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Welcome / Blog Archive / Book Review / 2018-06-doc8 Applying EU Insolvency Regualtion in Practice

2018-06-doc8 Applying EU Insolvency Regualtion in Practice

During 2016 and 2017 researchers of universities or research-institutes of Genoa, Sofia, Prague, Mainz, Riga, Valencia, Amsterdam and Glasgow have developed best practices in cross border cases for the survival of distressed companies. The project was co-funded by the Action grants programme to support judicial cooperation in civil and criminal matters of the European Commission. Aligning with a practical comparative international methodology, the goal of the project was to collect and exchange best practices in the field of insolvency and pre-insolvency cross-border proceedings. The result of all efforts should assist insolvency practitioners to better coordinate and implement international cooperation; the envisaged end-goal to enhance the management of multiple proceedings, reorganisation of companies and the protection of creditors and interests of stakeholders. The final product is an e-book and a hardcopy version, in front of me, which collects the results of the project.

The book is divided in two parts, Part I ‘The EU Insolvency Regulation’ (EIR Recast), with seven contributions, and Part II ‘Cross-Border Insolvency Proceedings: A Comment on Selected National Practices’, with eight contributions. Part I contains selected themes from the EIR Recast itself; Part II contains national reports from Bulgaria, Czech Republic, Germany, Spain, Italy, Latvia, the Netherlands and Scotland, UK. These latter reports provide in general a commentary to the relevant applicable rules of private international law in light of possible best practices to overcome issues in the cross-border management of insolvency and pre-insolvency proceedings. Below some remarks on the book: Ilaria Queirolo and Stefano Dominelli (eds.), European and National Perspectives on the Application of the European Insolvency Regulation, Scritti de Diritto Privato Europeo e Internazionale, Volume 18, Aracne editrice 2017 (ISBN 978-88-255-0906-9).

In Part I the first chapter on ‘Scope of Application of the Regulation (EU) 2015/848 on Insolvency Proceedings’ (Castelló Pastor, Gómez Fonseca) is rather descriptive on the material, personal, temporal and territorial scope of the EIR Recast. In the contribution regarding the international jurisdiction for main proceedings one finds more discussion and practical difficulties identified (Gruber). The meaning of ‘central administration’ in recital 30 EIR Recast and the same terms in the Brussels I Regulation (Recast) and Rome I, arguments against the introduction of a group COMI and the uncertainties when relocation of COMI constitutes an ‘abuse of right’, these are all topics which will be welcome for further debate in academic literature. As to the theme of abuse, Gruber, rightfully, is cautious to apply a broad concept, such as: abusive are all COMI shifts that evidently do not contribute to maximizing the debtors’net assets for the benefit of the creditors (as Eidenmüller does). Gruber submits that with regard to detemining international jurisdiction for the opening of main insolvency proceedings, there is no room for operating with an abuse of rights concept. Gruber finds the solution within the framework of determining COMI itself: if the debtor simply aims at hiding assets from the creditors, these amount to the conclusion that the COMI is not sufficiently ascertainable by the creditors. The next topic on the jurisdiction in secondary and territorial proceedings (Carruthers) is rather descriptive, though careful. The chapter on the determination of applicable law in international insolvency proceedings (Brodec) provides a good overview, interestingly also referring the Austrian and Czech literature. In general, I would say, this also makes the whole book a must read in addition to other books on the EIR Recast especially those which limit themselves nearly only to UK literature. ‘Information to, and Rights of, Creditors’ (Rone) provides a solid overview. I could not detect whether ‘creditor’ also includes a creditor with its habitual residence, domicile or registered office outside of the EU.

