Key points

  • Where main proceedings have been opened in one member state, secondary proceedings may be opened in another member state where the debtor has an establishment. The effects of the secondary proceedings shall be restricted to the assets in that territory.  
  • Local law and court discretion may apply to the opening of secondary proceedings and may be exercised, but these should not be discriminatory.

The Facts

A debtor company, incorporated in Belgium, was placed into main insolvency proceedings in France. An Italian creditor sought to commence secondary proceedings in Belgium. The court in Belgium referred the case to the ECJ.

Decision

The ECJ held as follows:

  • Secondary proceedings can be opened in the member state where the company has its registered office and in which it possesses legal personality, even if its centre of main interests is in another member state.    
  • The right to open secondary proceedings was not restricted to those creditors established in the member state where the secondary proceedings were being sought. The laws of that member state may determine who can open such proceedings.  
  • Courts of member states where secondary proceedings are requested may have the discretion to refuse to open secondary proceedings where it is appropriate to do so.

Comments

A member state must not impose unduly restrictive conditions for the opening of secondary proceedings and its courts must not exercise discretions which are discriminatory on the grounds of nationality, place of residence or registered office. Secondary proceedings protect a diversity of interests and not merely local interests. Cases may arise where the estate of the debtor is too complex to administer as a unit or where differences in the legal systems concerned are so great that difficulties may arise from the extension of effects deriving from the law of the State of the main proceedings to the other States where the assets are located. For this reason, a liquidator in the main proceedings may request the opening of secondary proceedings.

Re Burgo Group SpA