Introductory Act to the European Insolvency Regulation (EU) 2015/848

Together with the start of the application of the new European Insolvency Regulation (EU) 2015/848 on 26th of June 2017 the Regulation (EU) 2015/848 establishing the forms referred to in Regulation (EU) 2015/848 of the European Parliament and of the Council on insolvency proceedings and the German Introductory Act to the European Insolvency Regulation came into force yesterday. A new Art. 102c was introduced into the German Introductory Act to the Insolvency Code (EGInsO) that adapts and specifies certain procedural rules of the German Insolvency Code in respect of the recast of the European Insolvency Regulation (EIR). In particular it specifies possible remedies against the insolvency court’s decision on its jurisdiction, the jurisdiction for annex procedures and further details for the new secondary proceedings as well as the group coordination proceedings.

During the last weeks we have been informing you in detail about the newly regulated parts of the 2015 EU Insolvency Regulation and would like to refer to our newsletters concerning the extension of its scope to hybrid and pre-insolvency proceedings, the remake of the jurisdiction rules (COMI), the interconnection of national insolvency registers via the European e-Justice Portal, the recast of the data protection provisions, the reform of secondary insolvency proceedings  and the new Group Insolvency Law.

The main steps in the legislative process and a document comparison between the 2002 European Insolvency Regulation and the new 2015 version can be found at
http://www.schubra.de/en/internationalaffairs/EIR_Recast_2015.php

We hope you find it interesting reading.

Alexandra Josko de Marx
LL.M. (Kraków)
Attorney at Law in Germany

 

Alexandra Josko de Marx

Direct application of the EIR and introductory law in the member states

The EIR is directly applicable in all member states of the European Union and does not require to be adopted or ratified. However local introductory laws are often helpful to adjust European regulations into national laws in order to safeguard the practical implementation. Therefore not only Germany but also other member states, e.g. France, intend to introduce similar laws. Other countries like Poland or Italy appear so far to not enact further rules for the application of the new EIR.

Overview of the new provisions

The following remarks shall only be an overview of those rules that specify the provisions of the EIR beyond the scope of the regulation.

While Art. 102c § 2 EGInsO requires the court to dismiss a second application to commence insolvency proceedings if the prerequisites for a secondary insolvency proceedings are not met. Art. 102c § 3 EGInsO in addition provides for hearing rights for the insolvency administrator, the debtor and the creditors committee. In case of discontinuation, the insolvency creditors have a remedy right. § 3 (3) further stipulates the duty to inform the insolvency administrator in the other member state of the firstly commenced main insolvency proceedings about that decision.

Art. 102c § 4 EGInsO specifies the right to challenge the court’s decision to commence main insolvency proceedings on the grounds of international jurisdiction under Art. 5 EIR by virtue of an appeal on points of law under §§ 574 to 577 of the German Civil Procedural Code (ZPO). § 575 ZPO provides for the deadline of one month to file such an appeal. However the German legislator did not opt for the second remedy as provided for in Art. 5 (2) EIR that the decision commencing main insolvency proceedings may be challenged by parties other than the debtor and any creditor or on grounds other than the lack of international jurisdiction.

Art. 102c § 5 EGInsO states that the place of the insolvency court shall determine the place of jurisdiction for annex procedures if there are no other provisions applicable. Under German law the insolvency courts do not handle avoidance actions for adversary proceedings, it is the ordinary courts that are competent.

With respect to the newly stipulated secondary insolvency proceedings, the German legislator requires the insolvency administrator to obtain creditors committee’s consent prior to an undertaking under Art. 36 EIR, Art. 102c § 11 EGInsO. According to this new rule, the insolvency administrator may commit to treat local creditors under their local insolvency regime without commencing secondary insolvency proceedings. Art. 102c § 12 EGInsO requests the insolvency administrator to publish the intended undertaking. With respect to obtaining the approval of such undertaking by the known local creditors under Art. 36 para 5 EIR, Art. 102c § 17 EGInsO refers to the procedural rules and majority requirements for a German insolvency plan (§§ 243 et seq German Insolvency Code).

Parallel to the new rules regarding group insolvency proceedings under the EIR, the German legislator has set into force a set of rules governing the insolvency of a group of companies that will be applicable from April 2018.  Art. 102c § 22 EGInsO stipulates, that the German provisions shall be suspended to the extent that the European provisions about cooperation, communication and coordination in Art. 56 and 57 EIR apply. In addition the German group coordination procedure shall not be opened in case of detrimental effects to the group coordination procedure under the EIR. Besides further provisions on the suspension of realisation of assets and other details, Art. 102c § 23 EGInsO stipulates the necessity for the creditors committee or the creditors meeting to consent to the initiation of a group coordination procedure.

Alexandra Josko de Marx, Attorney at Law in Germany, LL.M. (Kraków)


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