The Insolvency Office Holders Forum will take place on Thursday 4 October at 4pm at the Athens Congress venue. If you would like to attend the meeting, please contact Caroline Taylor.

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2016 News Update

 
The Insolvency Office Holders Forum of INSOL Europe (“IOH Forum”) now enters its third year. It is co-chaired by three insolvency practitioners, Daniel Fritz (hww hermann wienberg wilhelm), Marc André (representing the Conseil National des Administrateurs et des Mandataires Judiciares, “CNAJMJ”) and Stephen Harris (Ernst Young). The forum was established to consider matters that are of immediate interest to insolvency officeholders. The European parish comprises one of the globe’s significant economic trading areas and provides a very rich tapestry in terms of its formal insolvency process, both historically and currently. Indeed, Europe may be the very cradle of the insolvency practitioner as he or she is recognised today.
 
It has been a busy year for the IOH Forum. At the Berlin Congress in October 2015, all attendees recognised that the spectrum of issues facing insolvency officeholders is quite broad, and we set about identifying core topics worthy of attention. A thumbnail survey was launched across the EU, in January 2016, drawing responses from INSOL Europe’s members in 23 European jurisdictions – broadly painting the shape of the profession. The survey and details of contributors can be accessed here. The profession is extraordinarily diverse at a superficial level. Yet at the core are individuals who comprise a minority profession.
 
The INSOL Europe survey coincided with the EC commencing a further round of consultation on insolvency reform and harmonisation in the EU. The focus of the EU consultation has been on the role of “pre-insolvency proceedings”, which, in conjunction with the recast regulations, are expect to play a role in addressing the excess of NPLs in Europe. The EC has also had an eye to the profession itself in this round of consultation. Who knows the destiny of the profession in Europe – we can but speculate. And we can influence for the good.
 
The co-chairs of the Insolvency Office Holders Forum were of like mind – we should put forward a point of view to the EC. And we have done so. At the core of the reasoning is the tiny nature of our profession and the crucial role it has in the efficient marriage of capital and assets at the margins of viability (thus, where the losses are sustained). It is, in workforce terms, utterly miniscule. It comprises a fraction of minority professions, accountants and lawyers, individuals prepared to contemplate exposure to personal liability, from diverse backgrounds, dealing with corporates (and sometimes individuals) at moments of great tension, often exercising quasi-judicial functions. The tool box at the disposal in each jurisdiction varies enormously, as do the cultural norms against which officeholders operate. Thus, in order to provide a steer and promote some common good which is likely to be self-fulfilling and of benefit in the European context we have recommend to the EC a concept of minimum standards, and that regulation of the profession be set at national levels. Almost drawing upon the concept (for those old enough to recall) of “subsidiarity”.
 
We were forced, by virtue of time constraints, to promote a point of view without testing on the membership. That said, when we tested our recommendations on the conference gathering in Portugal we found overwhelming support. The recommendations covered the following areas and the full topic and poll result can be found here. 
-    Licensing and registration
-    Regulation, supervision and discipline
-    Qualification and training
-    Appointment systems
-    Work standards and ethics
-    Legal powers and duties
-    Transparency
-    Remuneration
 
Where next? At the annual gathering of the IOH Forum there was a lively debate of candidate topics. In next six months the IOH Forum is to look in depth at three topics: “Independence”, “Transparency” and “Fairness in Formal Proceedings”. The EC is as informed as we and other relevant organisations are prepared to inform.
 
A very big thanks to our sponsors Edwin Coe and the CNAJMJ. Without their thoughtful sponsorship the EC would not be so well informed. 
 
Stephen Harris

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It started with a Poll – INSOL Europe’s Insolvency Office Holders Forum gets started in Berlin

by Stephen Harris (Ernst Young, London) and Daniel F. Fritz (hww hermann wienberg wilhelm, Frankfurt am Main)

After being inaugurated last year, the Insolvency Office Holders (“IOH”) forum enjoyed two events at the Congress in Berlin. First the inaugural session of the forum and second a panel session in the main conference. Both events helped to shape the forum in order to assist the profession in times of change.
 

Inaugural meeting

The inaugural session of the forum co-chaired by Marc André (France), Stephen Harris (UK) and Daniel F. Fritz (Germany) commenced with the welcome news of sponsorship for the forum from the law firm Edwin Coe LLP (www.edwincoe.com). The sponsorship is for a three-year period and we are all grateful to Simon Gilchrist.

A forum with a blank sheet of paper presents opportunities. And as it was the general theme of the Berlin conference “Innovation and Harmonisation” will truly have an impact on the IOH profession across Europe. Having this in mind various members from Germany, Ireland, Italy, Bulgaria, Spain, The Netherlands, France, Luxembourg and the UK quickly coloured in the certain of these blank areas.

Matters of concern to the members include regulation (both an excess and an insufficiency), appointment methodologies, minimum standards of expertise, insurance for officeholders, access to markets and cross border co-operation. Add to that a concern that certain legislators may be out of touch with those at the coal face, and there is plenty to think about here. One of the likely outcomes of the inaugural meeting will be the commissioning of a review of the regulatory framework across member states, as a consolidation of the factual matrix within which members operate. The survey will be initiated soon and shall help to learn more about diversity, common ground and actual needs of the professionals.

Interactive Poll

In addition, the main conference hosted a presentation from the Insolvency Office Holder Forum on the theme of “Guidelines, protocols, law reforms and harmonisation – how does it suit you?” Here, an interactive poll was conducted and moderated by the co-chairs Stephen Harris, Daniel F. Fritz and former President of INSOL Europe Jim Luby.

The results speak best for themselves and can be downloaded here:
IOH Poll QA Results (PDF)
IOH Poll QA Results (PowerPoint)

Now the chairs of the forum will evaluate the results and come up with ideas how to serve the members on the basis of the wishes and needs of the membership, expressed in this poll.
 

Further support

And finally, but not least, the forum was informed of some further support from the Conseil National des Administrateurs Judiciaires et des Mandataires Judiciaires (www.cnajmj.fr), for which we are most grateful and through such generous support, will enable the forum to play an increasingly active role. 
 

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.

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