In November 2016 a proposal for a Restructuring Directive was published two weeks ago. Officially it has a much longer titel: ‘Proposal for a Directive of the European Parliament and of the Council on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30/EU’ (‘Restructuring Directive’). For a short explanation and all related documents, see http://bobwessels.nl/2016/11/2016-11-11-restructuring-directive-published/. It introduces the Pifor, the ‘practitioner in the field of restructuring’. Who’s he (she)? See my article, based on my column in Global Restructuring Review December 2016.2017-03-24 Wessels IP and Pifor
The Conference of European Restructuring and Insolvency Law (CERIL) is an independent non-profit, non-partisan, self-supporting organisation of approximately 75 lawyers and other restructuring and insolvency practitioners, law professors and (insolvency) judges committed to the improvement of restructuring and insolvency laws and practices in the European Union and in its Member States and their operation. CERIL’s primary purpose is to advise, at its own motion or at request, on technical and policy issues relating to restructuring and insolvency laws, regulation and practice and any related laws, both to European Union institutions as well as Member States and EU’s neighbouring countries. The Conference’s vision is to provide a unique independent perspective to endorse significant long-term improvements in restructuring and insolvency systems across Europe, including the European Union. CERIL is a voluntary organisation, based on the shared commitment by its conferees to collect and present their best insights. To become a conferee is by invitation only and free of charge. Conferees are leading scholars, judges and practitioners in the field. Many of them have been active as an expert on matters of restructuring and insolvency to the European Commission or selected as reporter to the European Law Institute’s project ‘Rescue of Business in Insolvency Law’. Conferees come from around 25 European countries and are independent: they do not take a position which may be influenced by professional obligations and relations or act on behalf of a certain interest group.
The Conference establishes a platform that allows for the exchange of ideas, in-depth discussions, often in the context of joint studies and statements of advice on technical and policy matters. The Conference may support legislative initiatives on a European Union or national level but also discuss fundamental principles and concepts. Ten Working Parties have been set up to prepare future CERIL statements on such matters as directors liability, acts detrimental to an insolvency estate, the role of shareholders in a restructuring, improving professional and ethical rules applicable to insolvency practitioners, or consumer rights in case of the insolvency of a retailer.
CERIL’s governance exists of an Executive and a Board. The Executive is formed by seven conferees:
– Prof. Dr. Bob Wessels, Emeritus Professor of International Insolvency Law, Leiden University, The Netherlands (Chair)
– Prof. Dr. Ignacio Tirado, Professor (Titular) of Commercial Law, Universidad Autónoma of Madrid; Senior Legal Consultant World Bank (Financial Sector) (Vice-Chair)
– Prof. Dr. Reinout D. Vriesendorp, Professor of Insolvency law, University of Leiden; partner De Brauw Blackstone Westbroek, Amsterdam, The Netherlands (Secretary). The other executives are:
– Giorgio Corno, Esq., Studio Corno Avvocati Milan, Italy
– Prof. Ian F. Fletcher QC (hc), Emeritus Professor of International Commercial Law, Principal Research Associate, University College London, UK
– Prof. Tuula Linna, Professor of Procedural Law, University of Lapland, Rovaniemi, Finland
– Prof. Stephan Madaus, Professor of Civil Law, Civil Procedural Law and Insolvency Law, University of Halle-Wittenberg, Halle, Germany.
For information: www.ceril.eu
Article 2(9) of the EU Insolvency Regulation (recast) (EIR 2015) is certainly an improvement of the set of rules of the location of assets in insolvency cases crossing borders within the EU. This serves deal certainty, in the sense of strategic planning of asset location, as well as in cases where it would come to legal conflicts about where assets are located. This is the short conclusion of an article (see the draft text for: Journal of International Banking Law and Regulation due for publication in May 2017). It is indeed of prime importance where an asset can be located, as was the case in Nortel Network. The mechanism the EIR 2015 uses is localisation rules, indicating where a debtor’s assets must be deemed to be located. The EIR 2015 contains eight of these rules, including rules for shares, financial instruments, cash held in bank accounts and copyrights. See Proof corr Wessels_2017_JIBLR_Issue_5_Proof_4
Further to my invitations, expressed on my blog www.bobwessels.nl, go to 2017-01-doc13, to participate in developing my book International Insolvency Law, Part II, please see attached the fourth memo, this time related to the definition of ‘collective proceedings’ in the meaning of Article 1(1) EIR 2015 in its relation to Annex A (and the proceedings listed in it) and the troublesome way of changing the Annexes A and B, with as a recent example Regulation (EU) 2017/353 of early March 2017. Responses please before 27 March to firstname.lastname@example.org. I thank those authors that reacted to earlier memos, by quality responses or by sending forthcoming articles. This all contributes to the quality of the publication!Memo04
