Status of foreign creditors in secondary bankruptcy proceedings

Abstract

The status of foreign creditors in international bankruptcy, i.e., bankruptcy proceedings with foreign element, depends on the manner in which this matter is regulated in particular country. We distinguish between main and secondary bankruptcy proceedings in which creditors can file their claims. In the countries that regulate the initiation of both main and secondary bankruptcy proceedings, creditors have equal status, which means that foreign creditors are equal to local creditors in secondary bankruptcy proceedings. By foreign creditors in secondary bankruptcy proceedings, we mean creditors who do not have the citizenship of the country in which the respective secondary bankruptcy proceedings have been initiated. These may be persons who have already filed a claim in the main bankruptcy proceedings, as well as in other secondary bankruptcy proceedings. We must keep in mind that the secondary proceedings are initiated in order to contribute to the fulfilment of the principle of unity of the bankruptcy estate, as well as the efficiency of settling creditors’ claims. In any case, the secondary proceedings enable the assets of the bankruptcy debtor or most of them to be part of the bankruptcy estate. In addition, the transfer of excess assets of the bankruptcy estate from the secondary to the main proceedings allows creditors to be settled efficiently. In order for foreign creditors to be able to exercise their rights in the secondary bankruptcy proceedings, it is necessary for the competent authorities from different bankruptcy proceedings against the same debtor to cooperate. This especially refers to the cooperation of the bankruptcy trustee appointed in the main bankruptcy proceedings with the competent authorities in the country of initiating the secondary bankruptcy proceedings. The paper pays attention to Regulation (EU) 848/2015 on insolvency proceedings, as well as the provisions of the Act of Bankruptcy of the Republic of Serbia that regulate this matter. In order to define the status of foreign creditors, it is necessary to determine the status of a foreign bankruptcy decision, as well as the status of a foreign bankruptcy trustee. Attention is also paid to situations when secondary bankruptcy proceedings are not initiated, which is regulated by Regulation 848/2015. The decision on that is made by the bankruptcy trustee who was appointed in the main bankruptcy proceedings, and he must then give a guarantee to the local creditors that their claims will be settled. In order to talk about the equal status of creditors, care must be taken to adequately apply the two basic rules in international bankruptcy, namely lex fori and lex fori concursus. This will ensure even settlement of all claims of all creditors.