The NIKI Luftfahrt insolvency drama was close to a legal controversy, which would have had vast proportions, with a clash between two legal systems, from Germany and Austria, see http://www.bobwessels.nl/blog/2018-01-doc7-comi-of-niki-luftfahrt-act-3/. Reuters reports, however, that both appointed IPs (in the German insolvency proceedings Lucas Flöther, in the Austrian proceedings Ulla Reisch) have settled the legal dispute: 'Airline Niki’s German and Austrian administrators agreed to cooperate to resolve the insolvent carrier’s future swiftly and guarantee legal certainty for its buyer.' My first reaction: I prefer cross-border cooperation over a legal fight, which in this case certainly would have taken considerable time, hassle and costs, probably to the detriment of creditors and the continuation of the business of NIKI. Both practitioners shoud be congratulated with the sensible view they took (although they are not there yet!). See the press release in German:
'15. Januar 2018 – Die Insolvenzverwalterin der „NIKI Luftfahrt GmbH“ in Österreich, Dr. Ulla Reisch, und der vorläufige Insolvenzverwalter des Unternehmens in Deutschland, Prof. Dr. Lucas F. Flöther, haben eine enge Kooperation beim Verkauf des Geschäftsbetriebs der insolventen Airline vereinbart.
Frau Dr. Reisch ist aufgrund der österreichischen insolvenzrechtlichen Bestimmungen und der Anordnung des Landesgerichtes Korneuburg verpflichtet, bis zum 19. Januar 2018 neue Angebote der Investoren einzuholen, die bereits an der vorherigen Bieterrunde teilgenommen haben. Außerdem können auch neue Bieter Angebote abgeben.
Anschließend werden der deutsche vorläufige Gläubigerausschuss sowie der österreichische Gläubigerausschuss binnen weniger Tage entscheiden, welcher der Bieter den endgültigen Zuschlag erhält. Die Unterschrift beider Insolvenzverwalter gewährleistet dabei dem Erwerber Rechtssicherheit für den Vollzug des Kaufvertrages. Damit werden trotz unterschiedlicher Rechtsauffassungen zur internationalen Zuständigkeit der weitere Fortbetrieb und die bestmögliche Verwertung der Vermögensgegenstände sichergestellt. Ausschlaggebend für den Zuschlag sollen unverändert der Kaufpreis, die Finanzierungsfähigkeit des Bieters sowie der Erhalt möglichst vieler Arbeitsplätze sein. Die interne Aufteilung des Kaufpreises zwischen den beiden Insolvenzmassen ist in Abstimmung, die rechtlichen Rahmenbedingungen sind beiderseits in Prüfung.
Bis zu dieser Entscheidung hat sich Prof. Flöther bereit erklärt, aus der deutschen Insolvenzmasse von NIKI die Finanzmittel zur Verfügung zu stellen, die erforderlich sind, den Basis-Geschäftsbetrieb von NIKI aufrecht zu erhalten. Dabei werden die Forderungen der österreichischen Arbeitnehmer von 1. bis 12. Januar 2018 vom österreichischen Insolvenzentgeltfonds bezahlt. Der Vollzug des Kaufvertrages („Closing“) soll nach wie vor in der zweiten Februar-Hälfte erfolgen, so dass NIKI – eine entsprechende Entscheidung des Erwerbers vorausgesetzt – spätestens im März 2018 den Flugbetrieb wieder aufnehmen kann.'
After completion of submissions on the fourth day of the second court hearing, on 14 July 2017, the Australian Supreme Court New South Wales (In the matter of Boart Longyear Limited (No 2)  NSWSC 1105) adjourned the hearing for 14 days to allow the opportunity for satisfaction of an important condition precedent relating to a party involved, which was at that time not satisfied. The Judge is open about its procedural strategy: 'I also then took the somewhat unusual step, at least in a scheme hearing, of ordering a mediation between the parties, in the unusual circumstances that the parties to the Secured Creditor Scheme and the Unsecured Creditor Scheme were highly sophisticated entities and had largely either been represented at the hearing or had advised the parties and the Court of their attitude to the schemes.' Why did the court do so? It discloses its intentions: 'I took that course because, as I noted in my ex tempore judgment as to that matter delivered on 14 July 2017, interests other than those of the entities before the Court, including employees of the Plaintiffs and the communities in which they operated, both in Australia and internationally, could be adversely affected if the schemes were ultimately not approved and the Plaintiffs were placed in external insolvency administration.' Third party interests therefore include also the community, even where they are located abroad! The court continues: 'I also noted that, if the parties were able to reach agreement as to a potential variation of the schemes, it may be open to the Court to amend the schemes by order made after the creditors’ meetings.' Given the fact that the court had power to approve the proposed alterations to the schemes in the particular circumstances and given the creditor support for them, the court appoved the schemes. For those who are sceptical about mediation in corporate restructuring matters the judgment serves as a sign that - under the conditions mentioned - it can work (I know, Australia is far away and one swallow doesn't make summer). See: In the matter of Boart Longyear Limited (No 2)  NSWSC 1105, at www.caselaw.nsw.gov.au/decision/599a8cf0e4b058596cba97cd.
