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2025
Inside Story – October 2025 - The Bank Resolution Framework in Poland: Arguments for a Creditors’ Ombudsman and Lessons for the EUThe topic of bankruptcy and bank resolution is currently being hotly debated in Poland, due to the high-profile bankruptcy proceedings of two large commercial banks – Idea Bank S.A. and Getin Noble Bank S.A., both in bankruptcy. In both cases, solutions under EU law have previously been applied and provide, in this case, for solutions known from Directive 2014/59/EU – the so-called BRR Directive. The manner in which these proceedings were conducted leads to the conclusion that the BRR Directive correctly and properly addressed the issues of interest. However, not all aspects have gone smoothly, as evidenced, for example, by the numerous consumer complaints about resolution in Poland.
Read the full story here by Mateusz Kaliński and Paweł Kuglarz of Tatara and Partners, Poland.
Inside Story – September 2025 – New Comprehensive Protection in Bulgaria for Close-out Netting Arrangements in InsolvencyA comprehensive Bulgarian close-out netting law was promulgated on 15 August 2025. It is structured as an amendment and supplement to the Financial Collateral Arrangements Act (the “Amendment”), which transposed the EU Financial Collateral Directive 2002/47/EC (the “FCD”) in Bulgaria. To reflect its broader scope, the title of the act was also changed to the “Financial Collateral and Close-out Netting Arrangements Act” (the “Act”).
The structural approach of the Amendment introduces a new close-out netting regime, building on the well-established financial collateral concepts that have been applied and court-tested in Bulgaria for over 18 years. Furthermore, to define the scope of the new regime, the Amendment refers to the terminology according to the domestic transposition of the EU MiFID Directive 2014/65/EU (the “MiFID”), while the new general conflict-of-law netting rule follows the wording under Article 25 of the EU Winding-up Directive 2001/24/EC (the “WUD”) as transposed in Bulgaria. Such reliance on established concepts will hopefully facilitate the practical application of the Amendment.
Read the whole story here by Tsvetan Krumov (Partner, Schoenherr, Bulgaria; Senior Assistant Professor in Private International Law, Law and State Institute, Bulgarian Academy of Sciences; Co-Chairman, EBRD Working Group on the Bulgarian close-out netting law.)
Inside Story – August 2025 – Landmark Legislation on Personal Bankruptcy newly offers Debt Relief Options to Individuals in BulgariaOn 19 June 2025, the Bulgarian Parliament passed a significant new piece of legislation — the Law on the Insolvency of Natural Persons (LINP) — introducing for the first time a legal framework that allows non-entrepreneurial individuals to be declared insolvent and, after fulfilling their obligations to creditors to the greatest extent possible, to obtain a full discharge from their remaining financial liabilities.
While the new law was promulgated in State Gazette Issue No. 54 as of 4 July 2025 and entered into force three days later, in practice, insolvency applications under the new regime will not be accepted until at least nine months following its entry into force. This delay is intended to allow for the technical implementation of a dedicated module for natural person insolvency proceedings within the unified Insolvency Register, the activation of which requires a formal order from the Minister of Justice.
Aimed at striking a balance between creditor recovery and debtor relief, the LINP provides a unified legal mechanism for the fair, efficient, and timely resolution of individual insolvency cases. It also introduces the possibility of full debt discharge for individuals who act in good faith and comply with procedural requirements, following a prescribed period and subject to judicial oversight.
Read the full story here by Angel Ganev (Partner), Simeon Simeonov (Senior Associate) and Elena Ivanova (Senior Associate) of Djingov, Gouginski, Kyutchukov & Velichkov, Sofia, Bulgaria.
Inside Story – June 2025 – A Lex Concursus Europaea as Insolvency Law No. 28?If the inauguration of the new President of the USA has made one thing clear, then it is the dawning of an era of competition across the entire globe. Unheard amounts will be pumped into several economic sectors to guarantee the lead position. Directed primarily towards China, it leaves the EU far behind. This is not because the EU was lacking the appropriate brain power but (among few more things) sufficient investment – it is money that is lacking. Here, again, one of the reasons for such hesitation is that the differences in the member states’ insolvency laws are making investment costly and therefore unattractive. Understandably, what reasonable investor would throw money into a region in which it is hardly possible to foresee the insolvency risks?
It is no wonder, thus, that the capital markets have been pushing for harmonisation of these laws for around 15 years. It is indicative of the specific European mode of reaction, however, that the measures taken so far leave the goal still a distance away. Christoph Paulus (Professor Emeritus, Humboldt University Berlin, Germany; Counsel, White & Case, Berlin, Germany) and Francisco Garcimartin (Professor, Universidad Autonomá Madrid, Spain; Consultant, Linklaters SLP, Spain) submit a proposal how the process of harmonisation could be sped up drastically. The Commission would just have to enact a regulation which allows companies to opt in to a separate insolvency law, which we will call the lex concursus europaea and which would constitute the 28th set of insolvency laws. Read the full proposal here.
Inside Story – May 2025 - A Universalism: What are the new limitations on the English court’s ability to assist foreign office-holders?Universalism is a concept that some ideas apply universally. Applying universalism to the insolvency world fosters the ideal that insolvencies should be mutually recognised in all jurisdictions. Universalists take the view that it is better and more efficient for the administration of an insolvency and better for its creditors for there to be one single process controlled by one office-holder. If there are assets and/or interests in more than one jurisdiction, then these should be remitted to, or controlled by, that one office-holder.
While that might be the most efficient way to manage multi-jurisdictional insolvencies, limitations have been imposed or have developed in some jurisdictions. Where it is impossible for there to be a single process, or there are limitations imposed by local rules, then the concept of main and secondary proceedings has evolved, with overall control exercised by the office-holder in the main proceedings. In England and Wales, a series of judicial decisions have impacted the ambit of universalism and what we have come to know as modified universalism has continued to develop. A series of leading cases have grappled with the concept and our courts have sought to clarify the extent to which it applies. Patrick Elliot (Partner, Keystone Law, UK) summarizes these leading cases in the Inside Story published here.
April 2025 - Mapping Grey Areas in International Legal Approaches to the Failure of Crypto FirmsCryptoassets have grown in popularity in recent years, with 8% of EU citizens reported as having crypto investments. This is also an area of unusually high cross border investment in the EU, with 40% of crypto investments crossing borders. There has been similar or greater interest in many other countries, including in developing countries, often without awareness of the real risk entailed. When failures happen, they have the potential to be cross-border and legally messy and studies have highlighted that crypto businesses may not address insolvency issues adequately in terms of service or otherwise.
The INSIDE Story (also published in the Spring edition of Eurofenix) by Rebecca Parry, Professor, Nottingham Law School distinguishes between different types of cryptoassets and service providers, noting that many operate without clear legal terms or sufficient consumer protections, and often in jurisdictions with light regulation. Failures such as FTX and Terra/Luna highlight the unpredictability of where and how insolvencies are handled, which can impact creditor rights and prolong case resolution. The research emphasizes the need for more predictable legal approaches, better industry practices, and possibly market-driven solutions to fill regulatory gaps, particularly in countries lacking robust legal protections for crypto investors. Read the full story here.
