INSOL Europe’s Insolvency Office Holders (IOH) Forum conducted a survey from December 2015 to May 2016, which was presented to the European Commission, DG Justice in July 2016 by the Co-Chairs of the Insolvency Office Holders Forum: Marc André, France, Daniel F. Fritz, Germany and Stephen Harris, United Kingdom
The survey “
REPORT ON THE REGULATION OF INSOLVENCY OFFICE HOLDERS FINAL VERSION FOR WEBSITE” and a Summary ”
IOH Exec Sum Report INSOL Europe July 2016“ including: “
Insol Europe Survey - Annex 2” including actual recommendations for Minimum Standards was conducted amongst selected members of INSOL Europe with relevant practical experience either as insolvency office holder (“IOH”) or professional with broad experience in insolvency and/or restructuring matters. Responses could be collected in the meantime covering 22 European jurisdictions.
The questionnaire sent to the respondents is available here “
INSOL Europe officeholder survey Jan 2016”.
Annex 2, which is available here: “
Insol Europe Survey – Annex 2” is including a one-page tableau for easy reference and overview, highlighting the key findings, key observations, but key difference of each jurisdiction reviewed.
Having reviewed the answers and based on their own experience the Co-Chairs of the IOH Forum want to highlight as introduction the following key observations that should always be borne in mind when reviewing or assessing the situation of IOHs across Europe:
- Compared to other similar professionals like lawyers and accountants the profession is quite small but must deal with a wide range of cases ranging from over-indebted consumers ranging to multi-national groups of companies with turnovers of billions of Euros.
- The profession falls largely on individuals, often with close nexus to the court, or exercising quasi judicial functions.
- IOHs are working with entities, entrepreneurs at the cusp of viability, thus, at moments of tension and stress.
- They are tasked with making difficult and far reaching decisions, often in very short time frames.
- They are exposed to personal liability.
- IOHs are practising in many different models, and come from different backgrounds.
- IOHs largely form sophisticated professional bodies, but variations do exist.
The snapshot of this survey does not and was not intended to capture how the profession works in each jurisdiction, nor the glue that helps it function. Nor the role of the profession nor its direction of travel or evolution in each jurisdiction or economy, either in terms of addressing the NPL issue that is prevalent in certain parts of Europe or as a stepping stone to live side restructuring techniques. Nor in terms of fueling good practice or effective economic change. Showcasing these important issues would be another task to perform and a vital prerequisite to fully understand the profession before thinking of changes or the introduction of additional rules.
As a key result we understand that nevertheless the professions works on various similar standards but always under sensitive circumstances. It must be stressed that even if the same principles are overlapping for certain jurisdictions, they are then again totally differing in other countries reviewed.
Reccommendation
As a consequence, the IOH Forum is not deeming the profession fit and ripe for introducing narrow and all too common minimum standards or principles – and this in particular based on the constant changes of the insolvency framework based on law reforms and changes of the market and economic climate overall which is already challenging the profession and therefore the functioning of the insolvency system. It must be understood that in some jurisdiction IOHs can look back on long lasting traditions and evolution lines whereas in other jurisdiction the concept of an IOH not just working as a liquidator and distributor of assets is quite a new phenomenon.
However, the IOH Forum would deem it extremely helpful to enhance the approximation of the professions by the professionals themselves. Any assistance to facilitate exchange of knowhow, best practice standards and generally knowledge exchange, e.g. by means of peer reviews and the possibility to earn CPE points not only in the respective home jurisdiction but across the EU would be extremely helpful, indeed welcomed and would automatically lead to the desired harmonization on the long run, but just not on top down approach but by a real bottom up evolution including the affected professionals and not by imposing rules that might even affect the well-functioning of this sensitive area of the whole capital market.
While the survey and this summary report were finalized the IOH forum was provided with the “Study on a new approach to business failure and insolvency, Comparative legal analysis of the Member States’ relevant provisions and practices (Tender No. JUST/2014/JCOO/PR/CIVI/0075)“ by Leeds University with regards to IOHs making reference to an assessment by the EBRD, namely the “
Assessment of Insolvency Office Holders: Review of the Profession in the EBRD region” (2014).
Based on the IOH forum’s own research certain general principles of the Leeds Study are applicable in all covered jurisdictions and are commonly used for certain topics concerning IOHs. If, what the IOH forum is not fully in agreement with, minimum standards should be imposed on the profession, the diversity must be seen and acknowledged for various other aspects, however.
Therefore, any further assessment of general principles and as a consequence common minimum standards - as far as developed in accordance with the reality of the profession and based on thorough assessments including the affected professionals and organizations duly representing the profession - are highly appreciated. But in any event all such minimum standards must be double checked by the reality, the actual daily work and circumstances of the profession and insofar with respect to the relevant topics they should cover.
Now, while certain of these eight rules as set out above are matching such reality test as well by the observations as set out in the survey undergone by the IOH forum very well, other principles are neglecting relevant facts and are not in compliance with the actual situation in certain European jurisdictions.
Generally supporting harmonization by means of approximation we therefore would recommended to use these rules as minimum standards only in a revised version. For this purpose we have commented and revised these “rules” in Annex 3 and are recommending to considering the eight rules in this amended version as a potential set of minimum standards as consolidated and set out in Annex 4 – Minimum Standards as proposed by the IOH-Forum.
During the Panel Session of the INSOL Europe Conference in Cascais, Portugal 2016, the attending members of INSOL Europe are invited to vote in the Minimum Standards on IOHs as proposed by the IOH Forum. After this test the proposed Standards might be published here.