Radu Lotrean
President of
INSOL Europe

The second outing for the High-Level Insolvency Course brought over 100 participants together in Nicosia, capital of Cyprus. Paul Omar (Technical Research Coordinator, INSOL Europe) reports from the first module of the successful event.

The second outing for the High-Level Insolvency Course brought over 100 participants together in Nicosia, capital of Cyprus. While temperatures outside were above 30ºC throughout the event, held over 2 days at the Hilton Hotel, inside cooler surroundings helped attendees focus on the lectures and complex case studies making up the first module of the course. Following an introduction by Radu Lotrean (President, INSOL Europe) and Emmanuelle Inacio (Course Director, INSOL Europe), welcome speeches were given by Georgios Karrotsakis (Head, Cyprus Insolvency Service) and Spyros Kokkinos (Registrar of Companies and Official Receiver of Cyprus) referring to recent reforms introducing rescue in the form of the examinership procedure, improving the enforcement process and the treatment of consumer indebtedness as well as providing a firm foundation for the organisation of the local profession.

The opening afternoon’s proceedings began with an introduction to the history of bankruptcy law and how modern trends were anticipated in developments beginning in the Ancient Period, which saw insolvency acquire moral overtones and penal sanctions. The more modern focus on rescue comes in the wake of the shift in commercial activity from individuals to legal entities (companies, partnerships and other vehicles) and has progressively moved upstream in the lifecycle of these entities, leading contemporary insolvency frameworks to consider adoption of early warning and pre-insolvency measures to complete the modern tool-kit. Recent work by the European Commission promoting preventive restructuring, given some attention throughout the course, also falls within this trend.

The second lecture, by Professor Irit Mevorach (Nottingham), continued the introductory theme by providing a comparative outline of the scope of insolvency procedures in a number of jurisdictions and the debtors they target. Going further, the presentation covered the opening phase of procedures and how debtors are incentivised to open bankruptcy proceedings and seek court protection. Using the contrasting structures of wrongful trading and filing obligations, Professor Mevorach explored how effective these are at ensuring timely entry into insolvency to help protects the creditors’ interest. Closing proceedings on the first day, the final lecture looked at the concept of the estate, its constitution and its evolution through avoidance actions, onerous property provisions and rules on after-acquired property.

The second day began with an exploration of cross-border insolvency through the prism of the international texts. Leading the debate, Professor Irit Mevorach contrasted possible outcomes with universalism and territorialism as guiding principles for insolvency frameworks, the difficulties that the UNCITRAL Model Law and European Insolvency Regulation attempt to palliate as well as the issues arising where these texts need to be invoked. As the acknowledged UK expert on corporate groups, Professor Mevorach also touched upon their unique and varied structures, highlighting the complexity in cross-border cases, particularly referring to the themes of coordination, communication and cooperation. This was followed by a session featuring a case study that brought the themes and issues to the fore.

The afternoon session retuned to substantive law, looking at various procedures along the continuum as debtors begin to experience financial difficulties and approach insolvency. The opening lecture began with a consideration of informal workouts and strategies at the threshold of insolvency, further explored through a case study offering a fact matrix inviting a contrast between informal and formal processes. Formalised insolvency was then the theme of a presentation by Dr Alexander Roxas (Thessaloniki), who took the audience through the steps from opening, via constitution of the estate, to plan formation, with a special focus on the Draft Directive on preventive restructuring and how it might offer an alternative to formal proceedings by moving the focus on restructuring further upstream. A concluding lecture closed the loop on the organisation of procedures by looking at the treatment of contracts in insolvency.

Overall, participants were keen to share their experience of practice in Cyprus, offering insights into how changes to the system intervening in recent years had brought new opportunities, though not always sufficiently well utilised. The debate between international and local experts that ran throughout the course also elicited views on how the domestic law might be ameliorated with examples forthcoming from other jurisdictions of good practice that could be emulated. The course now moves on to its second component, which will take place on 25-26 October at the same location, where a master class will be offered on local insolvency law and practice.

The Young Members Group (YMG) co-chairs were invited to the AIJA Annual Congress, which took place from 28 August to 1 September 2018 in Brussels. Georges-Louis Harang attended the congress and was warmly welcomed by AIJA members, especially Hector Sbert, Marine Simonnot and Anouk Rosielle, President and Vice-Presidents of the AIJA Insolvency Commission. 

Also, a meeting with Wiebe de Vries, President of AIJA, and the members of the Insolvency Commission was held on Thursday 30 August. It was an opportunity to discuss the cooperation settled between both associations and the future of this cooperation. Especially, details of the joint event in Mallorca in June 2019 were discussed as well as the possibility of other opportunities to cooperate in the future.

On this occasion, the YMG emphasised the goal of a long-term cooperation with AIJA. Wiebe de Vries, President of AIJA, and the members of AIJA's Insolvency Commission are very pleased of such cooperation. 

Concerning the Mallorca Conference, AIJA has put in place administrative support for the joint event (booking of the hotel) and have installed a specific committee in charge of the organisation of this event (members of the Insolvency Commission). The YMG co-chairs will be in contact with this organising committee to carry on the organisation of the seminar in Mallorca. We will keep you informed of the progression of the organisation of this joint event. Stay tuned!

Keep up to date on the activities of the Young Members Group on our website.

On 4 July 2018, a temporary creditors’ council adopted the settlement agreement, marking the end of the first phase of the extraordinary administration procedure involving the Croatian Agrokor Group. A majority of creditors with claims amounting to 80.2% of the total debt agreed to the proposal submitted by the extraordinary commissioner. The Commercial Court in Zagreb subsequently confirmed the creditors’ settlement agreement in its decision dated 6 July 2018.

Since the extraordinary administration procedure started over the Agrokor Group in April 2017, this case has become the most significant economic and political issue in Croatia and the West Balkans region. With over 60,000 employees and assets estimated as worth some EUR 7.1 billion, the group was considered “too big to fail”. That is why the Croatian Parliament adopted a special Law on “a procedure of extraordinary administration in companies of systemic importance” on 6 April 2017 in order to save the company, the text immediately being dubbed the Lex Agrokor. Its purpose was chiefly to avoid ordinary bankruptcy proceedings being opened over companies in the Agrokor group.

Djuro M. Djuric and Vladimir M. Jovanovic outline the case. Read the full Inside Story and other articles here.

If you would like the opportunity to have your Inside Story published in a future edition, please email Communicatons Manager, Paul Newson for details.

The committee is delighted to announce that the winner for this year’s award is Yutong Zhang from China. Yutong is a visiting researcher of University of California, Los Angeles, School of Law, and prior to that he was a PhD candidate at China University of Political Science and Law. Currently Yutong is practicing insolvency and turnaround at JD Finance. 

He will be writing a paper on ”Blockchain: A Chance for Turnaround Procedure Modernization”, which will be published in summary in one or more of the Member Associations’ journals and in full on their websites. 

As part of the award, Yutong is invited to attend the INSOL Europe Congress on 4-7 October 2018 in Athens, Greece. We would like to congratulate Yutong on his excellent application and also thank all the candidates who applied for the award this year.

Full details of the award and previous winners are available here.

All members of INSOL Europe are entitled to the membership benefits of INSOL International. INSOL International also has ancillary groups that represent the judiciary, regulators, lenders and academics. These groups play an invaluable role within INSOL International and provide valuable forums for discussions of mutual problems. 

You can find their Membership Report for the first half of 2018 and other reports on our website here.