Hazelhoff Centre for Financial Law series includes a new publication: New Bank Insolvency Law for China and Europe, Volume 2: European Union. It’s over 200 pages and has been written by prof. Matthias Haentjens, Lynette Janssen, PhD candidate and myself, all from Leiden Law School. The current volume provides a comprehensive analysis of the current EU bank insolvency framework, discusses future developments in the field of EU bank insolvency law, and investigates relevant Dutch, German and English rules and practice. Its chapters contain an overview of European bank insolvency law and its institutional framework, (normal) insolvency proceedings for banks, management of the institution, bail-in, effects on contracts, judicial review, and more specialised topics, such as deposit guarantee schemes, cross-border banking groups and recognition of resolutions measures, and towards an effective cross-border bank resolution framework. This research has been made possible with a grant from the Royal Netherlands Academy of Arts and Sciences (KNAW) in the context of its China Exchange Programme. Researchers of the China University of Political Science and Law (CUPL), and Leiden Law School’s Hazelhoff Centre for Financial Law have addressed the question: how best to achieve a modernized bank insolvency regime for China and the EU? The series takes into account some of the most important developments in international restructuring and insolvency law. The volumes on ‘New Bank Insolvency Law for China and Europe’ therefore present a valuable resource for academics, practitioners and policymakers, and a timely contribution to scholarly and practical discussions about the development of rules that govern the recovery and resolution of banks. See http://www.elevenpub.com/law/catalogus/bank-insolvency-law-eu-1-2017#
At the moment Saint Petersburg is hosting the International Legal Forum (ILF), the biggest legal event in Russia. Last year it featured over 70 roundtables, conferences and general debates and attracted 3700 participants, representing 77 countries and 77,000 online viewers in 58 countries joined as well. In 2017, ILF contains a separate program concerning insolvency. See for the agenda for all days of ILF (http://www.spblegalforum.com/en/Agenda) – insolvency track is starting Thursday 18 May. You can look at the time for the session of your interest and then at the indicated time (please note that it is Moscow time) go to “Forum 2017” at the top and then to “Broadcast”. There you can join for free and without any registration. For instance, on Thursday ILF will feature the theme of Directors liability in insolvency (14:00 Dutch time), Criminal aspects of insolvency (15:25 Dutch time), Consumer insolvency (16:50 Dutch time). Tomorrow (19 May 2017) there will be a large session on Cross-border insolvency with among others Sidney Brooks (Chief Bankruptcy Judge (retired) at U.S. Bankruptcy Court) and Adolfo Rouillon (Judge (Retired), Civil and Commercial Court of Appeals, Rosario, Province of Santa Fe, Argentina) and others at 8:30 (Dutch time) and part II at 9:45 Dutch time. Other sessions that might be of particular interest are The anatomy of a successful insolvency case: how to save a troubled business? (10:55 Dutch time) or Insolvency of financial institutions at 14:55 (Dutch time).
Your entree into the legal aspects of (Belgian and international) corporate finance and insolvency is the Corporate Finance Lab, see for an overview of six month output https://corporatefinancelab.org/2017/05/07/six-months-corporate-finance-lab-taking-stock/
Under the new Insolvency Regulation Member States will be required to publish relevant information on cross-border insolvency cases in a publicly accessible electronic register. The aim is to improve in the EU the provision of information to relevant creditors and courts, and to prevent the opening of parallel insolvency proceedings. Furthermore, in order to facilitate access to that information for creditors and courts domiciled or located in other Member States, the new regulation provides for the interconnection of such insolvency registers via the European e-Justice Portal. In March 2017 my column in GRR touched upon the subject. See 2017-05-08 Wessels – Insolvency registers
