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December 2022

Dear Members

As the year draws to a close, however you mark the occasion, I hope that you can take and enjoy a break over Christmas.

By all accounts, a respite will be needed as 2023 should be action-packed on several fronts. We anticipate an increase in workflow due to the wider economic issues. The conference circuit will be back to pre-Pandemic levels and I hope that at least one of our INSOL Europe events will pique your interest, whether for the technical content or the networking opportunities, or both.

We have announced the co-chairs of the Amsterdam Congress Technical Committee so do not hesitate to let them know if you have any suggestions on content or speakers. Now is your chance!

I am interested in the EU proposals on further harmonisation, which comes hot on the heels of the preventative restructuring directive. Personally, I think that a common EU approach to recognition and enforcement of non-EU insolvency cases merits heightened scrutiny. There are many reasons why harmonising internal laws may be beset by difficulties, but harmonising recognition and enforcement of non-EU Insolvency cases has an attractive logic.

Your Executive and Council members are meeting in early January, and again in March. As we forge deeper ties with local and national associations we hope that you can easily identify and reach your Council member and country co-ordinator. This should make it easier to maximise the benefits of your INSOL Europe membership and help to get younger members more involved.

With that, I would like to wish you all a happy and peaceful Christmas.

Nollaig shona daoibh go léir.

Barry Cahir
President, INSOL Europe

Barry Cahir
President of
INSOL Europe

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

New measures to further develop the EU's Capital Market Union:
A proposal for a Directive harmonising certain aspects of insolvency law

On 7 December 2022, the European Commission proposed new measures to further develop the EU’s Capital Markets Union (CMU), including a proposal for a Directive harmonising certain aspects of Insolvency Law (COM(2022) 702 Final)).

The proposal for a Directive targets the three key dimensions of insolvency law: (i) the recovery of assets from the liquidated insolvency estate; (ii) the efficiency of proceedings; and (iii) the predictable and fair distribution of recovered value among creditors.

The proposed Directive is divided into nine titles: general provisions (Title I), avoidance actions (Title II), pre-pack proceedings (Title III), duties of directors (Title V), simplified winding-up proceedings for microenterprises (Title VI), creditors’ committee (Title VII) sets out provisions on the creditors’ committee, measures strengthening transparency of national laws on insolvency proceedings (Title VIII) and final provisions (Title IX).

For example, the Proposal includes rules on actions to preserve the insolvency estate (i.e. avoiding actions by debtors that would reduce the value that creditors can get), on creditors’ committees to ensure a fair distribution of the recovered value among creditors; on so-called “pre-pack” proceedings (i.e. where the sale of the business is agreed before the insolvency starts) and on the duty on directors to timely file for insolvency to avoid that the value of the company deteriorates. It also introduces a simplified regime for microenterprises to lower the costs of winding them down and to enable the companies' owners to be discharged from debt, granting them a fresh start as entrepreneurs.

For more information, please see the Proposal available here.

Have your say!

The Proposal for a Directive harmonising certain aspects of insolvency law (COM(2022) 702 final) is open for feedback for a minimum period of 8 weeks (08 December 2022 - 14 February 2023 (midnight Brussels time)). Please note however that the eight-week feedback period is being extended every day until the adopted proposal is available in all EU languages.

INSOL Europe members contributions are very important as all feedback received will be summarised by the European Commission and presented to the European Parliament and Council with the aim of feeding into the legislative debate.

You can write in any official language of the EU (including English) by a free text (4000 characters maximum) or by adding an attachment (files must be less than 5MB). Please be aware that feedback received will also be published on the site of the European Commission.

To have your say, you will need to adhere to the feedback rules and to register or login using your account here.

New Restructuring Plans under the Transposition of the EU Directive

Spain published the transposition of the Directive on Preventive Restructuring and Insolvency in its Official Gazette on 6 September 2022. The reform came into force on 26 September.

Among many amendments, Spanish law now defines only one pre-insolvency tool: “planes de reestructuración” or restructuring plans.

This tool is substituted for the two pre-insolvency tools available in Spain until now: (i) out-of-Court payment arrangements (with almost no practical use) and (ii) refinancing agreements (with limited effects, as they only allow for modification of the conditions of financial claims).

The first example: In Re Xeldist Congelados, S.L.U.

A Galician Court has recently sanctioned the first restructuring plan in In Re Xeldist Congelados, S.L.U. Regarding the affected classes under this plan, it included: (i) vendors, (ii) vendors providing new financing (in either cash or goods), (iii) some classes composed by one single or several secured creditors, (iv) some classes composed by one single unsecured creditors, (v) a secured class composed of leasing companies, (vi) tenants and (vii) financial creditors.

