Vol 10 (2013) - Issue 5

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Bank Handlowy w Warszawie SA v Christianapol Sp. z.o.o. (C-116/11)

Introduction
The European Court of Justice has handed down judgment in Bank Handlowy w Warszawie SA v. Christianapol sp. z o.o. (Case C-116/11), a reference having been made by the Polish Court as to the interpretation of Articles 4(1), 4(2)(j) and 27 of the EC Regulation on Insolvency Proceedings (No. 1346 of 2000) ('the Regulation'). As explained below the European Court of Justice’s decision in this case is one clearly aimed at ensuring the efficiency and effectiveness of cross-border insolvency proceedings.

Background
On 1 October 2008 the French Court opened insolvency proceedings in respect of Christianapol sp. z o.o., a Polish company (wholly owned subsidiary of a German company in turn 90% owned by a French company), finding its centre of main interests to be situated in France. The proceedings were protective, being opened on the ground that the debtor was not in situation calling for the cessation of payments, but that it would be in that situation if a financial restructuring was not undertaken quickly.
On 21 April and 26 June 2009 Bank Handlowy, a creditor of Christianapol, asked the Polish Court to open second insolvency proceedings in respect of Christianapol pursuant to Article 27 of the Regulation. In the event that the judgment of the French Court was held to be in breach of public policy in accordance with Article 26 of the Regulation, an alternative application was made by Bank Handlowy for the opening of winding up proceedings under Polish law.
Thereafter, on 20 July 2009, the French Court approved a rescue plan for Christianapol, pursuant to which debts would be paid off in installments over a 10 year period. Having originally maintained that Bank Handlowy’s application for the opening of secondary proceedings in Poland should be dismissed on the basis that such proceedings would be contrary to the objectives of the French insolvency proceedings, once the French Court approved the rescue plan, Christianapol argued that the secondary proceedings should be discontinued as the main proceedings had closed. That argument having been raised, the Polish Court asked the French Court whether the insolvency proceedings in France had indeed been closed. However, the answer given by the French Court failed to provide the necessary clarification.

Reference for a preliminary ruling
In the circumstances, the Polish Court referred the following questions to the European Court of Justice for a preliminary ruling:
1. Is Article 4(1) and (2)(j) of [the Regulation] to be construed as meaning that the term 'closure of insolvency proceedings' used in that provision should be interpreted autonomously, independently of the rules applicable in the legal systems of the individual Member States, or is it solely for the national law of the State of the opening of proceedings to decide when closure of insolvency proceedings occurs?
2. Is Article 27 of [the Regulation] to be interpreted as meaning that the national Court dealing with an application for the opening of secondary insolvency proceedings may never examine the insolvency of a debtor in respect of whom main insolvency proceedings have been opened in another State, or rather that the national court may in certain situations examine the existence of the debtor’s insolvency – particularly where the main proceedings are protective proceedings in which the court has established that the debtor is not insolvent?
3. Does interpretation of Article 27 of [the Regulation] permit secondary insolvency proceedings, the nature of which is specified in the second sentence of Article 3(3) of [that] regulation, to be opened in the Member State in which the whole of the assets of the insolvent person are situated, when the main proceedings, which are subject to automatic recognition, are of a protective nature, a scheme of payment has been accepted and confirmed in those proceedings, that scheme is being implemented by the debtor and the court has forbidden the disposal of the debtor’s assets?