Many societies recognise concerns about the cost of access to justice. The Federal Court of Australia obviously gave a serious warning to lawyers for ‘… an inefficient and inappropriate way of dealing with the preparation for, and conduct of the hearing of, a case that, in effect, was to be, and should have been, substantively prepared and argued at all stages by counsel … Given the obvious efficiency (and proper role) of having counsel draft and settle pleadings and submissions, as well as leading evidence in chief, and significant savings in fees from his doing so, there is no apparent reason why much of that work was planned to be done by not one but, in various unexplained ways, four solicitors as well as counsel.’ In Justice Rares’ view ‘… it is time that the profession recognised that costs should be kept to a minimum. Having five lawyers looking at, for example, the drafting of a pleading or submissions is a matter that, in a case such as this, bespeaks a failure to address a client’s best interests …’ and ‘… involves a degree of waste and unnecessary duplication of effort that I cannot comprehend.’ Why did these lawyers act so inconsiderately, mindless to client’s interest? Teamwork is fine, but appropriately and efficiently organisation of the legal work to be done is even better. See Federal Court of Australia 21 March 2017 (Armstrong Scalisi Holdings Pty Ltd v Piscopo (Trustee), in the matter of Collins  FCA 423), at http://www.austlii.edu.au/au/cases/cth/FCA/2017/423.html
‘Winding up of (assetless) companies in Central-Eastern’ is the theme of a one dat evnet in Budapest. It will be organised on 12 May 2017 by INSOL Europe’s Eastern European Countries’ Committee. Other topics include director’s liability, dealing with non-performing loans and harmonisation of training and education of IPs accross Europe. I have been invited to speak on certain topics of the new Insolvency Regulation, in a forum with Andrea Csöke (Supreme Court of Hungary) and Alberto Núñez-Lagos (Uría Menéndez Abogados, Spain; former president INSOL Europe). I did receive a list with over 200 registrants, clearly a sign of the demand for learning on matters of restructuring and insolvency and sharing experiences, practical tips and ideas. I understand registration at www.insol-europe.org/events is still possible. That’s were you can find the programme. Hope to see you there.
Leiden Law School is proud to launch an intensive one-year Advanced Master’s programme on Law & Finance. In today’s world, finance is ever-more regulated. And while over the last decades, the financial sector has increasingly become more legal, our societies have increasingly become more financial. A specialised and advanced education at the intersection of law and finance is therefore needed. Also because of the complex, international and multidisciplinary nature of the questions the financial sector is faced with. Financial regulation poses a unique set of challenges related to economic and legal realities that affect the financial sector. Professionals with sharp minds that are qualified to work in this international and multidisciplinary environment are therefore in high demand. Leiden Law School has developed a brend new advanced programme aimed towards talented legal professionals and law graduates and graduates from other fields who have an adequate background in law.
The programme has a strong practical dimension. The academic staff are renowned experts most of whom have practiced at the highest levels in the field of law and finance. In its teaching, theoretical insights are therefore paired with practical experience. In addition, extensive contacts exist with a network of professionals in a variety of organisations, such as national and international supervisory authorities, financial institutions, the judiciary and law firms. This network is essential for the extra-curricular activities, such as site visits to financial institutions and financial supervisory authorities.
See the flyer of the programme Leiden Adv LLM Law-and-Finance Flyer or go to http://en.mastersinleiden.nl/programmes/advanced-studies-in-law-finance/en/introduction.
Application deadline is 15 May 2017 (but may be extended).