As not all classes voted in favour, the plan was non-consensual. It was sanctioned as it counted with the simple majority of the classes voting in favour (from which at least two were secured). The plan included interim and new financing which obtained protection from claw back actions through the Court’s sanction.

An article featuring the main characteristics of restructuring plans and how they work will feature in the Winter edition of Eurofenix.

INSOL Europe 2023 Amsterdam Congress Technical Committee

Congratulations to our INSOL Europe 2023 Amsterdam Congress Technical Committee Co-Chairs Alice van der Schee and Carmel King who have just formed their dream team Christel Dumont, Michala Roepstorff, Daniel A. Lowenthal, Enda Lowry, Antonia Mottironi, David Orsula and Noor Zetteler!

INSOL Europe 2023 Amsterdam Congress Technical Committee Co-Chairs:

Alice van der Schee, Van Benthem & Keulen, The Nerherlands / INSOL Europe Council Member / Membership Development Committee Leader
Carmel King, Grant Thornton, UK / INSOL Europe Anti-Fraud Forum Co-Chair

INSOL Europe 2023 Amsterdam Congress Technical Committee members:

David Orsula, bnt attorneys-at-law, Slovakia / INSOL Europe INSOL Tech and Digital Assets Wing Co-Chair / Country Coordinator for Slovakia
Enda Lowry, McStay Luby, Ireland / INSOL Europe Young Member
Michala Roepstorff, Plesner Law Firm, Denmark / INSOL Europe Council member / Country Coordinator for Denmark
Christel Dumont, Dentons, Luxembourg / INSOL Europe Country Coordinator for Luxembourg
Daniel A. Lowenthal, Patterson Belknap Webb & Tyler, United States of America
Noor Zetteler, Wijn en Stael Advocaten, The Netherlands / INSOL Europe Council member
Antonia Mottironi, Ardenter Law, Switzerland / INSOL Europe Young Member

The INSOL Europe 2023 Amsterdam Congress Technical Committee Co-Chairs and members will be working tirelessly to deliver an outstanding technical programme on Friday 13 & Saturday 14 October 2022! Save the date!

New Chairs for the INSOL Europe Academic Forum

We are pleased to announce that the INSOL Europe Academic Forum has a new chair – Rodrigo Rodriguez (Switzerland), assisted by deputy chair Jennifer Gant (UK).

Rodrigo Rodriguez is Professor of Civil Procedure and Insolvency Law at the University of Lucerne (Switzerland). He is also the Head of the Federal Supervisory Authority on Insolvency in Bern. Rodrigo is a long-standing member of UNCITRAL Working Group V and he has published comprehensively in the field of Swiss and International insolvency in English, German, French and Spanish. Prior to these activities he was as an attorney at law in Zurich, gaining his first experience in the insolvency field in the liquidation of the Swissair Group.

Jennifer Gant has been an active member on the board of the Academic Forum since 2015. She is currently a senior lecturer in law at the University of Derby in the UK with research interests focused on the social policy issues present in insolvency and restructuring procedures globally, an area in which she has published extensively. She is also an observer of the UNCITRAL Working Group V on behalf of INSOL Europe, is a delegate of CERIL, and is also a member of the editorial board of Eleven International Publishing’s series on European and International Insolvency Law Studies.

Rodrigo and Jenny took up their new roles at the Annual Congress in Dubrovnik (Croatia) in October, when we said goodbye to the former chair Tomas Richter (Czech Rep.) and secretary Line Herman Langkjær (Denmark). We thank Tomas and Line for their unwavering support during their difficult tenure which covered the Covid-19 lockdown period and look forward to the next 3 years with Rodrigo and Jen at the helm.

Estonia: 30 Years of the Bankruptcy Law

Amidst the snows of winter, Tartu University furnished a warm welcome for a celebration with double intent: to commemorate the 30th anniversary of the passing of the Bankruptcy Law, one of the first legislative acts of the newly independent republic, and also mark the 70th birthday of Professor Paul Varul, former Minister of Justice, its originator and designer.

(Photo Credit: Andres Tennus)

Gathered in the newly refurbished Aula, the more than a hundred attendees, drawn from academia, the judiciary and practice, witnessed a stellar programme of presentations by domestic and international speakers across the day’s proceedings, put together by the organising committee headed by Anto Kasak (Advocate and University Lecturer).

Highlights of the day included papers focused on the challenges of the Directive on Preventive Restructuring and Insolvency, including its cross-class cramdown feature, asset security models past and present, collateral in bankruptcy, enforcement and recovery, consumer insolvency and the latest revisions to legislation addressing domestic and European developments.

The history of the domestic Bankruptcy Act naturally featured, with Professor Varul charting the changes across the intervening decades since independence. His role in its inception and ensuring its continued relevance to present day practice was universally acknowledged. Rounding off the day’s proceedings was the presentation to Professor Varul of the Gold Medal of the National Association of Bailiffs with further plaudits forthcoming from the insolvency and academic worlds at the reception which followed.

