Opening independent territorial insolvency proceedings prior to any main insolvency proceedings is the second part of highlighting independent territorial insolvency proceedings under the EU Insolvency Regulation (recast) (EIR 2015). The first part was published in May 2022 and related to the rather exceptional case where territorial insolvency proceedings were opened prior to the opening of main insolvency proceedings (Article 3(4) EIR 2015). See https://bobwessels.nl/blog/2022-05-doc2-on-independent-territorial-insolvency-proceedings/
Under Article 3(4)b of the EIR 2015, the protected creditor to whom this right to request the opening of territorial proceedings was granted, was a creditor whose claim arose from, or was in connection with, the operation of an “establishment” situated within the territory of the member state where the opening of territorial proceedings was requested. According to Article 2(10) of the EIR 2015, “establishment” means any place of operations where a debtor carries out or has carried out, in the three-month period prior to the request to open main insolvency proceedings, a non-transitory economic activity with human means and assets.
In a case decided by the District Court of North-Holland this year in January, the court assessed that a company called Prometeon Tire Group, must have its COMI in Italy, based on the presumption of having its statutory seat in Italy. The court drew the conclusion from an extract submitted to the Dutch Trade Register that Prometeon Tire Group has an “establishment” in the Netherlands, from which it operates – or used to operate – a tire wholesale business. The only trade name mentioned in the extract was “Prometeon Tire Group S.r.l. branch Netherlands” with a business address in Schiphol-Rijk, an industrial estate that is part of Amsterdam’s Schiphol airport. Because the claim related to employee schemes for the person or persons working at the Dutch branch, the court also established that the claim arose from or was related to the operation of the Dutch branch. Therefore, the court was of the opinion that it had the authority to open territorial insolvency proceedings on the basis of Article 3(2) or Article 3(4) of the EIR 2015. It also decided that, based on Article 7 of the EIR 2015, Dutch law applied.
From a quick look at the company’s website, it may be concluded that comparable branches operate in Germany, Hungary and Poland. What would happen in the case, for instance, if the Polish branch was also subject to territorial proceedings in Poland? The EIR 2015 is silent on the exceptional situation of the existence of two parallel independent territorial proceedings running concurrently in EU member states without main proceedings having been opened in another member state in which the debtor’s COMI is located. No COMI and two branches with applicable rules from the Netherlands and Poland respectively? Should the EIR 2015 apply by way of analogy?
Will the appointed insolvency practitioners be subject to the duties of cooperation and coordination in the EIR 2015? For the IPs would that mean they mutually coordinate these territorial insolvency proceedings between themselves? And what happens when Dutch and Polish national private international law rules – conflicts of law rules – conflict with each other? How would the cases involve the Italian company itself where there is no “owner” of assets located in the other country brought into the insolvency play?
Who knows! A part 3 will follow!
District Court of North-Holland 17 January 2023, ECLI:NL:RBNHO:2023:317
This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR mid February 2023. See globalrestructuringreview.com