March 2025 - Rethinking offline public tenders in Insolvency. Are they obsolete? The Romanian view.Organizing auctions with the aim of selling at the highest price possible has remained a common practice since the beginning of time. While the methods of organizing auctions have changed according to the customs of the time and place, the practice is still very common in most parts of the world. An interesting fact is that people tend to have a sort of fascination with auctions and often give them symbolic meaning. That is reflected in the ways the auction is organized: from announcing the starting price, to declaring the winner.
When it comes to insolvency, public tenders align perfectly within its principles and scope: maximizing asset recovery, ensuring transparency in proceedings, giving a fair treatment to creditors, selling the assets in a timely and efficient manner. In Romania, creditors can choose between methods of asset sale, from negotiation procedures to public tenders, as long as transparency over the entire process is guaranteed. But we notice that still the most common method proposed by insolvency practitioners and approved by creditors is the public tender.
Read the full story here by Patricia Poulussen-Radulescu, Project Manager, CITR Romania.
February 2025 - Financing Obligations and Creditor Priority: The Dutch Supreme Court sets New Precedent in a Landmark WHOA-RulingThis Inside Story by Noor Zetteler and Anne Mennens (Wijn & Stael Advocaten, Netherlands) shows how a WHOA plan cannot not impose new financing obligations on lenders, but may change the order of priority among creditors.
Royal IHC (“IHC”) is a Dutch company with a rich history in the maritime and offshore industry. Headquartered in the Netherlands, it operates in more than 20 countries. In 2023, IHC used a Dutch WHOA plan to undergo a major and complex financial restructuring. While this relatively new restructuring tool was initially used primarily by smaller, purely Dutch companies, the WHOA has recently proven to be effective tool in large, complex, cross-border restructurings. In addition to IHC, Diebold Nixdorf, McDermott, Steinhoff and Vroon have now also been restructured with the help of the WHOA, whether or not ‘twinned’ with a foreign restructuring tool such as the UK Scheme of Restructuring Plan, US Chapter 11 and/or a South African composition plan procedure. Read the full story here.
January 2025: Playing Different Games under the Preventive Restructuring Framework in Portugal: (Un)Fair Negotiation?This brief Inside Story by José Gonçalves Machado (Professor, Lusófona University, Lisbon; Researcher, CEAD – Francisco Suárez, Portugal) will outline the different principles that apply to and rules on negotiation and implementation for different restructuring plans under the Portuguese restructuring frameworks. The key questions are how far can contractual freedom and par conditio creditorum (“PCCP”) principles go and whether they can be harmonized.
The Portuguese preventive restructuring frameworks (“PPRF”) are negotiating tools specially designed to enable distressed and viable companies to restructure effectively and to continue business as a going concern. As negotiating tools, they have a common structure which can be divided into three phases: pre-negotiation phase, negotiation phase (including the drafting of a restructuring plan/“RP”) and conclusion (through adoption and, in some cases, court confirmation).
Read the full story here.
2024
December 2024: Kosovo’s New Insolvency Law: Challenges of a New Legal FrameworkIn August 2024, Kosovo adopted a new Law on Bankruptcy Proceedings, repealing the previous law of 2016. The new law is partially harmonized with the EU Regulation 2015/848 on insolvency proceedings (recast) and Directive (EU) 2019/1023 on preventive restructuring frameworks. The new Law presents multiple changes to insolvency proceedings, ranging from changes to the involuntary initiation of cases to termination of bankruptcy, as well as a new institutional setup regarding selection and disciplinary proceedings for bankruptcy administrators. Moreover, in February 2022, the Law on the Commercial Court entered into force, establishing the Commercial Court as the competent court for insolvency proceedings.
These changes have been prompted by the judiciary and private sector, who have highlighted numerous loopholes and irregularities in the Bankruptcy Law 2016. Additionally, they were included as necessary changes within the Kosovo Rule of Law Strategy 2021-2026 (“RoL Strategy”), such as establishing the Chambers of Bankruptcy Administrators and aligning the Law on Bankruptcy Proceedings with the Law on the Commercial Court.
Nonetheless, the number of insolvency disputes in Kosovo remains low. From January until September 2024, there were nine insolvency cases. Seven were continued from previous years, and two were newly filed in 2024. None of these cases were resolved during this period. Key changes to insolvency proceedings imposed by the new legal framework are outlined in the Inside Story by Vlora Maxhuni, Rule of Law Advisor, Deutsche Gesellschaft für Internationale Zusammenarbeit.
November 2024: Saving the Business through Share Deals: The Use of Asset Transfers under Hungarian LawHungarian lawmakers have frequently sought to implement legislative solutions to save the economic activities of businesses in financial difficulty. In recent years, three notable regulatory changes have been implemented in order to save such businesses:
- disconnection pursuant to Act XCIX of 2021 on transitional rules related to emergency situations (“disconnection”; in Hungarian: “leválasztás”);
- establishment for the purpose of sale pursuant to Government Decree 129 of 2023 (IV. 17.) on emergency rules of sale in order to continue the economic activity of the debtor in the course of winding-up proceedings (“establishment for the purpose of sale”; in Hungarian: “alapításos értékesítés”); and
- spin-off pursuant to Act V of 2013 on the Civil Code (“spin-off”; in Hungarian: “leválás”).
October 2024: The Insolvency Directive Proposal: Draft Opinion and Amendments offering Best Chances for Harmonisation of European Insolvency LawIn December 2022, the European Commission presented a draft Proposal for a Directive of the European Parliament and of the Council harmonising certain aspects of insolvency law. This draft proposal opened discussions on some of the potential changes into national laws and generated differing remarks and positions towards the Proposal.
Forty-nine entities from the European Union, including the Allerhand Institute, issued their positions within this legislative process, and now the European Commission is analysing them, hoping to propose a final version of the Directive. As within the whole European Union the level of coherence of the above-mentioned issues is relatively low, this Inside Story by Paweł Kuglarz and Mateusz Kaliński of Tatara and Partners in Poland may be insightful for other Member States facing the need to assess the required changes and amendments to the new law. Read the full story here.
September 2024: Cross-Border Transaction Avoidance: The Aktsiaselts METUS-EST case and the Challenge to Estonian and Swedish CourtsThe Estonian Court declared the bankruptcy of Aktsiaselts METUS-EST (register code 10195826) on 5 July 2023. The Swedish court declared the bankruptcy of MetuSweden AB (register code 556843-1281) on 2 August 2023. MetuSweden AB is 100% Aktsiaselts METUS-EST daughter company.
The Swedish bankruptcy trustee of MetuSweden AB was of the opinion that payments made to the Estonian mother company Aktsiaselts METUS-EST before the declaration of the bankruptcy in the total sum of SEK 18,044,311 are subject to transaction avoidance rules according to Swedish bankruptcy law. The Estonian bankruptcy trustee of Aktsiaselts METUS-EST was of the opinion that, even if these payments are subject to the Swedish transaction avoidance rules, the same payments are not avoidable under Estonian transaction avoidance rules. Nevertheless, as the Recast European Insolvency Regulation 2015 (EIR Recast) applies, the outcome of the case may be fascinating, albeit an interesting fact that the Estonian and Swedish transaction avoidance rules are very similar, not to say identical, as the law used as the model for Estonian transaction avoidance rules was Swedish law.
