The Recast Insolvency Regulation (Regulation 2015/848) (“Recast Regulation”) will apply to all member states of the EU (with the exception of Denmark) in relation to insolvency proceedings opened on or after 26 June 2017. The Recast Regulation takes a similar approach to that of the prior EU Insolvency Regulation (Regulation 1346/2000), which came into force in 2002. The Recast Regulation seeks to create a uniform code for insolvency jurisdiction, and cross-border recognition (within the acceding Member States).
Some of the key changes under the Recast Regulation include:
- The Recast Regulation applies to proceedings which provide for the restructuring of a debtor at a stage where there is only a likelihood of insolvency, as well as to proceedings which leave a debtor fully or partially in control of its assets and affairs (see recital 10).
- The Recast Regulation is clear that the list of proceedings in Annex A is exhaustive (see article 1(1) and 2(4)). Any types of proceeding which are not listed in Annex A will not fall within the Recast Regulation. Notably, this approach means that schemes of arrangement under the Companies Act 2006 remain excluded from the Recast Regulation.
- The rules on the centre of main interests (or “COMI”, i.e. the jurisdiction in which it may open “main” or primary insolvency proceedings) have been amended. There are also significant clarifications on how to rebut the presumed COMI and a focus on avoiding insolvency forum shopping in cases where this detriments creditors (see recitals 28-33).
- For corporate entities, COMI is presumed to be the place in which the debtor conducts regularly its administration, in a way which is ascertainable by third parties – typically, the starting point is a corporate entity’s registered address. Under the Recast Regulation, this presumption has been limited and now only applies to companies if the registered office has not moved to another Member State within the three months prior to the request for the opening of insolvency proceedings.
- Under the Recast Regulation, as similar presumption has been applied for individual debtors (the prior regulation contained no such presumption), whereby the debtor’s COMI is presumed to be their COMI is their usual residence, unless this has moved within six months prior to the request for the opening of insolvency proceedings. If an individual operates a business or professional activity, their COMI will be presumed to be that individual’s principal place of business (again, unless it has moved in the three months prior to the request for the opening of proceedings).
- The Recast Regulation provides additional guidance and clarity on the interplay between primary and secondary insolvency proceedings (see articles 41-44) and indicates a preference to co-ordinate the use of secondary proceedings where possible.
- The Recast Regulation also makes changes in the case of the insolvencies of groups of companies, focusing on the co-operation of courts and office holders across the group, and provides for a new concept of group co-ordination proceedings, whereby a group coordinator may be appointed to propose a coordination plan and conduct proceedings across the group. An application may be made by the holder of an insolvency appointment of any member of the relevant group – and where more than one such application is made, the court to which the first is made will take jurisdiction.
- The Recast Regulation also calls for the European Commission to establish a system to connect national insolvency registers and the European e-Justice Portal into a decentralised searchable system. The Recast Regulation provides for this to be implemented by 26 June 2019 – although in light of Brexit, it remains to be seen whether the English national register will therefore be required to be included in such register.