The Future of the European Insolvency Regulation

Abstract

On 28 April 2011, the future of the European Insolvency Regulation was discussed during a one-day international conference in Amsterdam. Since its entry into force in 2002, the European Insolvency Regulation has proven to be a successful piece of European legislation. At the current time, the review and possible reform of the Regulation is on the agenda of the European Commission. This should lead to a legislative proposal in 2013. The conference provided for a gathering of ideas on the functioning of the EIR, on possible amendments to it, and on the issues encountered in practice. It was strongly supported that the COMI of the debtor should be maintained as the factor determining jurisdiction to open main insolvency proceedings. It was regarded desirable to introduce different COMI definitions for natural persons and legal persons respectively. Secondary proceedings should be possible next to main proceedings, but they should no longer be limited to liquidation proceedings. With regard to dealing with insolvencies of corporate groups, it was acknowledged that coordination of the insolvency proceedings of group companies is desirable. On the topic of applicable law and security rights, the discussion showed that Article 5 EIR required clarification on certain issues. Opinions differed on the question whether the protection currently offered to secured creditors is excessive or whether it should be maintained. Furthermore, it was widely supported that the Regulation should provide for explicit obligations for both courts and liquidators in main and secondary proceedings to cooperate in cross-border insolvency cases. Finally, suggestions were made to either widen the scope of the EIR or draft separate regulations for pre-insolvency proceedings. The discussions showed that a reform of the EIR is indeed deemed necessary in order for the Regulation to continue to be a successful instrument in the international insolvency practice.