Read the full story here by Anto Kasak, Partner, Kasak and Lepikson Law Firm; Lecturer, Tartu University, Estonia.
August 2024: The Sisyphean struggle of introducing Consumer Bankruptcy Law in the Western Balkans: The Cases of Montenegro and North Macedonia The Myth of Sisyphus (French: Le mythe de Sisyphe) is a 1942 philosophical essay by Albert Camus. Influenced by philosophers such as Søren Kierkegaard, Arthur Schopenhauer, and Friedrich Nietzsche, Camus introduces his philosophy of the absurd. Camus compares the absurdity of man’s life with the situation of Sisyphus, a figure of Greek mythology who was condemned to repeat forever the same meaningless task of pushing a boulder up a mountain, only to see it roll down again just as it nears the top.
The Western Balkan countries remain one of the last countries on the list in Europe without any consumer bankruptcy legislation. Despite numerous attempts at changing this situation in the last decade, one can hardly see a difference between Sisyphus rolling up his boulder and the governments in the Western Balkans that keep trying to implement consumer bankruptcy law through various mechanisms, yet have consistently fail to succeed. In the meantime, the enforcement system remains the only available solution for debt repayment, leaving citizens facing over-indebtedness without any solution.
Read the full story by Marinela Majnova, Ph.D. Candidate, School of Economics and Business, University of Ljubljana, Slovenia here.
June 2024: Navigating Uncertainty in Belgian Insolvency: Technology-Driven Businesses and the Enigma of Software LicencesIn today’s rapidly evolving business landscape, businesses find themselves at the intersection of technological innovation and geopolitical and economic turbulence. Despite the increased reliance on software systems and digital infrastructure, it remains peculiar that, in many EU Member States, there is still no clear framework for handling software licences in insolvency.
This Inside Story by Jente Dengler, Senior Associate, Insolvency & Restructuring, Monard Law, Belgium, explores the enigma of software licences under Belgian insolvency law in a wider EU context, demonstrating the need to bridge the gap between legal frameworks and technological realities as to ensure that software assets receive the attention they deserve in times of financial distress. Read the full story here.
May 2024: Corporate Purpose vs Corporate Interest in Luxembourg Restructuring and InsolvencyThe concepts of “corporate purpose” and “corporate interest” of a commercial company, whilst fundamental for corporate governance of Luxembourg companies, are not defined in Luxembourg law or jurisprudence. In this Inside Story, authors Sofia Polykandrioti and Michael Scott of Loyens & Loeff, Luxembourg explore these concepts with a focus on restructuring and insolvency situations by: (i) examining the features of each concept, (ii) considering which corporate body is responsible for assessment of the concepts, and (iii) discussing, in brief, the judicial assessment of the concepts when restructuring plans are being sanctioned. Read the full story here.
April 2024: “Forgive us our Debts”: Ecclesiastical Insolvency in Croatia
In December 2023, the first case of bankruptcy of an ecclesiastical institution in history of Croatia was in sight. Namely, the Commercial Court in Zagreb Croatian Financial Agency (FINA) initiated preliminary bankruptcy proceedings against the Diocese of Zagreb-Ljubljana of the Serbian Orthodox Church.The Serbian Orthodox Church has been present on this part of the territory of Croatia since the 16th century, when its first monasteries were founded. Later, the Kings of Hungary and Emperors of Austria granted them numerous privileges for the purpose of defence of the southern borders from the Ottomans. This Diocese has jurisdiction over Orthodox Christians in northern Croatia and Slovenia. In the 20th century, the church was at the centre of the war conflicts and suffered both human and material losses. The Serbian Orthodox Church in Croatia, Diocese of Zagreb-Ljubljana was registered in the Register of Religious Communities of the Republic of Croatia on 16 November 2004 with its headquarters in Zagreb-Ilica Str. 7/II.
An important dispute between the Serbian Orthodox Church and the Republic of Croatia arose from the damaging of the palace of the Diocese in the Croatian capital of Zagreb at the beginning of the conflict in 1992, which led to judicial proceedings. The Diocese of Zagreb-Ljubljana of the Serbian Orthodox Church lost the case and had to pay a huge amount for procedural expenses. Since its account was blocked, the proposal for opening preliminary bankruptcy proceedings followed. However, by the hearing scheduled for determining the bankruptcy ground, the debt was paid and proceedings were closed.
Read the full story here by Dr Djuro M. Djuric, Visiting Research Fellow, Martin Luther University, Halle-Wittemberg, Germany.
March 2024: Transposition of the Preventive Restructuring Directive into Ukrainian LawOn 9 November 2023, the Parliamentary Committee for Economic Development recommended the adoption of the Bill implementing the EU Preventive Restructuring Directive 2019/1023 (“Bill #10143”) at the first reading. The next day, the Cabinet of Ministers of Ukraine presented its own (alternative) bill on the same subject (“Bill #10228”). The imminent transposition of Directive 2019/1023 (“PRD”) into Ukrainian law is driven by several factors:
- Ukraine’s attainment of candidate status for EU membership in June 2023 mandates compliance with the PRD as part of the EU acquis;
- Fulfilling conditions for micro-financial assistance in 2023, crucial during wartime, necessitates legislation aligning with PRD principles to enhance corporate bankruptcy and insolvency regimes, allowing for full debt discharge;
- Transposition is integral to the Roadmap for Capacity-Building Activities designed to facilitate the implementation of the Code of Ukraine on Bankruptcy Procedures adopted by the Ministry of Justice in September 2023; and
- The European Commission’s November 2023 emphasis on the imperative of enhancing Ukraine’s bankruptcy legislation further underscores the urgency of the transposition of the PRD.
Read the full story here by Oleksiy Kononov, MSCA4Ukraine Post-Doctoral Fellow, Faculty of Law, Economics and Finance (FDEF), University of Luxembourg.
February 2024: A Second Chance… for the Second Chance Directive in PolandAlmost all of the European Union Member States have already implemented the Restructuring Directive, also referred to as the Second Chance Directive. Unfortunately, at time of writing, Poland is the only country which has failed to do so, although several drafts have so far been discussed.
In Poland, a team of experts within the Ministry of Justice prepared the first bill which was subject to public consultations a long while ago. A lot of business organizations (also including the National Chamber of Insolvency Practitioners and the INSO Section of the Allerhand Institute), public entities as well as the courts submitted their positions on the draft. Later on, yet another draft was published, slightly changing its subject matter, by expanding the scope of the regulation, and thus requiring another round of consultations. Over the period of parliamentary elections in Poland in October 2023, Mateusz Morawiecki’s government sent this draft to the Parliament for consideration. However, the newly elected government of Donald Tusk decided in January 2024 to withdraw the draft bill and present it for further amendments. In summary, a lot of work has already been done, including the drafting of a very detailed report on the areas needed to be covered to ensure compliance with EU law requirements.
