On 20 May 2015, the European Parliament adopted a new version (the "Revised Regulation") of Regulation 1346/2000 on insolvency proceedings (the "Original Regulation").
According to the statement of the Council's reasons, the Revised Regulation is aimed at making cross-border insolvency proceedings more effective with a view to ensuring the smooth functioning of the internal market and its resilience in economic crises.
The scope of the proposed Revised Regulation is therefore broader than the scope of the Original Regulation and extends to hybrid and pre-insolvency proceedings, as well as to proceedings providing for a debt discharge or a debt adjustment for consumers and self-employed persons.
One of the major advances of the Revised Regulation undoubtedly lies in improving the procedural framework for determining the jurisdiction for opening insolvency proceedings. The concepts of centre of main interest ("COMI") and "establishment" are further clarified to provide useful guidance to all those concerned and increase legal certainty. In addition, a number of verification and compliance mechanisms have been set up.
Therefore, before insolvency proceedings open, courts must examine whether the debtor's COMI is actually located within their jurisdiction. As regards the determination of the COMI, special consideration should be given to creditors and to their perception of where the debtor conducts the administration of business.
Moreover, the new rules contain a set of safeguards aimed at preventing abusive forum shopping. Presumptions as to COMI are rebuttable and do not apply if the registered office/principal place of business is moved in the three-month period before the request to open insolvency proceedings. In all cases, where the circumstances give rise to doubts regarding the court's jurisdiction, the court should ask the debtor to supply additional evidence to support his assertions as to the location of the COMI and, where the law applicable to the insolvency proceedings so allows, give creditors an opportunity to present their views on the question of jurisdiction.
In order not to hamper the efficient administration of the insolvency estate, the Revised Regulation sets out specific situations in which a court seized of a request to open secondary proceedings should be able, at the request of the insolvency practitioner in the main proceedings, to refuse or to postpone the opening of such proceedings.
The Revised Regulation allows the insolvency practitioner in the main proceedings to propose an undertaking to local creditors according to which they will be treated, in the main proceedings, as if secondary proceedings had been opened. This commitment must fulfil a number of conditions and in particular must be approved by a qualified majority of local creditors.
The Revised Regulation also gives the court power to temporarily stay the opening of secondary proceedings when a temporary stay of individual enforcement is granted in the Member State where main proceedings have been opened.
In addition, the Revised Regulation introduces a number of rules to improve communication between the participants in the main and secondary proceedings.
Such improvement in communication generally appears as a priority of the Revised Regulation since it imposes on Member States an obligation to establish insolvency registers that contain certain information about the debtor and the insolvency practitioner, as well as information relating to the insolvency proceedings.
Specific provisions on cooperation and communication between the courts and the insolvency practitioners involved in the insolvency of members of groups of companies also aims for greater communication and efficiency and contribute to improve the Original Regulation.
The Revised Regulation should apply from June 2017. In the meantime, the Original Regulation still applies.