The recast EU regulation on insolvency proceedings will enter into force soon

The recast Regulation 2015/848 of the European Parliament and of the Council (Regulation) which replaces the current regulation on insolvency proceedings will enter into force on 26 June 2017. The aim of the Regulation is to increase the efficiency of cross-border insolvency proceedings by providing a unified legal framework, and to exclude the possibility of forum shopping in such procedures. In order to reach these goals, the Regulation, amongst other amendments, introduced the following changes.

• For preventing abusive forum shopping, the Regulation amended the rules on the determination of the debtor’s centre of main interest (COMI). In case of a company, the place of registered office shall still be presumed to be the centre of main interest, but this presumption shall only apply if the registered office has not been moved to another Member State within the three month period prior to the request for the opening of insolvency proceedings.
• Since secondary insolvency proceedings - which are not necessarily liquidation proceedings under the Regulation - may hamper the efficiency of managing the insolvency estate and the quick satisfaction of the creditors, the Regulation sets out certain situations in which the court may postpone or refuse the opening of secondary insolvency proceeding. The court may refuse the opening of the secondary insolvency proceeding, if the insolvency practitioner of the main insolvency proceeding undertook to local creditors that they will be treated as if secondary insolvency proceeding had been opened and if this undertaking adequately protects the interests of local creditors.
• To ensure that insolvency proceedings are conducted as efficient as possible, the participants of the main insolvency proceedings and the possible secondary proceedings, such as the insolvency practitioners and the courts, shall cooperate with each other, which in particular means the exchange of the information relevant to the other proceedings, but it may also cover the coordination of the realisation or use of the debtor’s assets. 

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