An academic ceremony, at least in the Netherlands, is the defence of a dissertation. Once done successfully the candidate will receive a Doctor of Laws degree. This is what happened to Gert-Jan Boon at Leiden University in early July. His topic of research was the debtor in possession (DIP), a comparative legal approach based on US, EU, and Dutch restructuring law. I highlighted the book and raised some questions in my GRR column in July, re-published om my own blog, see https://bobwessels.nl/blog/2025-08-doc1-is-the-dip-here-to-stay/.
After the ceremony, of course, there was a reception, with congratulations, handshakes, drinks, and quite some chatting. It was a huge crowd with over a hundred people, and in many places the question was asked: on a European level, how does a DIP differ from an IP? Who will be appointed by a court and generally administer a traditional insolvency liquidation? My takeaway from the conversations was that there is little uniformity in views about the powers of a DIP compared to those of an IP. I have decided to share my thoughts with you and explain the facts first. Only then can a reasoned judgment be given.
In all member states of the EU (except for Denmark), the Preventive Restructuring Framework Directive (PRD 2019/1023) has been implemented. A debtor-in-possession and the legal elements of a preventive restructuring framework (stay, restructuring plan with class formation and cross-class cramdown, confirmation by the court, etc.) are now a part of national insolvency laws in the EU.
Compared to the European Insolvency Regulation that originally was introduced in the early years of this century, in the recasted version of 2015 the term debtor-in-possession was new, see Article (2)(3) EIR 2015:
‘debtor in possession’ means a debtor in respect of which insolvency proceedings have been opened which do not necessarily involve the appointment of an insolvency practitioner or the complete transfer of the rights and duties to administer the debtor’s assets to an insolvency practitioner and where, therefore, the debtor remains totally or at least partially in control of its assets and affairs.
The terms ‘assets and affairs’ has been translated in German as ‘sein Vermögen und seine Geschäfte’, in French as ‘ses actifs et ses affaires’, and in Dutch as ‘zijn goederen en zijn onderneming’. The Dutch term ‘onderneming’, means a business or undertaking and also includes the services of any (intellectual) professional. In the Netherlands, a so-called liberal profession (such as from a civil law notary, a medical doctor or an attorney) is regarded as an enterprise (which was rather new for Belgium). Such a private practice (a ‘onderneming’) could be a debtor-in-possession who falls under the scope of the EIR 2015.
The term itself was a present outside Europe before 2015. The UNCITRAL Legislative Guide provides that a ‘debtor in possession’ is ‘a debtor in reorganization proceedings, which retains full control over the business, with the consequence that the court does not appoint an insolvency representative’. Both UNCITRAL and the EU apparently found it necessary to formulate the figure with a reference to something it doesn’t contain: the appointment of another party. The thinkers of both organisations are familiar with traditional insolvency jargon. A formulation of an autonomous figure like a DIP, however, should be possible based on its own characteristics, without referring to something else, what it isn’t. Whatever the case, it’s certainly difficult.
European languages struggle to express the term in their national languages. The chosen translation either reflects negatively that such a debtor has not been divested (French: ‘debiteur non dessaisi’) or, more positively, that he stays in control of its business (in German: ‘Schuldner in eigenverwaltung’; the Dutch language needs no less than seven words: ‘schuldenaar die zijn goederen in bezit houdt’).
As follows from the recitals, the EU’s rescue policy forms the basis of this new figure. Recital 10 says that the scope of the EIR 2015 should extend to proceedings that promote the rescue of economically viable but distressed businesses. It covers the restructuring of a debtor at a stage where there is only a likelihood of insolvency, leaving them fully or partially in control of their assets and affairs:
“Since such proceedings do not necessarily entail the appointment of an insolvency practitioner, they should be covered by this Regulation if they take place under the control or supervision of a court. In this context, the term ‘control’ should include situations where the court only intervenes on appeal by a creditor or other interested parties.”
