The project shall address the interwoven issues of cross-border insolvency proceedings under the reformed EIR, ranging from pre-insolvency proceedings to closely coordinated main and secondary proceedings and to the coordination of parallel insolvency proceedings within a group of companies. The proposed amendments of the EIR will considerably change the general framework of cross-border insolvencies in the EU, as the restructuring of struggling businesses will be a major objective, along with the improved coordination of parallel proceedings (involving either a single debtor or companies within a group). Accordingly, the proposed three research areas are closely interrelated: The extension of the scope of the EIR allows for the coordination of parallel proceedings at an early stage of the insolvency; the improved coordination of main and secondary proceedings is used as a template for the coordination of insolvencies within groups of companies.
The proposed project shall comprehensively address the main changes of the EIR by providing for a dialogue between the main stakeholders involved in the process of its implementation.
1. Cross-border insolvency proceedings require the efficient administration of the debtor’s assets located in different jurisdictions. Under the EIR, secondary proceedings may be opened with the aim to protect local creditors. The new Regulation will foster the cooperation between main and secondary proceedings; nevertheless, national insolvency laws will still apply to each individual proceeding, so that coordination may prove difficult.
The project will explore how the new EIR will affect cooperation between main and secondary proceedings. The new rules will further integrate the proceedings in different Member States, but the outcome of complex liquidations or restructurings will crucially depend on the effective adoption of new devices such as protocols and synthetic proceedings. The research will identify the key determinants, including best practices that practitioner may adopt, for a successful coordination between liquidators and courts.
2. The proposed applicability of the EIR on types of proceedings which provide for the restructuring of an estate or leave the existing management in place (pre-insolvency and hybrid proceedings) requires an assessment of the impact of such an extension on the functioning of the overall system of the EIR becomes of relevance in order to verify whether it meets the needs of mutual confidence among Member States in this matter.
A survey of the pre-insolvency and hybrid proceedings under the domestic insolvency laws and an analysis of their functioning in cross-border cases become necessary in order to face the challenges they involve in respect of the relevant grounds of jurisdiction, the coordination of insolvency proceedings and the recognition of judgments opening the proceedings, as well as of any further judgment.
3. The new provisions on the insolvencies of international groups of companies will result in an intensified international cooperation in the liquidation or reorganization of companies belonging to such groups. As a consequence, issues of national company law will become even more important in EIR practice.
It is therefore highly important to develop a better understanding of the differences and common principles of national laws in this respect. The focus will be on conflicts of laws issues (delineation between the applicable corporate law and the lex fori concursus), corporate governance in insolvency situations (in particular with respect to restructuring plans) and liability issues (distribution of proceeds between creditors of different group companies, claims of one group company’s liquidator against another etc.).