Paweł Kuglarz and Mateusz Kaliński of Tatara and Partners, Poland, write about what should be covered and what should be changed in their Inside Story.
January 2024: Small and State Funded – An Empirical Study of Liquidations in ScotlandThere is a significant degree of uniformity between corporate insolvency law in Scotland and in England and Wales, with many key elements reserved to the UK Parliament. The same types of corporate insolvency procedure exist in both systems, including liquidation in its various guises: members’ voluntary liquidation (MVL), creditors’ voluntary liquidation (CVL) and compulsory liquidation (winding up by the court). Nevertheless, there are differences in the relevant laws and insolvency practice. This is reflected in the fact that compulsory liquidations have historically been more commonplace in Scotland than CVLs, but the opposite is true for England and Wales. There are also differences in adjacent areas of law, such as the law of debt and the law of secured transactions, with these having an impact on insolvency outcomes.
Despite the contrasts between English law and Scots law and the availability of valuable data, there is a general absence of empirical analysis of corporate insolvency in Scotland. Consequently, the authors undertook a study to examine insolvent liquidations (i.e. CVLs and compulsory liquidations) for Scottish companies whose liquidations had their end point within a 12-month period. This enabled them to make a number of significant findings regarding the size of estates of liquidated companies, their lifespans and the duration of the liquidation procedures, as well as with respect to expenses, the role of state and the recoveries by various groups of creditors.
Read the full story here by Dr Jonathan Hardman, Senior Lecturer, University of Edinburgh, UK and Dr Alisdair MacPherson, Senior Lecturer, University of Aberdeen, UK.
2023
December 2023: Parallel Dutch Schemes: New Possibilities for Cross-Border Group RestructuringsAs has been extensively reported, on 1 January 2021, the wet homologatie onderhands akkoord (WHOA) went into effect in the Netherlands, and with it the ‘Dutch Scheme’ as the first Dutch restructuring plan. Surprisingly, the Dutch Scheme was initially used principally by small corporations. During the last year, however, larger national and multinational businesses have started using the Dutch Scheme as a vehicle for reorganization. Dutch Schemes have been increasingly used as parallel proceedings in multinational group restructurings, pending simultaneously with, for instance, proceedings in the United Kingdom and/or the United States. With the recent restructurings of Dutch shipping company Vroon Group (in which Jones Day advised the shareholders) and American-German Diebold Nixdorf and its subsidiaries (Diebold—in which Jones Day was involved as debtors’ counsel), case law on parallel proceedings is developing quickly.
In this update, Jasper Berkenbosch (Partner, Business Restructuring and Reorganization Practice, Jones Day, Amsterdam), Sid Pepels (Associate, Business Restructuring and Reorganization Practice, Jones Day, Amsterdam) and
Roos Suurmond (Associate, Business Restructuring and Reorganization Practice, Jones Day, Amsterdam) discuss some recent developments regarding parallel Dutch Schemes. Read the whole story here.
November 2023: AGPS Bondco, Testing English Courts’ Flexibility and Ability to provide Imaginative Solutions to Cross-border Insolvency IssuesOn the one hand, it is widely acknowledged that one of the ostensible objectives of the EU Insolvency Regulation was to prevent ‘forum shopping’ in the insolvency market. The ‘recast’ Regulation toned down this goal, by focusing primarily on mechanisms to prevent fraudulent or abusive forum shopping. On the other hand, it is equally widely acknowledged that the English restructuring framework built its success by offering a flexible and adaptable mechanism to foreign companies to restructure their debt in the UK through schemes of arrangement.
UK schemes have long been criticised for the absence of any provision to bind dissenting classes of creditors. The Corporate Insolvency and Governance Act 2020 (CIGA 2020), which made major changes to the UK’s corporate restructuring and insolvency laws, introduced a flexible ‘restructuring plan’ procedure (Part 26A plans), capable of cramming down not simply dissenting creditors, but also dissenting classes of creditors.
Eugenio Vaccari (Senior Lecturer, Department of Law and Criminology, Royal Holloway and Bedford Colleges, University of London, UK; Co-chair, Insolvency Law Academy, India) sets out the facts in this case and analyses the solution. Read the full story here.
October 2023: Distribution in UK Corporate Insolvency - Who Gets the Pie?It has been over 20 years since data was analysed to assess the rate of return to creditors, specifically those unsecured, during corporate insolvency. The last similar research was by R3 in 2001. This Inside Story by Asad Khan (Doctoral Researcher, University of Nottingham, UK) provides an overview of a recent empirical study conducted by the author. A company usually goes insolvent when it cannot satisfy its debts. There are around 20,000 corporate insolvencies in the UK every year. During distribution, fixed charge holders are repaid first, followed by provisions for expenses, preferential creditors, prescribed part contributions, floating charge holders, unsecured creditors and, finally, deferred claimants.
In 2001, R3 found that unsecured creditors received on average less than 7% repayment of debt and got nothing in over 75% of corporate voluntary liquidations (‘CVLs’). The research was based on surveys and is fairly dated. Arguably, there was a need to provide updated statistics that examines a creditor’s realistic prospect of repayment during insolvency. This may not only help parties assess their scope for returns and contract accordingly, but it could also help reveal areas for development to the regime. Read the full story by Asad Khan here.
September 2023: Pushing the Envelope in Times of War: Insolvency-Related Judgments and Ukraine’s Recent Insolvency Court PracticeRussia’s military aggression against Ukraine since 24 February 2022 not only dramatically changed the lives of millions of Ukrainians, but inevitably triggered the need ‘to move faster’ and re-adjust to new war-related circumstances. The law and judiciary are no exception.
This Inside Story aims to briefly shed light on Ukrainian recent landmark court practice in insolvency cases, which has pushed the envelope due to war circumstances and given a green light to consider the debtor’s claims on compensation of damages caused by Russia’s aggression against Ukraine at the location of and within the debtor’s pending insolvency case in Ukraine.
Naturally, this case further provides food for thought as to the prospects of qualifying such a court decision as ‘an insolvency-related judgment’ for the purposes of future recognition and enforcement thereof abroad with the view to the UNCITRAL Model Law On Recognition and Enforcement of Insolvency-Related Judgments (‘MLIRJ’).
Read the full story here by Dr Olha Stakheyeva-Bogovyk, Attorney-at-law, Ukraine; Associate, McDermott Will & Emery UK LLP
August 2023: The Directive Proposal and Creditor Representation in France: A New Opportunity for Creditors?The proposal for a Directive of the European Parliament and of the Council harmonising certain aspects of insolvency law of 7th December 2022 (“Proposal”), which, at the urging of the financial markets, is intended to give greater respect to creditors’ rights, has not gone unnoticed in France.
