UNCITRAL's Working Group V (Insolvency Law), in its 55th session, made huge progress and now also completed its work on the Draft Guide to Enactment of what is expected to become the UNCITRAL Model Law on Enterprise Group Insolvency. Both the Draft Model Law and the Draft Guide to Enactment were submitted to the UNCITRAL Commission for finalisation and adoption in its next session. States will be invited to incorporate the Model Law into their national laws with the purpose to equip them with modern legislation addressing the domestic and cross-border insolvency of enterprise groups. 

This Model Law, like the Model Law on recognition and enforcement of insolvency-related judgments adopted in the last session, is also designed to complement the existing 1997 UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) and the UNCITRAL Legislative Guide on Insolvency Law, in particular its part three. Legislation based on the MLCBI has been adopted by many jurisdictions, including certain of the EU Member States: United Kingdom, Poland, Slovenia and Greece. 

Further, the Working Group continued to discuss a draft text on a simplified insolvency regime for micro, small and medium-sized companies and suggested revisions to the text as well as inter-sessional informal consultations in order to progress with this project.

Finally, the Working Group discussed two proposals for possible future work. The proposal of the European Union on harmonizing applicable law in insolvency proceedings received large support recommending the Commission to take this up and allocate the project to Working Group V. As regards the proposal of the United States of America on asset tracing and recovery the Working Group recommended to hold a colloquium on whether the work should be taken up and with which scope.

INSOL Europe was honoured to have been invited to send a delegation to the 55th session which was held in May 2019 in New York. Our delegate, Florian Bruder of DLA Piper, will provide a more detailed update on the session, including a summary of some of the key points discussed among the States regarding the new Model Law on Enterprise Group Insolvency and the respective Guide to Enactment in the next issue of Eurofenix. 

Further information on UNCITRAL Working Group V

Late June saw the annual outing by the Deutscher Anwaltverein (DAV) in Brussels at their 8th European Insolvency and Restructuring Congress, co-sponsored for the second year running by INSOL Europe. Paul Omar reports for INSOL Europe.

Thursday 27 and Friday 28 coincided with a Europe-wide heatwave, sending temperatures soaring into the high 30s and low 40s. In Belgium, the airconditioned confines of the Stanhope Hotel helped keep the 80 speakers and delegates cool, though the items on the agenda were just as hot as the external temperature, the two key items on the programme being the recently adopted Preventive Restructuring Directive (2019/1023) (PRD) and the almost eternal question of Brexit.

Leading off the debate on the PRD, outgoing EU Commissioner Vera Jourova thought the text a singular achievement with a coordinated European approach being all the more necessary in the face of US and Chinese aggressive behaviour on the markets. Though full harmonisation is unlikely to be achievable, the Commissioner thought that Member States still needed to review the stigmatising focus of traditional European approaches. Joining in on the future of European initiatives in insolvency, Salla Saastamoinen (DG Justice) brought attention to the influence of the EU on the work of UNCITRAL in the field of conflict of laws, perhaps even leading to a recommendation to Member States to adopt the Model Law.

The focus of the morning panel was on how Member States should approach the process of adopting the PRD, Commissioner Jourova having warned against gold-plating the text to avoid complicating the simplicity of the text and its purpose. Salla Saastamoinen suggested that the main result of the PRD being adopted was to offer Member States a further tool for the toolkit, one that should prove useful. Members of the panel also contributed views on how French law will adapt to the PRD and how Denmark will fare as an outsider to these initiatives.

The Thursday afternoon workshops divided the delegates up into two groups, one hearing practical experiences with the Recast European Insolvency Regulation, the other focusing on the thorny issue of Brexit and its impact on cross-border restructurings. In the Brexit workshop, Andrew Shore (UK Insolvency Service) outlined some of the challenges facing the country with not only Brexit and possibly adapting to the loss of one of the many cross-border regimes, but also due to changes being signalled to domestic law. Key issues for the Government are how to continue to promote rescue of business and employment, while reducing the risk to efficiency of cross-border instances. Members of the panel helped illustrate this by analysing the Gibbsrule and the impact on selected industries in the absence of a dedicated framework for cross-border restructurings with Europe.
 
