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| May 2022 |
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Dear Members
The EU economy continues to experience a challenging time due to Russia's war against Ukraine, whose people we stand with unequivocally. The overwhelming negative factor is the surge in energy prices, driving inflation to record highs and putting a strain on European businesses and households.
In Germany, prices were up 87.3% compared to April 2021, mainly due to the strong price increases for natural gas (distribution) which was a whopping +154.8% on April 2021. Power plants had to pay +307.0%, that is four times(!) as much as one year ago while industrial consumers’ prices were up 259.9%, those of resellers 170.0%. Overall inflation has been going from 4.6% in the last quarter of 2021 up to 6.1% in the first quarter of 2022. In the Euro-area, headline inflation surged to 7.5% in April and is projected at 6.9% in the second quarter of this year before declining gradually thereafter. This is mirrored in the figures for the entirety of the EU, with inflation going from 2.9% in 2021 to 6.8% in 2022 and anticipated to decline to 3.2% in 2023.
Considering these challenges, growth will be much more subdued than was predicted before Russia’s invasion of Ukraine and uncertainty to the outlook remains high as long as Russia's brutal aggression continues. As a result, the world is experiencing a level of disruption and business risk not seen in generations. Some companies will freeze and fail, while others will meet the challenges head-on and innovate, advance, and even thrive. The difference is resilience - building resilience is the key to long-term sustainability and success.
It is very fitting, therefore, that we have chosen ‘resilience in times of adversity’ as the overall theme for our upcoming Annual Congress in Dubrovnik, to be held from 6 October to 9 October 2022 and returning to its familiar place in the annual events calendar. As always, the Congress will be an exciting opportunity to listen, learn, share experiences and network in a restructuring and insolvency industry of which we can all be proud to be a part of. Registration is now open and I invite you to join us to discuss how we can face today’s challenges with new ways of thinking, innovation and flexibility. Let us explore how our industry can keep viable businesses operating.
Before I close, I would like to extend my gratitude to the authors who have devoted their time and efforts to contribute to this edition. I am sure you will find it a very good read providing you with updates on the happenings in the world of restructuring and insolvency across Europe.
And, as always, I hope wherever you are reading this, you are staying safe and well.
Frank Tschentscher
President INSOL Europe
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Frank
Tschentscher
President of
INSOL Europe
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This issue is kindly
sponsored by:
DLA Piper is a global law
firm with lawyers located
in more than 40 countries
throughout the world.
www.dlapiper.com
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| Annual Congress 2022 - Dubrovnik - Registration Now Open! |
With thanks to our Congress Main Sponsor:
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| Call for Papers: Academic Forum Conference, Dubrovnik |
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Submissions Deadline: 15 June 2022
The Academic Forum of INSOL Europe will be hosting its 18th annual conference in Dubrovnik, Croatia, on Wednesday 5 October – Thursday 6 October 2022, immediately prior to INSOL Europe's main annual conference taking place in Dubrovnik from 6 to 9 October, 2022.
Expressions of interest are invited for the delivery of research papers within the overall academic conference's theme, which will be: “Insolvency Law in Times of Crisis”.
The Academic Forum encourages submissions on all relevant topics within the theme, dealing with substantive or procedural, as well as national or cross-border issues. The deadline for submissions is 15 June 2022.
For more information and updates visit the Academic Forum Events page.
The Academic Forum is pleased to acknowledge the generous sponsorship
of Edwin Coe LLP and their ongoing support of our activities
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| Insolvency Statistics: Bankruptcy Declarations at EU Level |
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Eurostat is the statistical office of the European Union and monitors inter alia declarations of bankruptcies on a quarterly basis in the European Union and euro area as it is useful to provide more up-to-date and frequent information on the economic environment for businesses than the traditional annual business demography statistics.
In particular for 2020 and 2021, quarterly data is very helpful to track better the effects of the COVID-19 pandemic. This is particularly important for policy makers when policy responses are needed due to business cycle developments in the current context.
