The European Parliament approved the revised version of the European Insolvency Regulation on 20 May 2015. The new regulation will take effect 24 months after publication in the Official Journal of the European Union. This completes the third revision process which commenced in 2011.
The European Insolvency Regulation regulates the mutual recognition and coordination of insolvency procedures within the EU and was introduced on 31 May 2002.
The amendments included in the new Regulation tie in with new initiatives laid down in the legislation of the various Member States aimed at the survival and restructuring of businesses as an alternative to liquidation.
The modernized Regulation applies to a broader range of commercial and personal insolvency proceedings. The reform allows 19 new national insolvency procedures, such as the Spanish “scheme of arrangement”, the Italian “reorganization plan procedure” and the Finish consumer insolvency procedures to benefit from the Regulation.
Discourages forum shopping
If a debtor relocates shortly before filing for insolvency, the court will have to carefully look into all circumstances of the case to see that the relocation is genuine and not abusive.
Companies are suspected of forum shopping if they relocate to another member state within 3 months. For consumers this period is 6 months from the time of changing their domicile to another member state.
Increased focus on rescue and recovery
The new rules avoid secondary proceedings in other Member States being opened, while at the same time guaranteeing the interests of local creditors. As a result it will be easier to restructure companies in a cross-border context.
The rules governing the insolvency of group companies with offices in various Member States discourage fragmentation of group insolvency proceedings at European level resulting in greater chances of rescuing the group as a whole.
Interconnected insolvency registers
Businesses, creditors and investors will have easy access to any national insolvency register on the European e-Justice Portal. This system has already been piloted for seven Member States (IP / 14/774).
More information on the legislative process can be consulted on the website of the Dutch Senate and the definitive text of the new European Insolvency Regulation can be consulted on the new EIR on EUR-lex.
Maarten de Vries, 14 June 2015