With the aim of providing interactive and educational opportunities to the growing international legal community, several committees within the International Bar Association (IBA) offer opportunities for young lawyers from around the world to apply for scholarships and to be nominated for awards that recognise outstanding individuals in the legal profession. The Insolvency Section of the IBA offers the Michael Prior Scholarship. Michael has been an insolvency veteran, closely connected to the IBA, who was first at what is now called Nabarro LLP and later at Moon Beever. He died in a car crash around 4 years ago. To honor him, the Insolvency Section looks for research and comments on laws from different parts of the world ‘… that could have the effect of discouraging company directors restructuring a distressed company in the “zone of insolvency,” as well as recent proposed legislative responses to the often undesirable economic effects of these laws imposing on directors personal liability for “trading whilst insolvent”. Awards include a trip to Sidney at the annual event in October 2017. For information go to www.ibanet.org/LPD/Insolvency_Section/Insolvency_Section/Default.aspx
Alphonse Eschenbrenner, who is he? Mr Eschenbrenner is a French national and lives in Rahling (France), close to the German border. Since 1996 he had been employed as a driver with the undertaking of Reisen, located in Pirmasens (Germany). His German earnings are taxed in France. In 2012 insolvency proceedings are opened against his employer Reisen. While salaries and wages were paid in full by that undertaking up to March 2012, Eschenbrenner had, on the date of the opening of the insolvency proceedings, a claim against his employer of EUR 5500 in respect of his remuneration for the months of April, May and June 2012. By virtue of those outstanding salary claims, Eschenbrenner requested, on 13 July 2012, the payment of insolvency benefit. To calculate the amount of that benefit, the German Tax Agency deducted from his gross remuneration the sum of EUR 3550 awarded by the provisional liquidator by way of advance payment for the period 1 April to 28 June 2012, as well as an amount corresponding to social security contributions and an advance, in respect of expenses, he had obtained for the month of April. Moreover, the Agency, based on German law, deducted from that remuneration an amount corresponding to income tax, calculated in accordance with German law, amounting for the three months at issue, to EUR 185, EUR 175 and EUR 173 respectively. Consequently, by decision of 18 July 2012, Mr Eschenbrenner was awarded a total amount of EUR 356 in respect of that benefit. It’s evident that he disagrees because he is not taxable in Germany. He proposes that German workers receive insolvency benefit equivalent to 100% of their previous net wage, while he is receiving an amount significantly lower than its previous net pay. The Court of Justice of the EU has a cold shower waiting for Eschenbrenner. See CJEU 2 March 2017, C-496/15, ECLI:EU:C:2017:152 (Alphonse Eschenbrenner v Bundesagentur für Arbeit). It decided that Article 45 TFUE and Article 7 of Regulation 492/2011 on freedom of movement for workers within the Union must be interpreted as not precluding, in circumstances such as those at issue in the main proceedings, the amount of the insolvency benefit awarded by a Member State to a frontier worker who is not subject to income tax in that State, and for whom that benefit, under the provisions applicable to him, is not taxable, from being determined by deducting income tax, as it applies in that State, from the remuneration used to calculate that benefit. The CJEU presents the conseuence of its argumentation: a frontier worker such as Eschenbrenner, unlike persons working and residing in that State, does not receive a benefit corresponding to his previous net remuneration. The fact that this worker does not have a claim against his employer corresponding to the part of his previous gross salary which he has not received because of that deduction has no effect in that regard.
On 27-28 April 2017, in Vienna, the European Law Institute (ELI) will host a Conference on the Project ‘Business and Rescue in Insolvency Law’. It will be held in the Palais Trautson, which sound very fine. The conference most probably is the last as the Report is nearing its end. The first one was held also in Vienna early 2015 (see http://bobwessels.nl/2015/03/2015-03-doc9-eli-conference-on-business-rescue-in-vienna-19-20-march/), the second one in autumn 2016 in Leiden, which included discussions and observations from some 15 judges respresenting 10 European countries (http://bobwessels.nl/2016/11/2016-11-doc6-business-rescue-conference-leiden-16-17-nov-2016/).
The Project goes into quite some detail on the following subjects: governance and Supervision of a rescue in court and out-of-court; financing a rescue; a stay; executory contracts; ranking of creditors; labour contracts; avoidance powers, particularly safe harbour for failed rescue efforts in a later formal insolvency; sales of substantially all of the debtor’s assets on a going-concern basis; rescue plan issues: procedure and structure; distributional issues; corporate group issues and the question whether special arrangements for small and medium-sized enterprises (SMEs) including natural persons (but not consumers) are necessary on a European level. In ELI’s newsletter January-February 2017 (just released, see http://www.europeanlawinstitute.eu/news/newsletter/) the conference is announced
as particularly attractive to those following the Project closely, since its Project Team (professor Stephan Madaus and myself) is completing their final report and will be presenting tangible results and suggestions. All National Correspondents (NCs) of the Project, the Advisory Committee and the Members Consultative Committee (MCC) are invited to attend, as well as those interested in Business Rescue. More information can be found via the newsletter. In the ELI newsletter of November-December 2016 Prof. Christiane Wendehort, vice-present of ELI, mentions our ‘first generation’ ELI project, that is entering its closing phase. The project is, she notes: ‘I … dare say, yielding stunning results: … the work of a network chaired by Bob Wessels and Stephan Madaus will greatly help in providing a better legal environment for the rescue of businesses in distress.’ Nice words, let’s get some action.
