- Regulation (EU) N° 2015/848 of 20 May 2015 introduces new provisions regarding groups of companies - Part two
Regulation (EU) N° 2015/848 of 20 May 2015 introduces new provisions regarding groups of companies - Part two
Layout of new Chapter V (″Insolvency proceedings of members of a group of companies″) of Regulation (EU) N° 2015/848:
This chapter includes:
▪ A Section 1 (Articles 56 to 60) with title as follows: ″Cooperation and communication″;
▪ A Section 2 (Articles 61 to 77) with title as follows: ″Coordination″. This section 2 is itself divided into 2 subsections, namely ″Procedure″ and ″General provisions″.
Setting the frame for processes and cooperation between law practitioners and/or courts as part of insolvency proceedings of members of a group of companies
The purpose of the provisions of Section 1 of Regulation (EU) N° 2015/848 is to frame cooperation:
▪ between practitioners in several member states,
▪ between courts with jurisdiction in several member states, and
▪between practitioners and courts with jurisdiction in several member states, as part of any given insolvency proceedings.
Cooperation and communication between insolvency law practitioners
When insolvency proceedings involve 2 or more members of a group of companies, the insolvency law practitioner appointed by a court as part of proceedings started for one member of the group must cooperate with any of his/her counterpart which may be appointed to take care of proceedings involving another group company.
As provided for by Regulation (EU) N° 2015/848, such cooperation may take on any form whatsoever, including agreements or memorandums.
Cooperation and communication between courts
When insolvency proceedings involve 2 or more members of a group of companies, the court before which such proceedings were started must cooperate with any other court which may be seised of an application to start insolvency proceedings or has started such proceedings regarding another group company.
When implementing such cooperation, the courts or any person or entity acting on their behalf may disclose information directly to one another or request such disclosure or assistance directly from one another.
Cooperation and communication between insolvency law practitioners and courts having jurisdiction
An insolvency law practitioner who has been appointed as part of proceedings regarding a company owned by a group of companies must cooperate and communicate with any court which either was seised of an application to start or has already started insolvency proceedings regarding another group company.
The group coordination proceedings as per Article 61:
Definition and purpose:
As provided for by Article 61, one of the insolvency law practitioners who have been appointed as part of proceedings regarding a company in the group, may request any court having jurisdiction for one of the group companies to start so-called "group coordination proceedings” (i.e. collective coordination proceedings).
The seised court must ascertain whether opening such proceedings is likely to lead to increased efficiency of the insolvency proceedings regarding the various members of the group.
The court must also make sure that planning to include a group company in the insolvency proceedings is not likely to harm the financial interests of any of said company's creditor (s).
The coordinator is responsible for:
▪ Developing recommendations towards a coordinated conduct of the insolvency proceedings started for the various group companies;
▪ Preparing a collective coordination programme in order to set, specify and recommend a full series of adequate steps towards an integrated approach for solving group companies' insolvency situations.
In particular, such programme may include recommendations regarding:
▪ The choice of adequate measures to restore economic results and financial stability at group or infra-group level;
▪ Dispute resolution paths in matters of intra-group transactions and related revocation actions;
▪ Agreements between the various insolvency law practitioners appointed for insolvent group companies.
The coordinator may also:
▪ Settle any dispute which may arise between two insolvency law practitioners ;
▪ Present and explain his/her collective coordination programme to the persons or entities to which he/she is accountable;
▪ Request information from any insolvency law practitioner regarding any group company.
Practical experience and feedback will help assess the actual gain from the recast European insolvency framework.