Vol 9 (2012) - Issue 4

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EC Insolvency Regulation: Is it Reform Time?

Introduction
The European Commission has recently launched a consultation examining the current European insolvency regime. The consultation is wide ranging. It seeks to elicit views on a number of fundamental aspects of the present regime. In particular, it asks what views there are about the general effectiveness of the EC Insolvency Regulation in facilitating cross-border proceedings, whether the scope of the Regulation should be expanded to include pre-insolvency proceedings, whether the concept of ‘Centre Of Main Interests’ (COMI) is workable and has withstood the rigours of recent experiences, whether there are problems with the interaction between the Insolvency Regulation and the Brussels Regulation and how the Regulation works in a multi-national and/or group situation.
The Commission’s Committee on legal affairs issued a report on 17 October 2011. It formulated a request to the Commission to submit to the European Parliament on the basis of various key articles in the mian Treaty, particularly Articles 50, 81(2) and 114, one or more legislative proposals relating to an EU corporate insolvency framework following detailed recommendations set out in an Annex which the Committee produced in order to ensure what it called a level playing field. Appended to a motion in the above terms for a resolution by the European Parliament were detailed recommendations as to the content of the proposal requested. The first part of the Annex dealt with recommendations regarding the harmonisation of specific aspects of insolvency and company law. The second part contained recommendations regarding the revision of the EC Regulation which is the subject matter of this piece, while the third part dealt with recommendations of the insolvency in groups of companies and the fourth and final part dealt with recommendations on the creation of a EU wide insolvency register.
It follows that change is very much in the air, or at least a discussion for change. With that in mind, INSOL Europe, which had previously prepared and issued a publication now available on its website on certain aspects of possible harmonisation of individual insolvency systems within the European Member States, has now provided a report which in effect attempts to address the key areas in some detail which in its working party’s view might be susceptible to reform. The drafting committee ( the Committee) was led by Robert van Galen of the Netherlands and five main members who were drawn from some of the principal regimes within the Member States, i.e. France, Germany, the United Kingdom and Belgium, and also had among its membership another Dutch lawyer deputed to assist the Chairman.
In any event, Article 46 of the Regulation stipulates a five year review period, at the end of which on a recurring basis, the Commission is to present to the European Parliament and the Council and the Economic and Social Committee, a report on the application of the Regulation. In April 2011, Monsieur Carriat, the Director General of the Justice Department within the European Commission formally stated that the Commission would make legislative proposals in 2013.

INSOL Committee’s working procedures
The Committee held a number of meetings to consider and put together various drafts prepared by all its members and then held two main consultation rounds to which the main experts in the field across the European Union were invited. The final version represents, in effect, a fusion of the Committee’s own deliberations and proposals, coupled with the observation and commentaries proposed by the experts.
There is no hiding the fact that the proposals overall are really based on the practitioner’s point of view, albeit based on a legal analysis of the Regulation and the underlying case law. The aim, even if not ultimately achieved, was to further the proper functioning of the Regulation by amending the substantive aspects within it and by improving technical aspects of the rules which find expression within the Regulation.