The development in Europe to integrated financial markets has brought significant achievements. To promote financial integration and market integrity while safeguarding financial stability, some six years ago within the EU internal market for financial services the EU is working on common rules and strong supervisory coordination. It introduced a Single Rulebook for financial regulation in Europe and created the European Supervisory Authorities (ESAs). These are the European Banking Authority (EBA, in London (still))), the European Insurance and Occupational Pensions Authority (EIOPA, Frankfurt) and the European Securities and Markets Authority (ESMA, Paris). These ESAs function as a cornerstone of the reforms put in place in the wake of the financial crisis. Since their establishment, the ESAs have contributed to the building of the Single Rulebook for financial services (banking, insurance and capital markets) and to the convergence of supervisory practices, in order to ensure a robust financial framework for the Single Market and to underpin the creation of the Banking Union. Presently the European Commission is evaluating this system, particularly by identifying areas where the effectiveness and efficiency of the ESAs can be strengthened and improved. Recently the Commission launched a public consultation on the operation of the ESAs with a twofold purpose: (i) to gather evidence on the operations of the ESAs to evaluate their operations and to see whether they are delivering as expected considering their objectives to protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, and (ii) to build a clearer overview of areas where going forward the effectiveness and efficiency of the ESAs can be strengthened and improved. Anything on your mind? Contributions can be submitted until 16 May 2017. For the link to the consultation, see https://ec.europa.eu/info/finance-consultations-2017-esas-operations_en
Het boek ‘Algemene voorwaarden’, dat vandaag verschijnt, is uitgegroeid tot het meest omvattende werk over algemene voorwaarden in Nederland. De eerste druk dateert van dertig jaar geleden (!); de huidige zesde druk is qua omvang meer dan vijf keer zo omvangrijk (ruim 900 pagina’s), maar dat komt natuurlijk ook omdat een tiental auteurs branche-specifieke bijdragen hebben geschreven, bijvoorbeeld over algemene voorwaarden in de huursector, energielevering, automatisering, verzekering en over de algemene bankvoorwaarden 2017. Voor het eerst is in deze druk een hoofdstuk opgenomen over algemene voorwaarden bij online contracteren met consumenten. Uiteraard is deze zesde druk aangepast aan de ontwikkelingen in literatuur en rechtspraak, met aandacht voor de Richtlijn oneerlijke bedingen (Richtlijn 93/13 EEG) en de toepassing daarvan in de rechtspraak van het Hof van Justitie van de Europese Unie. Zie nader B.Wessels en R.H.C. Jongeneel (red.), Algemene Voorwaarden, Wolters Kluwer, 6e druk, 2017 https://www.wolterskluwer.nl/shop/boek/algemene-voorwaarden/NPALGVRWA-BI16001/#auteurs
Germany is one of Europe’s lager countries where restructuring and insolvency law has changed dramatically over the last decade. The book of Eberhard Braun, InsO – Insolvenzordung, 7th ed., C.H. Beck, 2017, 2060 pp. (ISBN 978-3-406-69675-6), known as ‘the Braun’, reflects these recent changes. It provides an article-by-article commentary on the German Insolvenzordnung, with in addition a commentary on the revision of the EU Insolvency Regulation. It also includes a concise and compact treatment of Germany’s new (domestic) group insolvency law (the final version has been presented last March) and a commentary on its proposed rules on transaction avoidance.
Some thirty authors have contributed to the book, all being active as lawyers or financial consultants, which results in a clear orientation to the needs of practice, and the explanations given many times are the result of their rich experiences. The users of the book will be, I gather, primarily insolvency practitioners and attorneys. Having glanced through the commentary on the Insolvency Regulation recast (Reg. 2015/848) of around 250 pages, this orientation has its pros and cons. References to ‘foreign’, non-German literature are near to absent (except for the Bork/Mangano book). That’s a pity as in cross-border cases other, non-domestic literature might present arguments in favor of the interests of a client or a party in litigation. On the other hand, the authors have several times referred to court cases (probably based on their own experiences) from for instance Spain, Poland and Bulgaria, to present ‘non-German’ views. A strength of the book is that several commentaries at the end provide for ‘practical hints and tips’.
In the treatment of the new rules for insolvency registers the following caught my eye. Recital 76 provides: ‘In order to improve the provision of information to relevant creditors and courts and to prevent the opening of parallel insolvency proceedings, Member States should be required to publish relevant information in cross-border insolvency cases [my italics] in a publicly accessible electronic register. In order to facilitate access to that information for creditors and courts domiciled or located in other Member States, this Regulation should provide for the interconnection of such insolvency registers via the European e-Justice’. Which information must be published? The chosen wording regarding the information to be published (see my italics), and what this information specifically needs to contain (e.g. Article 24(2)(d) says: ‘… whether jurisdiction for opening proceedings is based on Article 3(1), 3(2) or 3(4)’), as well as the goal of providing this information (in recital 76: ‘In order to facilitate access to that information for creditors and courts domiciled or located in other Member States … ’) seems to indicate that only those proceedings mentioned in Annex A (compare Article 24(2)(c)) will be taken into the register that indeed have extra-territorial effect. This reading would necessitate to make a selection between ‘cross-border’ cases and pure domestic cases. If this would be possible at all – cross-border effects may only come to the surface some time after the opening of proceedings – and if it would be clear who has to make this selection (the ‘Member State’, or an agency on its behalf, the court, the insolvency practitioner, ‘if any’ (see Article 24(2)(g))?), such a limitation is difficult to align with the general goal of enhancing the effectiveness on collective insolvency proceedings and the effet utile of EU law. See in this way too Dugué (Art. 28, nr. 20), submitting that national legislators should oblige ‘courts’ to supply the register with information (unless it is clearly a domestic case). I wonder whether the better solution should be a technology driven one: all cases in the register, which is, if I am correct, the present practice in the system of the European e-Justice Portal.
