In the world of cross-border insolvency a ‘protocol’ can be described as a means of agreeing the alignment between different insolvency proceedings, or of establishing how (pre-) reorganisation measures will be taken across a number of jurisdictions. A cross-border insolvency agreement is designed to overcome certain legal or factual obstacles that could otherwise be an impediment to achieving a restructuring or an efficient and equitable liquidation. The use of protocols as a practical tool is stimulated by such non-binding instruments as the well-known CoCo Guidelines and the EU JudgeCo Guidelines.
A ‘protocol’ as an aid in aligning and streamlining cross-border cooperation between insolvency practitioners in insolvency proceedings pending in different EU Member States is sanctioned in Article 41 EIR Recast. Literature agrees that the provision reflects an established and successful practice of using protocols in a number of countries, especially outside Europe, mainly in the United States and Canada, but also in the United Kingdom. Protocols were also used in other jurisdictions, including Australia, The Bahamas, Bermuda, British Virgin Islands, France, Hong Kong, Israel, and Switzerland. The latest known protocol relates to Jet Airways, between insolvency practitioners in the Netherlands and India, see my contribution in GRR at https://globalrestructuringreview.com/article/1212431/cross-border-insolvency-protocol-in-jet-airways-innovations-and-challenges.
When someone said to me that the Jet Airways protocol was the first protocol used with a Dutch IP involved, I knew that was not the case, as the Lehman Brothers Protocol was even initiated from Dutch insolvency practice by IPs dealing with Lehman Treasury. The Lehman protocol was concluded some 10 years ago and involved 17 jurisdictions. But even then. I remembered an even earlier case in which a ‘framework agreement’ or ‘protocol’ was used. In Eurodis Electron Plc (2006, unreported), three from a group of eight companies were subject to English administration proceedings and Dutch bankruptcy liquidation (‘faillissement’) proceedings. When the English administrator had filed for the opening of secondary proceedings in the Netherlands, by way of a protocol both the UK and the Dutch IPs agreed that the claim handling process would be dealt with by the Dutch IP. The latter had to recognise an agreement already made by the English IP (as main IP) with a Dutch bank. In the protocol, the main and the secondary IP agreed on the way to realise the assets and the handling of the claims of the creditors and subsequently arrange for the distribution process to be in compliance with both English and Dutch law. Noteworthy in this protocol is that the activity of making distributions was to be done by the IP in the secondary proceeding, which is the mirror situation wih what happened in the Collins & Aikman Europe case or the Nortel Network cases. These cases formed the historic basis for the Article 36 EIR Recast (Right to give an undertaking), which allocates this function to the main IP.
Far over two years a protocol as a cross-border tool can be used in European practice. Query however is, where are they? True, there is no mandatory of voluntary (e.g. by INSOL Europe) registration system. Despite the general acceptance of the value and practical utility of cross-border insolvency protocols, their usage remains, as far as I know, very limited among insolvency practitioners and courts in the EU Member States. Last year, the Board of Directors of the International Insolvency Institute (III) decided to support a project ‘Cross-border insolvency protocols in the context of insolvency of enterprise groups’. Leading researcher is Ilya Kokorin LLM., from Leiden University (the Netherlands). The first stage of the project involving the collection and initial review of cross-border insolvency protocols is nearly finalised.
We would be grateful if one of my readers could assist and send information about the protocols you know of or send their text to me at firstname.lastname@example.org. Any questions you may have can be sent to the same address. Many thanks!