Friday dawned equally hot on the temperature plan, while news came in that the UK Supreme Court had declined leave to appeal in Gibbs, thus preserving the effect of the rule, absent any legislative intervention. Summaries of the workshops were delivered to conference before the morning panel embarked on an exploration of how the PRD will be implemented across Europe. Members of the panel contributed comparisons between existing pre-insolvency procedures in selected European jurisdictions, with a particular focus on the position in the Netherlands, Spain and Germany, where Ben Dany (German Ministry of Justice) informed the audience a new minister had just taken up the portfolio and would be determining the timeline for the implementation process once the transposition period begins in late July.
 
Wrapping up the morning, Lucas Kortmann (Resor) delivered his annual summary of the caselaw of the Court of Justice, looking at the recent cases on scope: Wiemer und Trachte (14 November 2018), NK/Fortis(6 February 2019); TUPE: Plessers(16 May 2019) and a curiosity in the area of clawback: Feniks/Azteca (4 October 2018), which has excited some debate. This was followed by the final panel involving a novel approach to looking at the international insolvency framework through the eyes of the stakeholders, using a number of arresting visuals to illustrate the diversity of potential players and views, all of which have an impact on the outcomes of any restructuring process. A roundup of practice changes that may occur after Brexit saw Jennifer Marshall (Allen and Overy) deliver a talk on the changing identities and roles of lenders and other financing bodies with increasingly complex financial structures continuing to pose essential questions on governing laws, especially the choice of restructure jurisdictions to have the benefit of cram-down and recognition in all affected jurisdictions. With a short envoi from conference chairs, the Brussels event then came to a close.

Photos by Andreas Burkhardt

On 6 June 2019 the European Council formally adopted 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 (directive on preventive restructuring frameworks). 

The formal vote of the European Council marks the end of the legislative procedure after the Directive Proposal was adopted by the European Commission on 22 November 2016. The directive on preventive restructuring frameworks will now be formally signed and enter into force on the twentieth day following its publication in the Official Journal of the European Union. The Member States will then be required to transpose the directive’s provisions into their respective legal systems within two years of its entering into force at the EU level. Member States that encounter particular difficulties in implementing this Directive will be able to benefit from an extension of a maximum of one year.
 
The directive on preventive restructuring frameworks provides a high degree of flexibility to Member States to adapt the new legislation to their existing frameworks. It is hoped that Member States will not sacrifice the rescue culture, a key driver behind the directive, by choosing to implement the minimum standards proposed in the directive.
 
Please consult the text of the directive here: https://data.consilium.europa.eu/doc/document/PE-93-2018-INIT/en/pdf

Report by Emma Inacio, INSOL Europe Technical Officer
We are delighted to announce that INSOL Europe was invited to hold a panel at the III International Insolvency Forum which took place during the Annual St Petersburg International Legal Forum (SPBILF) from 15 to 17 May 2019. The III International Insolvency Forum is one of the conferences organised under the aegis of the Annual SPBILF, founded in 2011, which is organised under the auspices of the President of the Russian Federation and the Ministry of Justice of the Russian Federation, and attended by circa 1400 delegates including representatives of international organisations.

On Thursday 16 May, Evert Verwey (co-chair of the INSOL Europe EECC) and Emmanuelle Inacio (co-chair of the INSOL Europe High-Level Course on Insolvency) co-moderated the INSOL Europe panel session devoted to the implementation of a rescue culture. The panellists invited to join the INSOL Europe panel were Christina Fussi (Co-Chair of the Insolvent Financial Institutions Subcommittee of the IBA Insolvency Section), Carrie-Ann James (Vice-President of the Insolvency Practitioners Association), Edward Olevinsky (head of the Advisory Council of the Russian Union of Self-Regulated Organizations of Arbitration Managers) and Artur Trapitsyn (member of the Board of the Russian Union of Self-Regulated Organizations of Arbitration Managers and chairman of the Self-Regulated Organization of Arbitration Managers "Merkuriy").

After a presentation of INSOL Europe, the panel took the form of a discussion where the participants identified the main elements of the pre-insolvency procedures in their own jurisdictions and presented the future directive on preventive restructuring frameworks as an opportunity to seize not only to harmonise the rescue culture in the European Union but beyond, which was greatly welcomed by our Russian hosts.

INSOL Europe was proud to be present at the 2018 and 2019 SPBILF which has emerged as a foremost international platform for discussing a broad range of urgent questions confronting the contemporary international community of legal professionals.
 

We are delighted to announce that registration for our Annual Congress in Copenhagen, Denmark, from 26-29 September 2019 is now open.  [Read more]