One of the characteristics of the EU Insolvency Regulation is its territoriality. In the draft text of my forthcoming book, I made some remarks on the topic. This is the third memo inviting reactions. See the initial invitation to participate in developing the fourth edition of my book on EU insolvency Law on this blog www.bobwessels.nl, go to 2017-01-doc13. For the other memo’s search for ‘memo’ on this blog, and you’ll find them. Once again, I am looking forward to your reactions, please before 13 March, at email@example.com. Memo03
Entries are invited for the prizes, awarded by the International Insolvency Institute (III) for the 2017 Prize in International Insolvency Studies. The Prize in International Insolvency Studies comprises a Gold Medal Prize for the winning submission as well as a Silver Medal Prize, a Bronze Medal Prize, and several Finalist Prizes. The Prizes are accompanied by an honorarium for the Medal winners. Topics can be matters of international insolvency and restructuring significance and on comparative international analysis of domestic insolvency and restructuring issues and developments. The winner’s contribution will be published in Norton Journal of Bankruptcy Law and Practice, s/he will receive a trip to the III’s conference in London in June 2017. The winner(s) will meet insolvency experts from around the world and to present their paper. The prize is particularly aimed at undergraduate or graduate students, researchers or practitioners in practice for less than nine years. Entries must be received by March 31, 2016. The III Prize started during my directorship at the Board of III (2004-2010), and I have acting as co-chair of the Jury for its first seven years. The Jury now is formed by some 10 insolvency law professors all over the world. The III Prize is a great supports for the younger generation to develop itself to the global top. More information about this Prize and the conditions for entering can be found as well as III in general can be found via: http://www.iiiglobal.org/
The 11th José María Cervelló Business Law Prize aims to promote legal study and research, and to facilitate access to the LLM courses of IE Law School for people who do not have the necessary financial resources. The IE Law School (which used to be named Instituto de Empresa) and the law firm ONTIER recently announced this prize competion. The subject of the essays opting for the 11th José María Cervelló Business Law Prize is: ‘Brexit: Legal consequences of the departure of the United Kingdom from the EU for businesses. Legal framework of the withdrawal and new Legal Framework, special reference to the problems of transitory law in respect of contracts, corporate operations and litigation’. The prize is considerable: € 30,000 divided as follows: € 10,000 will be given to the author of the winning essay, whilst € 20,000 will be assigned to the José María Cervelló Chair to be applied to its scholarship programme for the study of legal or tax courses at IE Law School. For further details, see https://es.ontier.net/ia/cervello-xi-becas-a4-ing.pdf
This is the first time I learned about this prize. I have known José Maria Cervelló (1947-2008) for quite some time. José Maria has been a member of the global board of the Ernst & Young Law Alliance (as it was called then), which I chaired (I have been a parter of Ernst & Young, now EY, from 1992-2005). We have known each other from the early 90s and worked together in this board from (I try to recall) 1997 – 2002. In my seven person board, with lawyers from countries including the UK, Canada, France, Italy and Germany, José Maria was the most cooperative strategic and forward looking thinker, with a general understanding of the needs and the wishes of young lawyers working in an international environment. He also was a professor at the IE Law School and taught on internal E&Y international courses, to which it was as a great advantage that he was an attorney for the State. José Maria always had a keen eye for the challenges international lawyers face with regard to certain principles of law to be maintained. Evidently, he was a strong supporter for the golden triangle of combined services in Tax-Accountancy-Law, which for many international clients (often boards of companies, not their legal departments) was rather evident. He also had a doctoral degree in arts and was a member of the association of friends of the Prado Museum. Being in charge, we also managed to organise our board meetings in Madrid and Amsterdam, arriving a day earlier. As a friend of Prado, he had easy access to the museum, and he could show me a variety of paintings in the Prado (a special tour for me on ‘Dutch history and royalty’ reflected in ‘Spanish’ paintings, and paintings of Velazquez). In the Netherlands, I recall, I could guide him through the Frans Hals Museum in Haarlem, so we could discuss the remarkable resemblance of the linen collars the regents in Spain and Holland wore at that time. I understand that he has donated a large collection of historical books and paintings on art and architecture to the Prado, see
https://www.museodelprado.es/aprende/enciclopedia/voz/cervello-grande-jose-maria/9c8441ca-3918-48a2-a81e-6d11ca964019. It was 2003 or 2004 when I spoke José Maria for the last time in Madrid on the possibility of giving lectures on cross-border restructuring and insolvency law. To our regret it could not be arranged. Looking back I think we were too early with the idea for lectures or a small course on that subject. I regard myself as privileged to have work with him and getting to know him.