International jurisdiction for the opening of insolvency proceedings according to the European Insolvency Regulation 2015 (NIKI Luftfahrt GmbH)

The presumption of the COMI of a legal entity at its registered office is difficult to refute. It is not enough for the essential market of the company to be located in another member state.

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Dr Christoph von Wilcken
Attorney at Law (Germany)

 

Dr Christoph von Wilcken

EuInsVO Art. 1 I, 3, 5 / EGInsO Art. 102c § 4; InsO §§ 21, 22, 27; ZPO §§ 574 - 577
Regional Court of Berlin, decision of 08.01.2018 - 84 T 2/18

In August 2017 relevant companies of the Air Berlin Group filed for insolvency in the local court of Charlottenburg. A creditor´s insolvency application against NIKI Luftfahrt GmbH was submitted to the Regional court of Korneuburg in Austria in September 2017. After the sale of the shares in NIKI Luftfahrt GmbH to Lufthansa had failed as part of the insolvency proceedings over the assets of Air Berlin PLC & Co. Luftverkehrs KG as consequence of antitrust concerns of the European Commission, NIKI Luftfahrt GmbH itself submitted an insolvency application. Although it is a limited liability company under Austrian law with its registered office in Vienna, the application was submitted to the local court of  Charlottenburg on the 13th December 2017. The local court of Charlottenburg first ordered provisional measures on the same day and also imposed a prohibition of disposals on the debtor on 27th December 2017.

Against this, a travel portal turned as a creditor of NIKI Luftfahrt GmbH with an immediate appeal, which was received by court on 2nd January 2018. The complainant rebukes the international jurisdiction of the local court of Charlottenburg. After the local court of Charlottenburg had decided on 4th January, not to rectify the immediate appeal, the Regional Court of Berlin allowed the appeal on 8th January 2018. The Regional Court of Korneuburg thus opened main insolvency proceedings over the assets of NIKI Luftfahrt GmbH in Austria on 12th January 2018. The appeal against the decision of the Regional Court of Berlin filed with the Federal Court of Justice has been withdrawn in the meantime. On 23rd January 2018, the local court of Charlottenburg has opened a secondary insolvency proceedings in Germany over the assets of NIKI Luftfahrt GmbH.

The dispute over the international jurisdiction had an immediate impact on the bidding process for the airline. While sales to the British IAG (British Airways, Iberia) had been agreed in Germany, Niki Lauda was awarded the contract in the Austrian proceedings.

The immediate appeal was considered admissible by both the local court and the regional court. For the admissibility, the creditor position of the complainant and his complaint of the missing of the international jurisdiction are sufficient in order to appeal against the opening of a main insolvency proceeding according to Art. 5 of the European Insolvency Regulation in conjunction with Art.102c § 4 of the Introductory Act to the German Insolvency Code. Although only provisional measures were taken, the right to appeal was admissible in order to ensure the effectiveness of the regulation with regard to its objective.

Deviating from the decision of the insolvency court, the appellate court did not consider the cited circumstances sufficient, to refute the existing presumption of the international jurisdiction for legal persons in the member state of its registered office, according to Art. 3 para. 2 European Insolvency Regulation. Such circumstances included the full economic incorporation into the Air Berlin Group, in particular through a Cost-Plus Agreement, on the basis of the debtor performed his flights for Air Berlin and made these his only relevant customer. The strategic planning, but also the flight planning, the revenue management, the sale of seat contingents as well as the marketing took place from Berlin. The managing director attended Berlin weekly, where also a part of the management team including the legal department is constantly seated. The restructuring efforts would be coordinated here. In addition, 16 of the 21 leased airplanes are stationed in Germany. From here, 80% of the cockpit staff and cabin crew are deployed, with predominantly had Austrian employment contracts though. Finally individual seat reservations were made via the Air Berlin website, the contractual relationship for the transport took place with Air Berlin and was carried out only by the debtor.

The regional court considered the listed circumstances insufficient to identifiably locate the centre of the main interests (COMI) of the debtor for third parties according to Art. 3 para.1 of the European Insolvency Regulation   in a member state other than the one of their registered office. The fact that an economic incorporation into a group, in particular its influence on strategic decisions and interventions in operational processes, is not sufficient, had already been established by the European Court of Justice in its Eurofood-decision in 2006. Also, the fact that the turnover is essentially made in another Member State, is not sufficient. This also results from the fact that the regulation determines the COMI to be where the interests of the debtor is managed. Although the regional court values the fact that the debtor has his main account in Berlin as a possible indication of a COMI in Germany.

However this indication is invalidated by the use of not completely subordinate Austrian accounts. In addition, conclusions could also be drawn regarding the centre of the main interest of the debtor from the place of the competent supervisory authorities and the law under which most of the employment contracts were made. In both cases, Austria surrenders as COMI, whose law is also subject to the cited Cost-Plus-Agreement. However, the fact that restructuring efforts have already been made in Germany for the group is not a criterion, with reference to the respective rule of the European Court of Justice in the case of Rastelli. Finally, even the debtor had not complained about the creditor´s application filed in Austria in September 2017 with regard to the International jurisdiction.

The decision shows the relevance of the right of appeal in Art. 5 European Insolvency Regulation introduced by the reform of 2015.The regional court´s reasoning is consistent with the case law of the European Court of Justice from the time before the amendment to the regulation. Since the legislature complied with the original case law on the question of international jurisdiction, this should be in accordance with the regulation. The registered office as a connecting factor for the COMI for legal entities is emphasized. As a result, this strengthens legal certainty and predictability and is therefore to be welcomed. For all the difficulties that have arisen in the concrete situation for the restructuring of the company, it is positive that the courts of both member states have reached matching results with regard to COMI.

Attorney at Law Dr Christoph von Wilcken


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