Inside this Topic Guide
There is no universal insolvency law. There are various frameworks in place to determine whether a particular court has jurisdiction to commence proceedings and which law is to govern those proceedings. It is also possible for there to be more than one insolvency or restructuring process in respect of the same entity, taking place in different jurisdictions. In addition, there are no bespoke provisions at present to deal with groups of companies. Matters become more complicated where companies in the same group are located in different jurisdictions and as a result it is possible that each company in a group may be subject to a separate insolvency process or restructuring process or indeed more than one process in various jurisdictions.
In order to regulate cross border insolvencies, there are various frameworks which facilitate recognition and co-operation amongst courts in relation to insolvency proceedings. From the English law perspective, the relevant legislation and court practice are derived from the following:
- Recast EU Regulation on Insolvency Proceedings (Regulation (EU) 2015/848), which applies from 26 June 2017 and replaces Regulation (EC) No 1346/2000;
- CBIR – Cross Border Insolvency Regulations 2006;
- Insolvency Act 1986 – s. 426; and
- Common law principles of comity.
There are also special regimes that apply to certain types of entities in the context of cross border insolvency. We limit the materials on this site to a consideration of:
- Credit Institutions; and
Recognition in England & Wales of insolvency proceedings taking place elsewhere can be achieved in a number of different ways. The two key considerations to take into account are:
(i) the entity type which is subject to a foreign process, and
(ii) the jurisdiction where the insolvency process has been commenced.
The responses to these questions will indicate which piece of legislation is applicable.
Recast EU Regulation on Insolvency Proceedings
Level 1: EUIR
- Recast EU Regulation on Insolvency Proceedings (Regulation (EU) 2015/848) - applies from 26 June 2017
- Regulation replacing Annexes A and B to EUIR (Regulation (EU) 2018/946)
The Recast Regulation replaces the EU Regulation on Insolvency Proceedings (Regulation 1346/2000) from 26 June 2017 is intended to improve the efficiency and effectiveness of cross-border insolvency, benefit creditors and debtors, facilitate the survival of businesses and present a second chance for entrepreneurs.
The Recast Regulation (like its predecessor) applies to companies, partnerships and individuals. There are some exceptions which are insurance undertakings, credit institutions, investment undertakings which hold funds/securities for third parties and collective undertakings. The geographical scope of the Recast Regulation extends to debtors whose centre of main interests ("COMI") is located in the EU (except Denmark). The Recast Regulation has direct effect and pre-insolvency and insolvency proceedings which are listed by country in Annex A to the Recast Regulation are given automatic effect by virtue of the Recast Regulation throughout the EU. Primary jurisdiction for insolvency proceedings belongs to the member state where the debtor has its COMI. In the case of a company and in the absence of proof to the contrary, this is where the registered office is located (the presumption cannot be relied upon if the registered office has been moved within 3 months of the commencement of the proceedings); proceedings commenced in this respect are known as main proceedings and encompass all of the debtors' assets in the EU. The types of main proceedings, which include rescue and reorganisation type proceedings, are listed in Annex A to the EUIR. Territorial or secondary proceedings can be commenced in a place where a debtor has an establishment (a place of operation where there is non-transitory economic activity carried on with human means and assets). Territorial and secondary proceedings are limited to the assets of the debtor in the Member State where it has an establishment but they too can be any type listed in Annex A. Generally speaking, the governing law of the main insolvency proceedings determines its effects throughout the Member States, although there are general exceptions which include (amongst others) rights in rem, set-off, ROT clauses and rules relating to payment systems. The purpose of these exceptions, broadly speaking, is to protect existing contractual arrangements from the effects of the insolvency which are carried out in other Member States. The nature of the Recast Regulation not only means that the English courts will recognise insolvency proceedings commenced in fellow EU Member States, but also that other EU Member States will recognise English insolvency proceedings and give effect to them without further formality.
The key changes include:
- further clarification on jurisdiction and the concept of centre of main interest (COMI) to increase legal certainty;
- new rules relating to secondary proceedings and specific guidance on the circumstances under which they may be postponed or refused;
- establishment of interconnected insolvency registers via the European e-Justice Portal to enhance access to information and prevent the opening of parallel proceedings; and
- a new framework of procedural rules for insolvency proceedings concerning different entities within a group of companies.
The Regulation entered into force on 25 June 2015 and applies directly in Member States from 26 June 2017.
Original proposals: proposed Regulation amending Council Regulation (EC) No 1346/2000 on insolvency proceedings | Press release | Speech | Q&A - "Towards a new European approach to business failure and insolvency" | European Parliament Procedure file
Level 2: implementation
Commission Implementing Regulation (EU) 2019/917 of 4 June 2019 establishing technical specifications, measures and other requirements required for the system of interconnection of insolvency registers in accordance with Article 25 of Regulation (EU) 2015/848 of the European Parliament and of the Council
- Insolvency Amendment (EU 2015/848) Regulations 2017 (SI 702/2017) | Explanatory memorandum | Government note on recast EUIR
- EU Regulation on Insolvency Proceedings (Regulation 1346/2000) - Consolidated version as at 2014 | Original version
Statutory amendments arising from a Brexit no deal scenario
The European Union (Withdrawal) Act 2018 provides for domestication of most EU law and grants powers to the UK government to correct deficiencies in this "retained EU law" arising from the UK's withdrawal from the EU. In exercise of those powers,
- the Insolvency (Amendment) (EU Exit) Regulations 2019 (2019/146) have been made. The SI repeals the majority of the retained EUIR and makes consequential changes to other legislation. An explanatory memorandum has been published; and
- the Insolvency (Amendment) (EU Exit) (No. 2) Regulations 2019 (2019/1459) have been made. The changes made are intended to reflect a change in exit day to 31 October 2019 and arise from the introduction of the new Scottish Insolvency Rules and the entry into force of Article 25 of the EUIR. The SI revokes Article 25 of the EUIR in order remove an obligation to integrate UK insolvency registers with the EU. An explanatory memorandum has been published.