In addition to the highly controversial simplified winding-up proceedings of insolvent micro-enterprises, the planned introduction of “pre-pack proceedings” à la française has been perceived with great scepticism in Germany, whereas in France the latter is noted with a certain satisfaction. Indeed, since their introduction in France in 2014, pre-pack proceedings are considered as one of the key restructuring tools for large companies. Nevertheless, in case of transposition into French law of the provisions as they stand now, French administrators may face the challenge of reconciling the principles of competitiveness and transparency required by the Directive for the sale process with the confidentiality that applies in France to the preparatory phase.
The limited comments and discussions in Germany on creditors’ committees (Title VII of the Proposal) can probably be explained by the fact that creditors’ committees have been anchored in the German system for many years. In France, it was mainly argued that the interests of creditors were already sufficiently represented by the mandataire judiciaire and the contrôleurs, so that the introduction of creditors’ committees will not be necessary. The Proposal now gives France the opportunity to balance its debtor-friendly insolvency law in favour of a more equitable framework that upholds the rights of creditors, without giving-up its primary goal of preserving employment.
Read the full story here by Anja Droege Gagnier, and Amélie Dorst of BMH Avocats, Paris
June 2023 - UNCITRAL: The Creation and Development of Insolvency NormsThe UNCITRAL Model Law on Cross-Border Insolvency was approved by the General Assembly of the United Nations in a resolution on 15 December 1997. To date, the Model Law has been adopted by an ever-growing number of countries, counting some 58 state members representing 61 jurisdictions in total. In the context of the quest for international regulation, the adoption of the Model Law by UNCITRAL represents for many the most important step taken in the emergence of a truly international framework for co-operation in insolvencies. This is not to denigrate the many excellent initiatives at regional level that continue to flourish, such as the European Insolvency Regulation (Recast), early work on whose predecessors influenced the shape of the UNCITRAL text. Nonetheless, UNCITRAL’s reputation as a consensus builder and its work on many successful international texts has done much to ensure that this text genuinely represents the views and expectations of stakeholders.
Jenny Gant (Lecturer at University of Derby, UK and Secretary of the INSOL Europe Academic Forum) and Paul Omar (Technical Research Coordinator, INSOL Europe) provide background on Working Group V, where the work on insolvency is now situated, in this month's Inside Story.
April 2023 - Pre Packs, Employees and the Spirit of EU LawThe hot topic in European insolvency has migrated from the implementation of the Preventive Restructuring Directive to the Proposal for a Directive on the harmonisation of certain aspects of insolvency law. Among those provisions is the pre-pack.
You can read Jenny Gant’s article on ‘Pre-Packs and the Impact on Employees’ here, which focuses on the interaction of the proposal of harmonisation of pre-packs in the Member States and the Acquired Rights Directive in the light of the case law of the European Union Court of Justice.
Jenny Gant is a Lecturer at University of Derby, UK and Secretary of the INSOL Europe Academic Forum.
March 2023 - The Swiss Blocking Statute: Criminal Proceedings as Interim Relief in Fraud-Related Insolvency CasesIn Switzerland, a strict blocking statute and the well-known banking secrecy make it difficult for the foreign insolvency office holder to seek information on the debtor’s assets from third parties (such as banks) prior to the recognition of the foreign insolvency decree. Criminal proceedings, however, offer a precious tool to obtain urgent freezing and disclosure orders at the earliest stage of fraud-related cases.What does this mean for foreign IPs? Embedded in Article 271, para. 1 of the Swiss Criminal Code, the Swiss Blocking Statute provides that a person shall be liable to a custodial sentence not exceeding three years or to a monetary penalty, or, in serious cases, to a custodial sentence of not less than one year, if they:
- carry out activities on behalf of a foreign State on Swiss territory;
- without lawful authority; and
- such activities are normally the responsibility of a public authority or public official.
Read the full story here by Antonia Mottironi, Partner, Ardenter Law, Geneva, Switzerland.
February 2023 - New Tools for Greater Efficiency in French Insolvency Proceedings: A Case StudyThe current multiplication of crises is weakening the entire economic environment, regardless of the size or history of the company. With the end of the aid policies practised until now by many governments, the difficulties are becoming more acute. At the same time, legal tools are evolving to enable the consequences of these crises to be dealt with more effectively.
In October 2021, the multi-professional firm O3 Partners accompanied one of the alternative players in the energy sector, which until then had been growing rapidly, in what will be the first application in France of the accelerated safeguard procedure with classes of affected parties. This procedure has been completely renewed by Ordinance No. 2021-1193 of 15 September 2021, which came into force on 1 October 2021 and which transposed the Directive on Restructuring and Insolvency.
The context of unification of the different laws of the EU Member States gives the ordinance an innovative character, but has also added legal uncertainty to the economic insecurity. It creates a new field in which counsel and experts as well as the court must integrate and implement new concepts and reasoning stimulating imagination and creativity.
The context of unification of the different laws of the EU Member States gives the ordinance an innovative character, but has also added legal uncertainty to the economic insecurity. It creates a new field in which counsel and experts as well as the court must integrate and implement new concepts and reasoning stimulating imagination and creativity.
Read how the case unfolded in this month's Inside Story by Isabelle Didier, Founder and President of GRIP 21; Lawyer and court-appointed Administrator (Paris).
January 2023 - The Insolvency Directive Proposal: First General Impressions from the Polish PerspectiveOn 7 December 2022, the European Commission published a “Proposal for a Directive of the European Parliament and of the Council harmonising certain aspects of insolvency law (“Proposal”), which is currently available for comments from the public and interested entities. The Proposal regulates the following areas of substantive insolvency law: Avoidance actions; Asset tracing; Pre-packs; Duty of directors to submit a bankruptcy petition; Simplified winding-up for microenterprises; Creditors’ committees; and Drawing-up of key information factsheets by Member States on certain elements of their national law on insolvency proceedings.
With the scope as largely outlined, the Proposal seems to harmonize quite a lot of important areas related to insolvency law. It is also another legal act at the European Union level covering insolvency and restructuring law, which subject matter seems to be more important from the economic and legal point of view, especially in the times of crises. Read the author's view of the new Proposal here by Mateusz Kaliński, Tatara and Partners, Poland.
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December 2022 - North Macedonia becomes the First EU Candidate Country to adopt the Directive on Restructuring and InsolvencyIn February 2022, the Ministry of Economy of the Republic of North Macedonia prepared, in cooperation with International Financial Corporation (World Bank Group), a Draft Law on Insolvency and submitted it to the Parliament (Собрание). The objective of this law is to provide protection of investors and their business, flexible and simplified proceedings for small enterprises and to clarify the conditions for participation of creditors in insolvency proceedings. One of the biggest novelties, not only in North Macedonia, but among all EU candidate countries in the West Balkans, is the introduction of preventive restructuring proceedings for debtors in difficulties. This instrument should allow the debtor to negotiate debt settlement options with its creditors and timely avoid insolvency. For an EU candidate country, it will also mean harmonization of the national legislation with the Directive on Restructuring and Insolvency.
Read the full story here by Dr Djuro M. Djuric (Visiting Research Fellow, Martin Luther University, Halle-Wittemberg, Germany; Associate Professor, College of Applied Studies for Economics and Administration, Belgrade, Serbia).
