The recast European Insolvency Regulation replaces the current Regulation of 2000 and will be applicable on cross boarder insolvency procedures opened after June 26, 2017.
The new rules address the main shortcomings of the old Regulation and endeavor to contribute to a more efficient settlement of cross boarder insolvency procedures.
We highlight the main changes in this update.
- The pre-insolvency procedure and hybrid procedure fall from now on (and more than before) within the material scope of the Regulation. These are the procedures aimed at safeguarding undertakings in financial difficulties through restructuring. For Belgium, this implies an expansion to all procedures of judicial reorganization including the amicable settlement.
- The key concepts “centre of main interests” (COMI) and “establishment” that determine the competent court, are being clarified.
- The Regulation entails an improved coordination between main and secondary insolvency proceedings. Secondary proceedings do not need to be a liquidation procedure anymore, which will facilitate the maintenance of the going-concern of a cross-border establishment.
- Procedural simplification is introduced by the so-called “synthetic proceedings”, whereby the rights of foreign creditors will be protected in the main insolvency proceeding, as if a secondary proceeding were opened.
- The member states are obliged to create an electronic register for insolvency proceedings in which the information concerning the insolvency procedure will be published. Afterwards, the different national registers will be linked via a central European e-justice portal, which gives the national judges and creditors from different member states the possibility to access all relevant information. In Belgium, the REGSOL is in the meantime up and running.
- Lastly, this Regulation also lays down rules on the coordination of insolvency proceedings that are related to several members of the same group of companies. The aim of which is to make the efficient and combined settlement of insolvency procedures possible.
The new Insolvency Regulation works out and builds upon the experience Europe gained the past 15 years, especially with regard to the insolvency of subsidiaries of a group of companies. By creating a framework for coordination, the chances of a smooth settlement of a complex international insolvency proceeding are being increased. Contact?