Parallel Reorganizations under the Recast European Insolvency Regulation – Selected EU Law Issues

Abstract

AbstractThe Recast European Insolvency Regulation (EIR) (Regulation 2015/848) repealed the rules in Articles 3(3) and 27 of the original EIR (Regulation 1346/2000) that required that secondary insolvency proceedings take the form of a liquidation (winding‐up). As a result, European debtors may now attempt to resolve their cross‐border insolvencies via parallel reorganization proceedings conducted both in the Member State of the debtor's centre of main interest and in one or more Member States in which the debtor possesses an establishment. This article aims to take account of the principal rules of the Recast EIR which, in addition to the national laws of the Member States involved, will regulate such attempts. Upon the review of these selected rules, the article concludes that, in principle, the Recast EIR provides EU debtors with a feasible cross‐border platform to reorganize in more than one Member State in parallel. However, the article finds that a particular rule central to the system of cross‐border insolvency under the EIR, namely, Article 45, which allows the multiple filing of claims in all proceedings conducted in respect of the debtor, has the potential to frustrate attempts at parallel reorganizations. This is particularly so where the cross‐filing rule combines with Member State law that is rigid as regards plan approval by creditor classes or minimum payouts to certain classes. Copyright © 2018 INSOL International and John Wiley & Sons, Ltd.