A New Approach to Regulating Group Insolvencies: 'Procedural Consolidation' in the Context of National and International Reform Proposals

Abstract

This paper develops a new approach to regulating group insolvencies: procedural consolidation. Under this approach, multiple proceedings over the assets of group companies are consolidated in one proceeding. However, there is no 'substantive consolidation', i.e., assets and liabilities of the group companies are kept distinct. The paper demonstrates how that approach could be implemented in the European Insolvency Regulation (EIR) and also in the domestic insolvency systems of European Member States such as Germany. The current proposals of the European Commission for a reform of the EIR and of the German Justice Ministry for a reform of the German Insolvency Code ('Insolvenzordnung') are evaluated against this background.