Now to the question raised during the drinks at the reception. Based on the wording of the EIR 2015, the following powers have been allocated to the DIP (I am leaving out group proceedings):
1) Article 6(2): when national law allows a DIP to bring actions that derive directly from the insolvency proceedings and is closely linked with them, the DIP may bring such an action in the court that has opened the main proceedings;
2) Article 28(1) and (2): the DIP shall request that notice of the judgment opening insolvency proceedings and, where appropriate, the decision appointing the IP (for instance a ‘practitioner in the field of restructuring’, see Article 2(1)(12) PRD 2019/1023) be published in any other member state where an establishment of the debtor is located, and the DIP may request that the information referred to in Article 28(1) be published in any other member state where they deem it necessary in accordance with the publication procedures provided for in that member state;
3) Article 29(1) and (2): if the law of a member state in which an establishment of the debtor is located and has been entered into a public register of that member state, or the law of a member state in which immovable property belonging to the debtor is located, requires information on the opening of insolvency proceedings referred to in Article 28 to be published in the land register, company register or any other public register, the DIP shall take all the necessary measures to ensure such a registration, while (see Article 29(2)) the DIP may also request such registration in any other member state, provided that the law of the member state where the register is kept allows such registration;
4) Article 38(1) and (3): if a court is seised of a request to open secondary insolvency proceedings, it shall immediately give notice to the DIP in the main insolvency proceedings and give it an opportunity to be heard on the request, while Article 38(3) provides that if a temporary stay of individual enforcement proceedings has been granted in order to allow for negotiations between the debtor and its creditors, the court, at the request of the DIP, may stay the opening of secondary insolvency proceedings for a period not exceeding 3 months, provided suitable measures are in place to protect the interests of local creditors;
5) Article 41(3): the rights and duties regarding cross-border communication and cooperation (Articles 41(1) and (2)) apply mutatis mutandis to situations where, in the main or in the secondary insolvency proceedings or in any territorial insolvency proceedings concerning the same debtor and open at the same time, the debtor remains in possession of its assets;
6) Article 55(5) and (7): claims may be lodged in any official language of the institutions of the EU. The DIP may require the creditor to provide a translation in the official language of the state where proceedings were opened (or other languages as set out in Article 55(5)). If the DIP has doubts in relation to a claim lodged in accordance with Article 55, it shall give the creditor the opportunity to provide additional evidence on the existence and the amount of the claim.
From this list, it follows clearly that the DIP does not enjoy all the powers of an IP. For instance, most importantly, Article 21 has not been conferred to the DIP. Looking further afield, it’s striking that the DIP has virtually no rights regarding secondary proceedings (Chapter III ‘Secondary insolvency proceedings’, Articles 34 – 52). A DIP can only request a stay. Was this because the EU legislature suspected that preventive restructuring frameworks would not create a need for such a stay? Can affected “foreign” creditors not initiate secondary proceedings because they are bound (voluntarily or through a cram-down) by judicial confirmation of the restructuring plan? What about unaffected creditors? Does the stay only apply to them? That the power (as laid down in Article 36) of the IP to avoid the opening of secondary proceedings by giving an undertaking has not been allocated to the DIP makes sense, as restructuring is not about distributing assets or proceeds received as a result of their realisation.
Article 76 EIR 2015 (with the heading ‘Debtor in possession’) provides that the provisions applicable under Chapter V (‘Insolvency proceedings of members of a group of companies’) to the IP shall also apply (‘…, where appropriate, …’) to the debtor-in-possession. Shouldn’t what is stated in Article 76 have been at the beginning of the text of the EIR 2015: all provisions of the Regulation that refer to an IP also apply to a DIP, with a list of excluded provisions reflecting that these would not be appropriate? It’s all unclear.
Isn’t the time ripe for the DIP to stop being a defective IP?
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 on 5 September 2025. See www.globalrestructuringreview.com.