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Since the first quarter of 2021, the data on the absolute numbers of bankruptcy declarations are provided by the national statistical institutes of the EU Member States, on a mandatory basis in accordance with the provisions of Regulation (EU) No 2019/2152 on European business statistics. Bankruptcies are defined as the number of legal units that have started the procedure of being declared bankrupt, by issuing a court declaration, at any time during the considered quarter. The bankruptcy declaration is often provisional and does not always mean cessation of an activity.
Regarding the number bankruptcy declarations, there has been a downward trend between the first quarter of 2015 and the fourth quarter of 2016, then turning mainly upwards until the third quarter of 2019. There were considerable decreases in the first and second quarters of 2020 due to the government measures supporting businesses during the beginning of the COVID-19 crisis which allowed the businesses to avoid declaring bankruptcy. After that, the number of bankruptcy declarations increased for three consecutive quarters until the first quarter of 2021. Then the bankruptcy declarations decreased in three consecutive quarters. In the fourth quarter of 2021, the seasonally adjusted declarations of bankruptcies decreased by 0.7 % in the EU and by 1.6 % in the euro area, compared with the third quarter of 2021. The levels of the bankruptcy declarations in 2021 are considerably below the pre-crisis 2019 levels.
Comparing the fourth quarter of 2021 with the third quarter of 2021, among Member States for which data are available, the largest decreases in the number of declarations of bankruptcies were found in Romania (-26.2 %), Estonia (-12.7 %) and Spain (-10.4 %). The highest increases in bankruptcy declarations were observed in Denmark (+37.8 %), Hungary (+24.7 %) and the Netherlands (+22.5 %). Throughout the whole 2021, the bankruptcy declarations decreased in accommodation and food services, information and communication, financial and insurance services. Comparing the fourth quarter of 2021 with the third quarter of 2021, the number of bankruptcy declarations increased in transport, trade, and industry.
The full article is available here.
Find out the latest insolvency statistics from other jurisdictions on our website here.
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| Inside Story - Ukraine: A is for Adversity, W is for War |
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In this month's Inside Story, Alesya Pavlynska and Anton Molchanov report from Kyiv, Ukraine, on the corporate and restructuring novelties in Ukraine resulting from the Russo-Ukrainian war.
For 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.
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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.
Download the full report here and find previous 'Inside Stories' on our website.
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| Upcoming Reforms to the Finnish Restructuring Act |
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Finland is in the process of implementing the Directive (EU) 2019/1023 of the European Parliament and of the Council by 17 July 2022.
The directive has many objectives – enabling preventive restructuring frameworks, ensuring a second chance to over-indebted entrepreneurs, and increasing the effectiveness of insolvency procedures – but it can be expected to have a dramatic effect on Finnish restructuring legislation and the dynamics of restructuring proceedings.
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After the implementation of the amendment, there will be two options for restructuring proceedings: the new early proceedings and regular restructuring proceedings, the latter of which will resemble the current restructuring proceedings. While there are many differences between the early restructuring proceedings and the regular restructuring proceedings, the means of restructuring will be materially the same in both proceedings.
Notably the early proceedings will be time-limited with a maximum of 12 months’ moratorium, during which the debtor is not allowed to make payments on restructuring debt and the creditors are prohibited from collecting their claims.
The amendment also contains other notable changes, including a prohibition on ipso facto clauses in restructuring. The codification of the prohibition will be a welcome clarification and will harmonise the legal state of ipso facto clauses in bankruptcy and restructuring proceedings.
Furthermore, a second wave of reforms to Finnish restructuring legislation proposed for 2023 is in an early preparatory phase. The intention of these changes is to streamline and simplify restructuring proceedings and to prevent mala fide applications of restructuring legislation.
Contributors: Mikko Tavast, Senior Associate and Jan Lilius, Specialist Partner, both of Hannes Snellman
A more detailed update will be published in the Summer edition of Eurofenix.
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| Towards a French Code of International Private Law for Insolvencies |
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In March 2022, a French think tank, the French Committee on Private International Law (‘Comité français de droit international privé’ which brings together judges and academics in coordination with the Ministry of Justice) drew up a draft code of private international law. This is a major step towards the introduction of a text codifying private international law in French law. The draft covers all matters of civil and commercial law including insolvency law.