November 2022 - Local Public Entities in Distress – An English PerspectiveThis is arguably one of the most difficult times in history for local authorities around the world. Authorities in developed countries like the UK are no exception. Councils in the UK face issues that are common to all types of local entities, such as inflationary costs for the provision of essential services (particularly social care) and reduced transfers and tax collection abilities due to the current global economic recession. In addition, they face unique challenges. These include increasing costs to service the commercial debt they had been encouraged to take in previous years, a dwindling and aging population, and increased demands of essential services from a more vulnerable population.
The purpose of this short Inside Story is to uncover the causes of municipal failures, assess the remedies available under the law and discuss whether regulatory changes are needed to improve the status quo. Read the full story here by Dr Eugenio Vaccari, Royal Holloway, University of London (UK) and Prof Yseult Marique, University of Essex (UK), FöV Speyer (DE), UC Louvain (BE).
October 2022 - A Polish Perspective on the Pre-Pack in the context of the Heiploeg Case before the CJEUIn Poland, the pre-packaged sale, also called the pre-pack administration, has been possible since 2016, as a result of important amendments to Bankruptcy Law and Restructuring Law – introduced via the Act of 15 May 2015. The pre-pack has grown in popularity, though some pitfalls occurred when two important cases were brought to the Court of Justice of the European Union (CJEU), namely Smallsteps (also known as Estro) (C-126/16) and Plessers (C-509/17) cases.
As a consequence of the first case especially, Estro or Smallsteps, the opinion of Polish government was that this required amendments to the Bankruptcy Law provisions regulating pre-packs. Within the legislative process, numerous experts contested this need and presented opinions proving that amendments are not required and they may make the Polish pre-pack less popular for the business. Indeed, after the amendments – introducing direct application of the Article 23[1] of the Polish Labour Code to a bankruptcy sale – the popularity of pre-packs went significantly down, with an estimated decrease of perhaps half of projects. Read the full story here by Mateusz Kaliński, Tatara and Partners, Poland.
September 2022 - Justified Implementation of the EIR and National Laws - Avoiding Unjust Forum Shopping from Estonia to Ireland!The Estonian Chocolate brand “Kalev” is one of the most recognised trademarks in Estonia. Unfortunately, Oliver Kruuda, the person who was behind this trademark, is also well known, but not in such a good light. He was a very successful businessman till recently, when he tried to escape from obligations arising in Estonia by relocating himself to Dublin with the hope of having a fresh start within a year under Irish insolvency law. Luckily, the Estonian and Irish Courts implemented national laws and the European Insolvency Regulation (EIR) correctly, meaning this little trick by an Estonian businessman did not succeed. Overall, justice was delivered and the ancient Greek god Themis supervised the situation perfectly.
The Creditor filed a petition against Mr Kruuda (“the Debtor”) with the Tartu County Court of Estonia on 14 May 2021, seeking a declaration of bankruptcy against the Debtor. The Tartu County Court appointed an interim trustee and restrained the Debtor’s rights to transfer assets and applied a general stay to enforcement proceedings on 7 June 2021. Without any knowledge of the Estonian courts, around the same time, the Debtor turned to an Irish Court, which declared the Debtor’s bankruptcy on 28 June 2021. Of course, the Debtor did not inform the Irish Court either about the bankruptcy proceeding in Estonia. Later, on the 1 July 2021, the Debtor informed the Tartu County Court about the declaration of bankruptcy in Ireland and petitioned for the termination of the Estonian bankruptcy proceeding. Nevertheless, the Tartu County Court declared the bankruptcy of the Debtor on 19 October 2021.
Read the full story here by Anto Kasak, Partner, Kasak and Lepikson Law Firm; Lecturer, Tartu University, Estonia and Kedli Anvelt, TGS Baltic Law Firm, Estonia.
July 2022 - Harmonisation in the EU - The Portuguese PerspectiveThe transposition of the Directive on Restructuring and Insolvency (the “Directive”) in Portugal was carried out by Law No 9/2022, of 9 January, in force since 9 April. It is no secret that the transposition was made with little time, hence without much reflection. The COVID-19 reason may be invoked, but the fact remains that the main lines of the Directive have been known since the Commission Recommendation of 12 March 2014.
Some of the measures in the Directive present a considerable degree of novelty and of complexity and even some syncretism (aggravated, the latter, by a poor translation of the Portuguese version). Inevitably, there are discrepancies or non-conformities with regard to what the Directive required. A general consequence may be drawn just from the Portuguese example: it is doubtful that the Directive will achieve the much-coveted harmonisation of insolvency law.
The scope of Law No. 9/2022 roughly corresponds to the scope of the Directive on restructuring and insolvency and reflected in its title – “preventive restructuring frameworks” and “discharge of debt and disqualifications”. The amendments with the greatest impact are regarding, therefore, the Special Revitalisation Proceedings (“PER”) and the discharge.
As mentioned, at several points, the regime presents discrepancies, non-conformities or deviations from the provisions of the Directive. In this month's INSIDE Story, Judge Catarina Serra, Justice of the Supreme Court, Portugal, illustrates this assertion with two (emblematic) examples: the rule on the formation of separate classes and the rule on ipso facto clauses. Read the full article here.
June 2022 - UNCITRAL WG5 Session 60: Focusing on Asset Tracing and Applicable LawSpringtime in New York…although not many of the delegates and observers shared the joy of this trip to the Big Apple given the hybrid approach taken this year due to the continuing impact of COVID, many did attend in person to enjoy once again the camaraderie and fellowship with colleagues from all over the world, reports Jenny Gant (UK).
During this session, the UNCITRAL Working Group V met to discuss firstly a few updates on the UNCITRAL Model Law on Cross-Border Insolvency: the Judicial Perspective. This document aims to acknowledge the international origin of the Model Law on Cross-Border Insolvency and to promote the uniformity in its application. The updates to the Judicial Perspective cover developments by other international bodies as well as interpretations of the MLCBI by judiciaries across the world. The Updates proposed were accepted with a few additions during the session.
The second important topic on the agenda revolved around the introduction of some kind of harmonising instrument that deals with civil asset-tracing and recovery in insolvency proceedings. Finally, the Working Group considered the topic of applicable law in insolvency proceedings. Read the full article here by Jenny Gant.
May 2022 - A is for Adversity, W is for War - Corporate and Restructuring Novelties in Ukraine resulting from the Russo-Ukrainian WarFor the absolute majority of Ukrainians, their lives changed drastically on 24 February – with air defence alarms heard for the very first time since the end of WWII and the first Russian cruise rockets hitting Ukrainian infrastructure and housing. As the third month of the war is coming to an end, the Ukrainian Parliament (Verkhovna Rada) continues to introduce new legislation, not just aimed at tackling the consequences of the war, but also becoming a weapon itself against the aggressor.With the start of the war and introduction of the martial law no major changes in corporate legislation have taken place in Ukraine. However, some restrictions implemented due to martial law have changed the corporate landscape directly or indirectly. Most of these restrictions affect Russian-affiliated companies. Read the full article here by Alesya Pavlynska and Anton Molchanov from Kyiv, Ukraine.
