in debtors with assets in different member states.

The ECJ also ruled that the court considering an application to open secondary insolvency proceedings cannot examine the insolvency of a debtor against which main proceedings have been opened in another member state, even where the main proceedings have a protective purpose.

This means that, even if the main insolvency proceedings (including sauvegarde proceedings) is pending in one member state, secondary proceedings may be started in the member state where the debtor has an establishment, and run in parallel with the main proceedings.

Law: ECJ Judgment in case C-116/11 dated 22 November 2012