EU Regulation on insolvency proceedings

EU Regulation 2015/848 of 20 May 2015 on insolvency proceeds (“New Regulation”), recasting the former Regulation (EC) 1346/2000 of 29 May 2000 (“Former Regulation”),  came into force on 26 June 2017¹ . The New Regulation will apply to any insolvency proceedings opened as from 26 June 2017.

The main changes are:

• COMI: the New Regulation codifies the concept of “centre of main interests” ("COMI") and establishes a rebuttable presumption that COMI corresponds to the registered office of the company. Such a presumption will not, apply, however, if there has been a move of the registered office during the three-month period prior to the opening of proceedings.
• Opening of secondary insolvency proceedings: It will now be possible to open secondary proceedings in another EU Member State not only if the debtor has an establishment in that EU Member State at the time of the opening of main insolvency proceedings, but also if the debtor had an establishment in that EU Member State in the three-month period prior to the request to open main insolvency proceedings.
  The New Regulation introduces the possibility for the courts to refuse to open secondary insolvency proceedings (i) if the insolvency practitioner in the main insolvency proceedings gives a unilateral undertaking in respect of the assets located in the Member State, in which secondary insolvency proceedings could be opened, that when distributing those assets and proceeds received as a result of their realisation, it will comply with the distribution and priority rights under national law that creditors would have if secondary insolvency proceedings were opened in that Member State and (ii) if such an undertaking has received the consent of a majority of creditors. Such secondary proceedings shall also be postponed in case a temporary stay of individual proceedings has been given in the main proceedings in order to preserve the effectiveness of the later proceedings and that appropriate measures are put in place to protect the interests of local creditors.
• Group of companies: In case insolvency proceedings are opened in relation to several companies of a same group, the courts and the office-holders appointed will have to cooperate and communicate with each other.
• Register:  The New Regulation will establish by June 2018 “national insolvency registers”. These registers will be created by every Member State. By June 2019, these registers will be publicly accessible via the European e-justice portal facilitating the coordination of cross-border insolvency proceedings, avoiding parallel procedures and informing the courts as well as the creditors.