April 2022 - Dull rerun or successful spin-off? Is the new ‘private’ version
of the Dutch Scheme covered by the EU Judgments Regulation?Prior to Brexit, much ink was spilled by English jurists debating whether the English scheme of arrangement was covered by the EU Insolvency Regulation, the EU Judgments Regulation, or neither regime. Whenever the issue was brought before the English courts, however, they would generally reach the conclusion that it actually did not matter that much: the court would apply domestic law regardless. And with that, the English courts never reached a solid landing on the issue of whether either EU regulation applied or not. Season one of the ‘EU regulations-show’ essentially ended with a nail-biting cliff-hanger in England, and as Brexit is unlikely to be reversed in the foreseeable future, there seems to be little hope for a sequel…
Enter the Dutch! While Brexit has made the issue in England largely moot, the underlying discussion has recently got its own spin-off show in the Netherlands. On the 1 January 2021, the Dutch scheme – similar to the English scheme of arrangement and English restructuring plan – finally entered into force in the Netherlands (after having been in the works for close to eight years). Perhaps with the aim of avoiding the same discussions that preoccupied English jurists for many years, the Dutch legislator decided to forgo typical English politeness about the subject, choosing instead to be typically Dutch and blunt about it. Read the full article here by Géza Orbán, Associate, Allen & Overy, Amsterdam.
March 2022 - Evaluating the Evidence and the Scope of, and Limits to Common Law Recognition of a Foreign BankruptcyIn Kireeva & Anor v Bedzhamov [2021] EWHC 2281 (Ch), Snowden J, as he then was, dealt with two applications. The first was an application by Lyubov Andreevna Kireeva, the Russian trustee in bankruptcy (arbitrazh manager) of Georgy Bedzhamov, for recognition at common law of her appointment with a view to enabling her to take control of Mr Bedzhamov’s property and assets in the UK; the second was an application in existing proceedings between Vneshprombank LLC and Mr Bedzhamov, by which the trustee, a non-party, sought an order under Civil Procedure Rule (CPR) 40.9 setting aside part of an order made in March 2021 varying the terms of a worldwide freezing order originally made in 2019. The variation had the effect of permitting Mr Bedzhamov to sell a Belgrave Square property and use the proceeds of sale to pay accrued and anticipated living expenses, legal fees in connection with the defence of the UK proceedings due to come on for trial in January 2022 and other disbursements. Read the full article here by Frances Coulson, Robert Paterson and Stephen Baister of Wedlake Bell LLP, London, UK.
January 2022 - The Successful Restructuring of a FMCG Retailer in Poland: Mission (almost) ImpossibleThe successful restructuring of an insolvent FMCG retail chain in Poland is a rarity. For various reasons, brands such as Alma, Real, Billa, Hit, Géant, Leader Price, Bomi and MarcPol have not survived the competitive race and have ceased operations. Furthermore, after 25 years in Poland, Tesco sold its 300 stores in 2020 to Netto (Salling Group). The Polish retail market may be tempting (EUR 60 billion/2019, PMR), but it is also highly competitive with strong consolidation trends.
The successful turnaround of the Piotr i Paweł retail chain has shown two things: it is extremely difficult to continue doing business bearing the “under restructuring” banner and that an FMCG operation in distress cannot be carried out without serious support from an external financing entity, preferably a strategic investor. What is also needed is a huge amount of luck! Read the full story here by Patryk Filipiak, Partner; Head of Restructuring and Bankruptcy, FilipiakBabicz, Poland.
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December 2021 - Insolvency Proceedings in Hungary: the New “Reorganisation” ModelSince the COVID-19 pandemic, to mitigate its effect on the economy, the Hungarian Government has taken several measures, passed several pieces of emergency legislation and introduced new legal tools to help – among others –local businesses. As part of the emergency legislation, the Hungarian Government introduced a new type of insolvency procedure, designed to be the main alternative to the existing traditional bankruptcy procedure (in Hungarian: “csődeljárás”). This new procedure serves as a new potential tool for businesses to handle and survive an insolvency situation, to restore their solvency and to continue the business operations.
Read the full story here by Zoltan Fabok, Special Counsel, DLA Piper, Hungary and Mark Seres, Associate, DLA Piper, Hungary.
November 2021 - New laws on Digital Assets in SerbiaAs from 21 June 2021, the first regulation on digital assets has entered into force in Serbia. In this way, Serbia became one of the fintech countries where a complete legal framework for digital assets is available. Moreover, it provides an attractive business environment and legal security for investors. The Law on Digital Assets (LDA) regulates the issuing of digital assets and secondary trading of digital assets in the Republic of Serbia. It also prescribes the provision of services related to digital assets, liens and fiduciary rights over digital assets, the competences of the Securities Commission and the National Bank of Serbia, as well as supervision of the implementation of the law.
Furthermore, this is the first regulation introducing the fiduciary as a security instrument in the Serbian legal system. As for insolvency law, the new regulation acknowledges digital assets as enforceable assets and status of both secured and pledge creditors. The notion of digital assets comprehends virtual assets and digital tokens. Finally, the new regulation regulates the status of the digital assets if a debtor enters insolvency proceedings.
Read the full story here by Djuro Djuric, PhD., Associate Professor, College of Economics and Administration, Belgrade, Serbia.
October 2021 - Turning back the Clock: Post-Brexit UK and Cyprus Cross-Border RecognitionThe loss of the relatively streamlined and automatic recognition regimes which applied between the UK and EU member states by virtue of the EU Regulation on Insolvency Proceedings 2015 (848/2015) (EIR Recast), has been described as a “great tragedy”. What was a clear and smooth route to recognition between Member States, facilitating more efficient and swift cross border insolvency proceedings with obvious benefits to creditors and other stakeholders, no longer applies for UK office holders who will need to seek recognition in EU member states and vice versa, leaving office holders to navigate through a fragmented and less predictable landscape of common law, domestic legislation and international treaties to identify the most appropriate route.
For insolvency proceedings which commenced prior to 31 December 2020, the position was clarified by the Withdrawal Agreement (2019/C 384 I/01); the EIR Recast continues to apply to those cases. The pathway, however, to recognition for insolvency proceedings commenced post 31 December 2020 will undoubtedly be more complex and the increase of cross border structures involving Cyprus means it is necessary to identify the legislative framework which will be applicable for recognition to be achieved.
Read the full story here by Chris Iacovides, Director, CRI Group; Certified Public Accountant; Licensed Insolvency Practitioner, UK, Cyprus and Romania and Andri Antoniou, Director, CRI Group, Cyprus; Solicitor (non-practising), England and Wales; Licensed Insolvency Practitioner, Cyprus; Former Qualified Examiner, UK Insolvency Service.
