Vol 2 (2005) - Issue 4

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Beyond CoMI - The Duty to Cooperate under EU Insolvency Regulation 1346/2000

Much time and effort has gone into the debate as to how the words ‘Centre of Main Interests’ (CoMI) should be interpreted in the context of the EU Insolvency Regulation (‘The Regulation’). This debate is by no means ended and indeed the new Chapter 15 recently added to the US Bankruptcy Code picks up the same words and therefore the arguments regarding jurisdiction are set to go truly global.
However, what happens once the arguments have been settled in a specific case and those charged with carrying out the assignment have settled into their tasks?
This article looks at the issues facing the liquidators in the main and secondary proceedings and in particular the duty to cooperate enshrined in the Regulation.

Cooperation - a cornerstone of the Regulation

The Regulation’s very purpose is to facilitate efficient and effective cross-border insolvencies and was brought into being in an attempt to replace the previous anarchy that invariably ruled when the business of an insolvent company spread over more than one jurisdiction. This aim is set out at the beginning of the Recitals on the very first page of the text, second only to the need for freedom, justice and justice across the Union.
The route by which Main and Secondary Liquidation might come into being should be well known by now and will not be discussed here. Suffice to say it is quite common for there to be one of each (and the possibility of more than one Secondary cannot be discounted).

The Regulation sets out a clear duty on the office holders:

Subject to the rules restricting the communication of information, the liquidator in the main proceedings and the liquidators in the secondary proceedings shall be duty bound to communicate information to each other.

Subject to the rules applicable to each of the proceedings the liquidator in the main proceedings and the liquidators in the secondary proceedings shall be duty bound to cooperate with each other.

Further guidance is to be found in the Recital to the Regulation:

Main insolvency proceedings and secondary proceedings can (...) contribute to the effective realization of the total assets only if all the concurrent proceedings pending are coordinated. The main condition here is that the various liquidators must cooperate closely, in particular by exchanging a sufficient amount of information. In order to ensure the dominant role of the main proceedings the liquidator in such proceedings should be given several possibilities for intervening in secondary proceedings which are pending at the same time.

The diligent reader will immediately notice some important features in the above extracts:

- The duty to cooperate extends to both parties. While the recitals make it clear that the Main proceeding is the dominant one the Duty to Cooperate applies equally to both or all players.