The NIKI Luftfahrt saga unfolds itself rapidly. The Landesgericht of Korneuburg (in Austria) has announced on 12 January 2018 that it has opened main insolvency proceedings ('Hauptverfahren') for Austria's incorporated NIKI Luftfahrt GmbH. The decision is the third episode in this airline insolvency drama in Germany/Austria, after the 8 January 2018 decision of the Landgericht Berlin. In this decision a judgment of the District Court in Charlottenburg on 4 January 2018 (see http://www.bobwessels.nl/blog/nikis-comi, which decision confirmed the courts earlier decision of 13 December 2017) was overruled (see http://www.bobwessels.nl/blog/2018-01-doc3-nikis-comi-continued/). The Berlin court said, in my words (following the press release): that international jurisdiction is not in Germany, rather in Austria. Indeed, the Korneuburg court decides: 'The case concerns main proceedings ... The international jurisdiction is based on Article 3(1) EIR 2015'.
I make, in this phase, 2 short remarks:
1 It is still possible that the Berlin decision is overruled by the German Federal Court of Justice, therefore - the Berlin court said - the District Court Charlottenburg's decision still applies. As the Korneuburg court indicates, it is still possible to appeal its decision via the Austrian appeal system. If I see it correctly, now 2 main proceedings are pending, which will be particularly thrilling when both in Germany and in Austry the outcome is: COMI is in our jurisdiction so there are 2 main proceedings! As I explained in Wessels International Insolvency Law Part I 2017/10585 in Germany Article 102 § 3 InsO ('To prevent conflict of jurisdiction') applies. Article 102 § 3(1) provides that if a court in another Member State has opened main insolvency proceedings, a request to open such main proceedings in a German court must be disallowed for as long as the main proceedings in the other Member State are pending. The German legislator stresses that German courts must respect the judgment opening insolvency proceedings without materially testing such a judgment. However, in this case the German have been opened already. Two caveats here: (a) are the German proceeding opened, as I understand it is still a provisional one (vorläufig); it will depend on the interpretation of 'opening' in Article 2(7) EIR 2015, and (b) German rules to realise the smooth operation of the EIR 2015 (so also said Article 102) have been changed, see Madaus NZI 6/2017, 203, and another internal conflict rule may be applicable.
2 It makes me sad too read how courts operate regarding COMI of NIKI. The Berlin court says: as COMI is not in Berlin (wrong: COMI can only be in a Member State) or Germany respectively, international jurisdiction is rather (vielmehr) for the courts in Austria. The court goes beyond its authority or discretion, as only and solely Austrian courts can exclusively decide whether NIKI's COMI is in Austria. Or does the court hangs it head to its big brother in Berlin?
The court in Korneuburg dissappoints with its very short statement re COMI. Article 4 EIR 2015 ('Examination as to jurisdiction) says in paragraph 1: 'A court seised of a request to open insolvency proceedings shall of its own motion examine whether it has jurisdiction pursuant to Article 3. The judgment opening insolvency proceedings shall specify the grounds on which the jurisdiction of the court is based, and, in particular, whether jurisdiction is based on Article 3(1) or (2).' The court does not specify these grounds. Is Austrian insolvency law organised thus, that a specification to be expected later? Could, evidently within the short timeframe for rendering a decision, the court not have specified (remember the violent reactions in Germany after the court of Leeds' decision regarding 3 German Daisytek companies, having their COMI in the UK) that the place of the registered office shall be presumed COMI, having received no or at first sight unsufficient other indications? In view of the renewed system of the Insolvency Regulation, which can include certain out-of-court insolvency proceedings, it was necessary to introduce a careful examination of the COMI. In this respect, the court leaves the EIR 2015 in the cold.
The International Insolvency Institute (III) has announced its 2018 Prize in International Insolvency Studies. This Prize comprises a Gold Medal Prize for the winning submission as well as a Silver Medal Prize, a Bronze Medal Prize, and several Finalist Prizes. As its continued standard, the III Prize is awarded for original legal research, commentary or analysis on topics of international insolvency and restructuring significance and on comparative international analysis of domestic insolvency and restructuring issues and developments. The Prize Competition is open to full and part-time undergraduate and graduate students and to practitioners in practice for nine years or less. Entries must not have been published and must be available to be posted on the International Insolvency Institute website at www.iiiglobal.org. Medal-winning entries will be considered for publication in the Norton Journal of Bankruptcy Law and Practice (West) and for inclusion in the Westlaw electronic database. Entries may be of any length but a limit of 20,000 - 30,000 words is preferred. Entries must be received by March 31, 2018.
Entries will be judged by a distinguished panel of leading international insolvency academics and practitioners. The Gold Medal winner will be awarded with US $3,000 as well as being honoured at the III's Eighteenth Annual International Insolvency Conference in New York on September 23-25, 2018. All Medal Winners and Finalists will be invited to attend the Conference and will be provided with complementary Conference registration. Medal Winners will also be nominated to Class VII of the III NextGen Leadership Program which will convene in New York in September, 2018 during the III's 2018 Conference. For further details and the terms of the III Prize in International Insolvency Studies go to www.iiiglobal.org or contact Franca Tibando, Executive Director of the International Insolvency Institute NextGen Leadership Program, at ++ 1 416-918-7301 or firstname.lastname@example.org.
Prof. Juliet M. Moringiello, Widener University Commonwealth Law School, on behalf of the American Bankruptcy Institute (ABI), attrached my attention for opportinuties for insolvency law students. They are invited to participate in this year’s American Bankruptcy Institute Law Student Writing Competition. European students should be encouraged to enter a paper from this or last semester by: (i) creating your account at http://connect.abi.org/e/107412/user-register/2nnvyf/330869740, and (ii) by logging in and submit your paper at http://connect.abi.org/e/107412/node-add-submit-paper/2nnvyh/330869740. It's certainly worth a try as winners will have a global platform to be seen to be performing, receive a portion of $4,000 in cash prizes, have the opportunity to be published in the ABI Journal and get a free membership to ABI.