On groups of companies, initially, under the former Insolvency Regulation, matters of insolvency for groups of companies had been deliberately left out. Under the present regulation, they form a large part of the new provisions, commented and discussed by Tschentscher, Esser and Cülter. Article 56(2) provides that, in implementing the cooperation and communication between the insolvency practitioners (IPs), these IPs ‘shall’ a soon as possible cooperate and communicate etc. The character of this ‘duty’ is discussed. Tschentscher (Art. 56, nr. 14) submits that its character is an ‘Obliegenheit’, which is an ‘obligation’ that only comes to live when it its triggered by the addressee of it. The result would be that the duty to inform only exists in case the insolvency practitioner in a foreign proceeding requires certain information. The text in different language versions is rather unclear (English: shall; German: ‘obliegt’; Dutch: insolventiefunctionarissen ‘gaan … als volgt te werk’; French: ‘[D]ans le cadre de la mise en oevre …’). Given the goal of ensuring the efficient administration of insolvency proceedings relating to different companies forming part of a group (recital 51) as well as the words ‘as soon as possible’ in Article 56(2)(a) I would expect IPs to be more active and start communication on their own initiative. At another place in the commentary Tschentscher (Art. 60, nr. 24), indeed seems to support the view that in practice IPs should inform each other on their own initiative. In practice, on a case-by-case basis, it will many times be clear which of the IPs is or should be in the lead (e.g. in considering and proposing a restructuring plan), although it should be noted that there is no such thing as a ‘dominant’ proceeding (known from the interrelationship between ‘main’ and ‘secondary’ insolvency proceedings, see recital 48), as in the context of coordinating the members of a group all pending insolvency proceedings related to these members function on the same footing.
In the case that the court is satisfied that the three requirements as expressed in Article 63(1) are met (opening of group coordination proceedings is approapriate, no creditor financially disadvantaged; the coordinator fulfils professional requirements), it must notify the other IPs and it will hear them. Article 63(2)-(4) provide the rules on timing, form etc. of this notification. The court seised shall give the insolvency practitioners involved the opportunity to be heard. See Article 63(4). In such a case these IPs can bring any relevant aspects regarding the fulfilment of the requirements and any potential objections to the attention of the court before it decides on whether to send the notice. Esser (Art. 63, nr. 28), submits that Article 64 (‘Objection by insolvency practitioners’) allows the IPs to bring forward objections, and that for this reason the hearing in the meaning of Article 63(4) does not seem necessary. I do not think that this is correct. Not only are the objections, provided for in Article 64 limited, to have a court decide on a certain matter without a hearing could easily contracdict the principle of equility of arms. Aforementioned right to object is limited to two situations, see Article 64(1)(a) and (b) (inclusion within group coordination proceedings; prior authorisation to the objection). Article 64(1) seems to limit the subject of the objections to the two given examples. What if the IP wishes to protest against the outline of the estimated costs and the share of the cost to be paid by each group member (see Article 61(3)(d))? Esser (Art. 64, nr. 6) submits that such objections should be allowed. In the light of the efficiency strived for I would support the view to limit the objections to the two mentioned in Article 64(1)(a) and (b). The regulation should not serve as an invitation to litigate.
In closing, I refer to the ‘outsider’ in the insolvency arena, Articles 78 – 83, on privacy and data protection law, with a clear comment by Becker.
The new Braun is, in all, a very timely and relevant book, that helps practitioners to understand better (EU cross-border) insolvency law and assists in overcoming the obstacles that this area so often presents.
Prof. Dr. Bob Wessels
Prof. em. international insolvency law
University of Leiden, The Netherlands
April 2017, accessible via www.bobwessels.nl (go to blog, 2017-04-doc7)