Group insolvencies

Abstract

The seventh chapter deals with insolvency proceedings involving groups of companies on the debtor’s side. In practice, this is a major use case for cross-border insolvency law. Generally speaking, the single entity approach is applied, meaning that there are several proceedings - one for each insolvent group member - rather than a single proceeding against the whole group. Only in a minority of jurisdictions, substantive consolidation (i.e. the consolidation of all estates of all group members, whether insolvent or not) takes place. Since there are several proceedings, cooperation and coordination of these proceedings is the main issue. Under some regulations, group coordination proceedings are provided for (albeit without being used in practice). However, the focus is on the cooperation and coordination of the courts and insolvency practitioners. Respective rules are available in the European Insolvency Regulation as well as in the UNCITRAL Model Law.