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Specific rules on jurisdiction or conflict-of-law rule are largely inspired by the terminology of the European Insolvency Regulation with the adoption of the criteria of the debtor's centre of main interests and secondary establishment. Besides, the rules also neutralise the transfer of the registered office to a non-EU state within six months before any application.
In the same vein, it is provided by the draft code that the law of the opening state applies to questions relating to any proceedings, but also to the guarantees and privileges of employee claims as well as the liabilities of managers.
And last but not least, it is provided that proceedings opened abroad will be recognised, while their enforcement will be subject to the rules of exequatur and that which will be granted under an accelerated procedure, ensuring rapid processing.
It still remains for the French legislator to enshrine this project in positive law. It will be consistent with the UNCITRAL Model Law on cross border insolvency.
A more detailed article written by Jean-Luc Vallens will be published in the Summer edition of Eurofenix.
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| Entries now open for the Richard Turton Award 2022 |
Application Deadline: 30 June 2022
Richard Turton had a unique role in the formation and management of INSOL Europe,
INSOL International, the English Insolvency Practitioners Association and R3, the Association of Business Recovery Professionals in the UK. In recognition of his achievements, these four organisations jointly created an award in memory of Richard.
We invite applications from any person who is a national of a developing or emerging nation, works in or studies insolvency & restructuring law and practice and is under 35 years of age. The successful applicant will be asked to write a paper of 3,000 words on a subject of insolvency or turnaround agreed with the panel. This paper will be published in summary in one or more of the four Member Associations' journals and in full on their websites. The award for the best paper proposal will be presented at the INSOL Europe Congress in Dubrovnik, 6-9 October 2022.
Visit our website for full details of the eligibility criteria and how to enter.
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| Annual Congress 2023: Amsterdam - Call for expressions of interest |
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With the Congress in Dublin still fresh in our minds, and plans for our next Congress in Dubrovnik in October this year already well advanced, you may be surprised to learn that we have already started planning our 2023 Congress, which will be held in Amsterdam from 12-15 October 2023.
All INSOL Europe members are invited to express their interest to participate as speakers at our flagship event which should indicate:
- the speaker’s nationality, affiliation and qualifications,
- the topic on which the speaker would be interested in speaking, and
- a short statement as to what unique or compelling perspective the speaker would like to bring to the congress.
The Technical Committee seeks in particular proposals from speakers who have not been speakers at the last two Annual Congresses.
Expressions of interest should be sent as early as possible to Emmanuelle Inacio, no later than 30 June 2023.
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| Forthcoming Events in Italy and Portugal |
Interntational Congress to discuss the transposition of the Directive 2019/1023 - Coimbra, Portugal, 3 June 2022
On the 3 June 2022, an International Congress to discuss the transposition of the Directive 2019/1023 will take place in Coimbra (Portugal). Speakers from INSOL Europe will include Ondrej Vondracek and Catarina Serra. For full details, please email Alexandre de Soveral Martins at soveralm@fd.uc.pt
Preventive Restructuring Frameworks and Early Warning in the New Insolvency Code - Italy, 8 and 15 June 2022
Registration is now open for the annual course “The New Insolvency Law”, organized by the University of Florence and held, both in person and online, on June 8 and 15 (2:30 pm - 4:30 pm CET). The course, whose title this year will be “Preventive Restructuring Frameworks and Early Warning in the New Insolvency Code”, is designed to offer guidance on the new Italian Insolvency Code, which will come into force next July 15 and on the new provisions introduced by the Italian legislature to transpose the EU Directive n. 2019/1023. The course will be held in Italian. To enroll please send an email to segreteria.corsiperfezionamento@dsg.unifi.it, specifying your name, surname and phone number and whether you wish to attend in person or online.
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We welcome feedback, news and story ideas for future newsletters.
Please send your suggestions to Paul Newson, CEO & Communications Manager,
email: paulnewson@insol-europe.org.
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| Disclaimer: This newsletter is sent to members of INSOL Europe. No responsibility legal or otherwise is accepted by INSOL Europe for any errors, omissions or otherwise. The opinions expressed in the articles that appear are not necessarily shared by any representative of INSOL Europe. |
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