JANUARY 2013
Schultze & Braun
21
the proposal be within the scope of the Regulation. However, national governments would still need to propose the proceeding to be added to the list of proceedings in Appendix A, which would also under the proposal determine, to which proceeding the Insolvency Regulation would apply to.
“The Centre of main interests (COMI) concept remains, however, a definition is added: how the COMI is to be determent both for companies and individuals. There is no look back period envisaged in the proposal. The courts are required to examine where the COMI is and give their grounds in the opening orders on which the jurisdiction is based. A right to challenge the court´s decision is envisaged for those creditors who are not situated or do not have their residence in the Member State of the opening of the proceedings.
“It remains to be seen whether the definition of COMI in the proposal is really, as the proposal states, only transforming the language from a decision of the European Court of Justice into law. It is indeed very questionable whether the possibility to challenge the opening of insolvency proceeding in one Member State by creditors from another Member State could be very helpful, particularly in proceedings intended to rescue the debtor, where time will be of the essence. To give creditors the chance to challenge an opening decision can jeopardize those efforts and gives individual creditors undue leverage to bargain against their follow creditors. The proposal interferes very much with the laws of the Member States and it should indeed be assessed whether the EU has the necessary competence to do so.”
The proposals also state that the administrator of the main proceeding is to be heard by the court which is requested to open a secondary proceeding. The
court for the secondary proceeding should, according to the proposal, on request by the administrator of the main proceeding be able to postpone or even refuse the decision if secondary proceedings are not necessary to protect the interests of local creditors. If the court opens secondary proceedings, it should open the type of proceeding under the national law which is most appropriate to the case. The secondary proceeding does no longer have to be a winding-up proceeding.
the main proceedings. However, the idea of having the courts refuse the opening of secondary proceedings or choose the fitting proceeding, interferes too much with the creditors´ rights. It is again questionable whether the EU has the competence to interfere so deeply with national laws.”
It remains to be seen whether the definition of COMI in the
proposal is really, as the proposal states, only transforming the language from a decision of the European Court of Justice into law.
Christoph continued: “The proposal provides in cases of the insolvency of two or more members of a group of companies for the cooperation of administrators and courts. It again gives administrators comparable rights as in main and secondary proceedings. An administrator can request the court of another proceeding to stay this proceeding and can file a composition plan for the whole group.
Christoph commented: “The proposal to abolish the requirement for secondary proceedings
to be winding-up
proceedings is very welcome. It is also a positive step for the courts to have the legal grounds to hear the administrator of
“It is a positive aim to give the different parties involved in the insolvencies of companies proper legal grounds to communicate with each other. However the possibility to stay a proceeding seems to be of broad consequence and it is quite certain that such decisions in many cases will not go unchallenged. The proposal appears to introduce the means to interrupt cooperation even though its aim is the opposite: to facilitate cooperation. It remains unclear which administrator is in the lead. Can the insolvency proceeding be brought to a standstill if all proceedings are stayed? This is hardly a desirable result. The same goes for competing plans of reorganisation, which plan is to be followed? In addition, the proposal does not differentiate between proceedings which are mere liquidations and those which lead to a restructuring of a group of companies. There is definitely still much to be discussed.” LM
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