Vol 2 (2005) - Issue 6

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Advocate General’s Decision in Eurofood

Introduction

Advocate General Jacobs delivered his opinion on the referral under Article 234 of the EC Treaty in relation to the dispute between the Irish and Italian courts on the interpretation of the European Insolvency Regulation (the ‘Regulation’) on 27 September 2005. In responding to four out of the five questions referred to the European Court of Justice (the ‘ECJ’) in the affirmative, the Advocate General has endorsed the decision of Kelly J in the Irish High Court and the strong recommendations of the Irish Supreme Court, in its judgment dated 27 July 2004, on foot of which these questions were referred to the ECJ. Central to Advocate General Jacobs’ opinion is his conclusion that the presentation of a petition to the High Court combined with the appointment of a provisional liquidator constituted a judgment opening main insolvency proceedings under the Regulation. Perhaps more interestingly from the perspective of the broader insolvency community, Advocate General Jacobs rejected the argument that the presumption that the centre of main interests (the ‘COMI’) of a company was in the Member State of registration was rebutted by the mere fact that its parent company, registered in another Member State, was in a position to control the policy of the subsidiary.

Chronology of events

In order to put the Advocate General’s opinion in context it may be useful to set out a number of key dates central to the dispute.

- On 23 December 2003, the Italian parliament passed into law decree no. 347 providing for the extraordinary administration of companies with more than 1000 employees and debts of no less than EUR 1 billion.

- On 24 December 2003, Parmalat SpA (‘Parmalat’) was admitted to extraordinary administration proceedings by the Ministry of Productive Activities. Dr Bondi was appointed as extraordinary administration.

- On 27 December 2003, the Civil and Criminal Court of Parma (the ‘Parma Court’) confirmed that Parmalat was insolvent and placed it in extraordinary administration.

- On 27 January 2004, Bank of America, a creditor of Eurofood, presented a petition for the winding up of Eurofood and appointment of Mr Pearse Farrell as provisional liquidator. On that date, the Irish High Court appointed Mr Farrell as provisional liquidator of Eurofood with powers to take possession of all of its assets, to manage its affairs, to open a bank account in its name and to retain the services of its solicitors.

- On 9 February 2004, the Italian Ministry of Productive Activities admitted Eurofood to the extraordinary administration of Parmalat.

- On 10 February 2004, the Parma Court made an order in which it acknowledged the filing of a petition to declare Eurofood insolvent and set the matter down for hearing for 17 February 2004.

- On the evening of Friday 13 February 2004, the provisional liquidator received notification of the said hearing.

- The provisional liquidator filed a defence brief with the Parma Court on 17 February 2004.

- On 20 February 2004, the Parma Court gave judgment which purported to open main insolvency proceedings concerning Eurofood, declaving it to be insolvent, determining that its COMI was in Italy.