A fine example of the project’s aim to collect and exchange best practices in the field of insolvency and pre-insolvency cross-border proceedings is ‘Cooperation between Authorities and Insolvency Office Holders’ (Queirolo, Dominelli). In a 70 pages piece with 282 (!) footnotes the authors address nearly all available literature and non-binding ‘soft law’ guidelines and best practices, developed e.g. by UNCITRAL, EBRD and the Turnaround Rescue and Insolvency research group, of which I was I was a member, of the University of Leiden. The latter group also has published sources of these guidelines ( The authors try to define terms such as communication, cooperation and coordination. A reason to be more specific in this regard is clear, as these terms now have a basis in the EIR Recast, in which they play an eminent role. Presently this domain of non-binding rules include the Communication and Cooperation (CoCo) Guidelines, developed over 10 years ago, some of which are criticised by the authors.

Since a few months the Conference of European Restructuring and Insolvency Law (CERIL) (see and INSOL Europe established a Joint Working Group (‘CoCo2 Working Group’), to coordinate work to review the CoCoGuidelines in light of present practice and understanding of cross-border cooperation and communication in insolvency matters. This group will be led by Prof. Tomáš Richter (Charles University) and Dr. Paul Omar (INSOL Europe) together with a membership composed of representatives of academia, judiciary and practice belonging to both organisations, as well as other stakeholders. The group is well advised to study the in-depth article of Queirolo and Dominelli. Their suggestion that time is ripe to raise the awareness of existing soft law in cross-border insolvency and restructuring matters is certainly true, and I would follow their submission that the European Commission adopt an instrument to support a compilation of best practices, or to develop its own set of best practices and guiding principles, which might result in a set of guidances, that in practice more effectively would be followed. The final paper in Part I is ‘Recognition of Decisions (Including Question of Public Policy) and Powers of Liquidators’ (Natov, Musseva, Pandov, Dimitrova) and is a well-documented overview of the topics.

From the national reports it can be noted that the emphasis should lay on training and development of knowhow and skills of practitioners, courts and restructuring advisors. The Dutch report (by Van Hoek, Van der Plas, Salomons and De Weijs) reveals that mid 2017 a search for ‘1346/2000’ (the former Insolvency Regulation) resulted in 155 judgments and those with references made to the EIR Recast resulted in 17 cases. As in many other jurisdiction, cases related to trade and investment with neighbouring countries form the larger part: Germany, Belgium and the UK. Other EU jurisdictions in these cases include France, Austria, Spain and Poland. Cases with involvement outside of the EU include Russia (the famous Yukos case), USA, Dubai, India, Switzerland, Iceland and BVI. These cases mirror the open Dutch economy. The reporters best practice is that, where knowledge of these systems will not be readily available beforehand, the successful handling of cross-border insolvencies requires an international network which the an IP can fall back on as well experience with operating in an international and intercultural context. From the Dutch report it also follows that practitioners do not like questionnaires, but are open for interviews (in my experience this reflects a European appetite). It appears that Dutch practitioners are rather reserved towards the use of protocols. It could indeed assist practitioners when draft-clauses or model tools could be developed. Legislation (for instance the EU rules of group-insolvencies) can be mocked upon, but legal rules have their limits and a contractual solution by creative lawyers can provide tailored solutions. It is my belief that judges more and more are understanding that a good result in a cross-border restructuring can not delivered exclusively by legal rules and their interpretation. Business problems should be solved by business solutions, not governmental rules only.

The 1986 Cork-report in the UK recognised it clearly, and it was echoed last year when prof. Madaus and I published our ELI Report on Rescue of Business in Insolvency Law: the EU as well as Member States should recognise that the success of any restructuring or insolvency system is very largely dependent upon those who administer it. Such a system can only function well when all stakeholders, including the general public, have confidence and respect in the courts and insolvency practitioners, and the way the roles of all parties involved are guaranteed and executed. I therefore think that the book should not only be studied by insolvency scholars. It should find its way to lawyers, economists, accountants and judges, entering into or involved in the cross-border insolvency and restructuring market. The multiple practical suggestions given by the authros make reading of the book beneficial for national legislators too. Where the market evolves into a level playing field, European oriented associations of insolvency and restructuring professionals and legislative staff of the European Commission institutional involved in developing restructuring and insolvency rules find in the book a good companion.

Note: this book I received free of charge from the publisher with the request to announce it or to review it on my blog at