Unification of Insolvency Law

Czech Republic: New European Insolvency Regulation No. 2015/848 published, slated to come into force mid-2017

Previously, the issue of court jurisdiction in insolvency matters (i.e., the issue of deciding which EU member state’s courts would be competent to hear and decide such matters) was governed by an EU Regulation from 2000 – more specifically, EU/1346/2000 – which at the time entered unchartered territory, seeking to address situations in which an insolvency case in one member state has reverberations in other member states e.g. because of real property, branch offices without separate legal personhood, in those other states. Application of the Regulation in real-life cases over the past fifteen years triggered a host of contested issues which had to be resolved by the ECJ. The 2015 Insolvency Regulation reflects the experience gathered during these past 15 years and incorporates them in a piece of legislation which replaces the previous Regulation of 2000 throughout the entire European Union, effective as of 26 June 2016 – with the exception of Denmark: Denmark alone will not participate in this step towards legal unification. Numerous details in the 2015 Insolvency Regulation are unprecedented. The following summarizes at least the most important points:

– The scope of application of the 2015 Insolvency Regulation is being broadened to cover all proceedings similar to insolvency procedures (thus removing previous doubts especially with respect to cases of self-administered insolvency in which no insolvency trustee is appointed).
– Among the terms redefined by the 2015 Insolvency Regulation, the most important concerns the „centre of main interests of the debtor”, i.e., in the case of legal entities, principally their registered seat. In the case of natural persons, legal assumptions and time limitations have been introduced to curb the twin phenomena of forum shopping and debt relief tourism.
– Once the European Insolvency Register anticipated by the 2015 Insolvency Regulation goes online, it will provide enormous relief to legal practitioners everywhere; however, it will only become operational as of 2019. Until then, separate research will be necessary of individual member state national registries for pending insolvency procedures, declarations of bankruptcy and insolvency plus resolutions and decisions in insolvency matters.
– The 2015 Insolvency Regulation resolves previously contentious competency issues related to court action plus points of contention related to registration of claims.
– It introduces brand new rules for group insolvencies.

The 2015 Insolvency Regulation is an important step forward in the unification of civil procedural law in the EU. It is striking that this unification process increasingly often relies on regulatory legislation: apparently, the European lawmaker has come to the conclusion that pursuing harmonization of laws merely through Directives (which are aimed at the individual member states and require implementation by their respective legislative bodies) is not enough.

Source: Insolvency Regulation No. 2015/848 of 20 May 2015, OJ L 141/19

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