August 2021 - The Challenges of Further Digitalisation in Estonian Insolvency ProceedingsEstonian digital governance has been among the best in the world with almost 99% of state services available online. However, one could argue that insolvency proceedings have not been smooth or digital enough so far. Several years of insolvency law revision in Estonia has finally reached its momentum and significant amendments were enacted as of 1 February 2021. The aim of these changes to the Bankruptcy Act is to make insolvency proceedings faster, more cost-efficient and transparent. This should also increase satisfaction of claims to creditors and decrease the number of asset-less insolvencies. This piece introduces a selection of the changes enacted in the Bankruptcy Act with the aim of making insolvency proceedings even more digital, smooth and user-friendly.
Read the full story here by Signe Viimsalu, Mag.Iur, PhD, MBA; Managing Partner, SiGN9, Estonia.
June 2021 - UNCITRAL Working Group V and a Simplified Insolvency Regime for MSEsThe last year has laid bare the weaknesses of many modern market economies to guard against the financial and social costs of a health crisis that has driven the global marketplace nearly to a standstill. Emergency measures covering everything from furlough schemes for workers unable to perform their job due to workplace closures to adjustments to some of the more draconian aspects of insolvency procedures, such as filing obligations, were introduced and have been steadily extended through the now extensive period of the pandemic.
Some of the hardest hit businesses have been those of small and micro sizes (MSEs). In addition, the many shared responses to the crisis such as the isolation of populations, travel bans, and limits placed on indoor and outdoor gatherings have potentially changed the perspective of individuals going forward. Who knows what long-term impact this crisis will have on the behaviours of consumers in particular within the global marketplace? Read the full article here by Dr Jennifer L. L. Gant (INSOL Europe Delegate to UNCITRAL WG-V).
May 2021 - For Great Ills, Great Remedies! The New Extraordinary Proceedings for the Economic Sustainability of Businesses in PortugalSince the early days of the pandemic, the Portuguese legislator has taken several extraordinary measures to help businesses: the deferral of specific obligations, namely tax obligations and social security contributions, bank loans, performance in lease contracts; a furlough scheme for employees; the opening of lines of credit, just to name a few. As far as insolvency law is concerned, the only measure for a long time has been the suspension of the duty to file for insolvency. The usefulness of such a measure is, however, limited, given the fact that, to begin with, the creditors and the debtor itself retains the right to request the opening of the insolvency proceedings.
More recently, Law No. 75/2020 of 27 November 2020 introduced additional measures, from which stand out the new extraordinary proceedings designed to allow the swift restructuring of businesses affected by the COVID-19 crisis (Articles 6 to 15). The national legislator has put into practice the old saying “for great ills, great remedies” and created extraordinary proceedings for an extraordinary crisis. But are these proceedings the (most) appropriate tool to meet the actual needs of the businesses (companies and entrepreneurs)?
Read the full article here by Catarina Serra (Justice of the Supreme Court, Professor, University of Minho (Braga), Portugal).
April 2021 - Simplified Restructuring Proceedings in Poland: Risks for CreditorsAs a result of the COVID-19 outbreak, a new type of restructuring procedure was introduced in Poland: the “simplified restructuring procedure” (SRP), which, in principle, corresponds to the “scheme of arrangement” known to English law. There are, however, material nuances of the new regulations, which may have a negative impact on the rights of the foreign creditors. In this article, authors Paweł Chmieliński (Advocate and Restructuring Advisor, KKLW Legal, Poland) and Przemysław Wierzbicki (Advocate and Restructuring Advisor; Managing Partner, KKLW Legal, Poland) provide the most important solutions which foreign creditors can use to defend their interests. A special feature of the new regulation is its temporary nature, which has been tied to the anticipated duration of the impact of the pandemic. As such, simplified restructuring procedures can be initiated as of 24 June 2020 (date of the entry of the new regulation into force) till 30 June 2021. Read the full story here.
March 2021 - The Implementation of the EU Preventive Restructuring Directive in Germany: A New Star in the FirmamentOn 22 November 2016, the European Commission presented a proposal for a directive to transform the restructuring and reorganisation laws within the European Union, which was supposed to help finally deal with the consequences of the 2008/2009 financial crisis. After extensive discussion surrounding the topic, a compromise was reached between the Council, the Commission and the Parliament in December 2018, leading to Directive (EU) 2019/1023 or the “Directive on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132” (Preventive Restructuring Directive/PRD) entering into force in July 2019.
The implementation of the PRD has now been finalised in Germany with the adoption of the Stabilisation and Restructuring Framework for Enterprises Act (Unternehmensstabilisierungs- und restrukturierungsgesetz/StaRUG) in the Bundestag on 17 December 2020. The StaRUG is intended to create the basis for the enforcement and implementation of corporate restructurings against the resistance of creditor minorities while avoiding insolvency proceedings.
Olomon Ljumani (Associate, ATN-Rechtsanwälte, Wuppertal; Lecturer, University of Public Administration North Rhine-Westphalia, Germany) outlines the key points of the new legislation here.
February 2021 - Pre-packaged Administrations in the UK: Nothing new under the Sun!The English corporate insolvency framework has gone through significant changes in recent times. Some of these changes have been introduced as soon as the effects of the COVID-19 pandemic on the UK economy became apparent. Nevertheless, last summer the Corporate Insolvency and Governance Act 2020 (the Act), which completed its progress in the Parliament and received Royal Assent on 25 June 2020, coupled these temporary measures with long-term reforms and regulatory powers to significantly amend the UK corporate insolvency framework.
Similar to other countries, the UK introduced some emergency legislation aimed at suspending statutory demands and restricting winging-up petitions, as well as the liability for wrongful trading. At the same time, with the Act, Parliament took the opportunity to introduce some long-discussed and more permanent changes to the corporate insolvency framework. These include the introduction of a short free-standing company moratorium, a new restructuring plan procedure (known as “part 26A restructuring plan”) modelled after the successful schemes of arrangement (but with a cross-class cram-down!), and a general ban on the enforceability of ipso facto clauses. Read the article here by Eugenio Vaccari (Lecturer, Department of Law and Criminology, Royal Holloway and Bedford Colleges, University of London, UK).
January 2021 - The Dutch Scheme is in Force: European Restructuring Practice on the Move!On 1 January 2021, the Dutch interpretation of the “debtor-in-possession proceedings”: The Wet Homologatie Onderhands Akkoord (WHOA), came into force. The WHOA provides for a brand-new restructuring tool, which, in our view, is a very welcome addition to the Dutch Bankruptcy Code, which dates back to 1896 and basically consists of only two types of formal insolvency proceedings for enterprises: suspension of payments and bankruptcy. The WHOA, also referred to in some circles as the “Dutch Scheme”, enables viable enterprises in financial distress to restructure their liabilities on a going concern basis via a restructuring plan.
This Inside Story by Jasper Berkenbosch (Partner, Business Restructuring and Reorganization Practice, Jones Day, Amsterdam, The Netherlands) and Sid Pepels (Associate, Business Restructuring and Reorganization Practice, Jones Day, Amsterdam, The Netherlands; Doctoral Researcher, Radboud University Nijmegen, The Netherlands) briefly touches upon several of the Dutch Scheme’s key features, and contemplates on the role that this new Dutch proceeding may play in the European restructuring practice. Will it turn the Netherlands into the new restructuring hub? Download the full story here.