Update on National Insolvency Statistics from Finland

Specialist Partner Jan Lilius from Hannes Snellman Attorneys has summarised the recent statistics in Finland on preventive restructuring proceedings, regular restructuring proceedings, and bankruptcy proceedings. In summary, the COVID-19 and the ongoing war in Ukraine have not drastically affected the number of formal insolvency proceedings filed.

The new Preventive Restructuring Proceedings were introduced in July 2022 along with the implementation of the EU Insolvency Directive. Since then, only two preventive restructuring proceedings have been filed in Q3/2022. The idea behind preventive restructuring is to enable companies facing impending insolvency to address their financial distress at an early stage when it appears likely that their insolvency can still be prevented and the viability of the business can be ensured. The objective in Finland, too, is to increase the number of preventive restructuring proceedings and hence to avoid unnecessary bankruptcies and their negative effects. Finland is also amending the domestic Restructuring Act to make restructuring proceedings more flexible and cost-efficient and to prevent the abuse of restructuring proceedings, such as filing for restructuring to delay bankruptcy. The proposed amendments are expected to come into force in the spring of 2023.

Regular Restructuring Proceedings correspond to the old restructuring proceedings before the revision of the Restructuring Act in July 2022. The number of regular restructuring proceedings filed during the pandemic has been below the average of the previous years with 331 filings in 2021 and 336 in 2020, while in 2003-2021 the average was 410 per year, the 2008 financial crisis lifting the average. The number has been decreasing year by year since 2013, but in Q3/2022 the number was 49 percent higher than in Q3/2021. In Q1-Q3/2020, there were 265 filings, in Q1-Q3/2021 242 filings, and in Q1-Q3/2022 243 filings.

The number of Bankruptcy Proceedings filed has been below the average of the previous years during the pandemic with 2,472 filings in 2021 and 2,135 in 2020, while in 2003-2021 an average of 2,617 proceeding were filed per year. In 2020 and 2021, the amount of direct corporate subsidies tripled compared to previous years, which on its part explains the lower number of bankruptcies and restructurings. On the other hand, during M01-M10/2022, 2,188 proceedings were filed, which is a little bit more than during M01-M10/2020 and 2021.

Further statistics from Finland and from all jurisdictions can be found on our website here.

Inside Story: Macedonia first EU Candidate Country to adopt Directive

North Macedonia has become the First EU Candidate Country to adopt the Directive on Restructuring and Insolvency.

In 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).

Cross-border insolvency after Brexit - where are we now?

Stefan Ramel, Guildhall Chambers, Bristol (UK), Georges-Louis Harang, Addleshaw Goddard (Europe) LLP, Paris (France) and José Carles, Carles Cuesta Abogados y Economistas SLP, Madrid (Spain) recently gave a joint presentation at the annual Guildhall Chambers insolvency seminar in Bristol (UK), which provided an opportunity to discuss the impact of Brexit on insolvency proceedings involving British entities or, more generally, the UK, specifically by reference to the comparative position in France and Spain.

The principal and well-known effect of Brexit insofar as it concerns insolvency is that, subject to some limited transitional provisions (see Article 67(3)(c) of the UK-EU Withdrawal Agreement), Regulation (EU) 2015 / 848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) no longer applies in situations involving the UK. This means that after Brexit, insolvency proceedings between the UK and Spain or France do not benefit from automatic recognition under the Recast European Insolvency Regulation. Looking at the matter from the perspective of a UK practitioner, that raises obvious issues as to how UK insolvency proceedings will be treated in France and Spain and what steps a UK practitioner can take to protect their debtor’s estate.

Although it is still, relatively speaking, early days since Brexit has fully taken effect, it is clear already that it will cause complications, delays and additional cost to a UK insolvency practitioner who has to take any sort of legal steps in France or Spain.

A full discussion of the issues will be published in the Winter edition of Eurofenix.

EECC Conference 2023: The Survival Toolkit you must not miss!


Plans are now well under way for the return of our EECC Conference, to be held in Vilnius, Lithuania, on 19 May 2023. The theme will be '2023 Restructuring and Insolvency Practitioners Survival Kit'. An optional drinks reception will be held on the eve of the conference to welcome the delegates to the beautiful city. Look out for more details coming soon on our website.

More dates for your diary in 2023 coming soon!


As well as the return of our EECC Conference in May 2023, and our Annual Congress in Amsterdam in October 2023, we are planning a wide programme of events in conjunction with partners such as R3, IPA and AIJA. Watch out for news updates coming soon!

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.

INSOL Europe, PO Box 7149, Clifton, Nottingham. NG11 6WD

www.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.