This forms part of the UK government's contingency planning for a 'no deal' Brexit and the draft Regulations are intended to ensure the UK has a functioning statute book in a 'no deal' scenario. In the event that agreement is reached between the UK and the EU and the Withdrawal Agreement comes into effect, these Regulations may be further amended (including during the agreed transitional period until the end of 2020) to reflect any future relationship between the UK and the EU. For further information, please see the Brexit Topic Guide.
- Wiemer & Trachte GmbH, in liquidation v Zhan Oved Tadzher  CJEU C-296/17 (14 November 2018 - Article 3(1) provides exlusive jurisdiction in relation to set aside transaction in an insolvency
- Virgilio Tarrago da Silveira v Massa Insolvente da Espirito Santo Financial Group SA CJEU C-250/17 (6 June 2018 - lawsuit pending)
- Vinyls Italia SpA, in liquidation v Mediterranea di Navigazione SpA CJEU C-54/16 (8 June 2017 - decision on Article 13 of the EUIR)
- Nike European Operations Netherlands BV v Sportland Oy (in liquidation)  EUECJ C‑310/14 (15 October 2015 - decision on Article 13 of the EUIR)
- Comité d'entreprise de Nortel Networks SA v Rogeau  C-649/13 (11 June 2015 - considered EUIR Articles 2(g), 3(2) and 27)
- Hermann Lutz v Elke Bäuerle  EU ECJ C-577/13 (16 April 2015 - considered Article 13 - detrimental acts)
- Burgo Group SpA v Illochroma SA and Jérôme Theetten  C-327/14 (4 September 2014 - meaning of establishment and secondary proceedings)
- Christian Van Buggenhout and Ilse Van de Mierop v Banque Internationale à Luxembourg  C-251/12 (Court of Justice of the EC ("ECJ") clarified the meaning of "for the benefit of a debtor" in Article 24 of the EC Insolvency Regulation.)
- Re Christianapol sp.zo.o  C-116/11 (The ECJ clarified the interpretation of Regulation 1346/2000, in particular, the rules governing the opening of secondary proceedings.)
- ERSTE Bank Hungary v Magyar Állam  C-527/10. (Considers whether Article 5(1) of the EUIR is applicable in the context of civil proceedings concerning the existence of a right in rem.)
- F-Tex  C-213/10 (EUIR and Judgment Reg)
- Interedil Srl  C-396/09 (COMI and establishment)
- Zaza Retail  C-112/10 (Conditions for opening territorial proceedings)
- Rastelli Davide e C Snc v Jean-Charles Hidoux  C-191/10 (Mixed property & COMI)
- MG Probud Gdynia sp. z o.o. 0  C-444/07 | Press release
- German Graphics Graphische Maschinen GmbH v Schee  C-292/08 (Application of the law of the Member State of the opening of proceedings.)
- Seagon v Deko Marty Belgium NV  C-339/07 (Preliminary ruling on the international jurisdiction of the courts to set aside transactions by virtue of insolvency.)
- Staubitz-Schreiber  C-1/04 (Considered the effect of moving COMI to another Member State after request to open proceedings in first Member State.)
- Eurofood: Advocate General's Opinion  C-341/04 |ECJ Judgment  C-341/04 | Irish Supreme Court judgment (What constituted the opening of insolvency proceedings within the meaning of Regulation 1346/2000 and which national court had jurisdiction to open main insolvency proceedings.)
- Tchenguiz & Ors v Kaupthing Bank HF & Anor  EWCA Civ 83 (03 March 2017)
- Trustees Of Olympic Airlines SA Pension & Life Assurance Scheme v Olympic Airlines SA  UKSC 27 (29 April 2015 - considered the meaning of "economic activity" and "establishment" in EUIR)
- Trillium (Nelson) Properties Limited v Office Memo Limited  EWHC 1191 (Ch) (Establishment.)
- Olympic Airlines SA Pension and Life Assurance Scheme v Olympic Airlines SA  EWHC 1413 (Secondary proceedings.)
- Westwood Shipping Lines Inc and another  EWHC 1394 (Opening of proceedings.)
- Eurodis Electron plc and others  EWHC 1025 (Ch) (Breaches of EUIR jurisdiction.)
- Alitalia Linee Aeree Italiane SpA  EWHC 15 (Ch) (Main and secondary proceedings.)
- Polymer Vision  EWHC 2951 (EUIR and Judgments Reg.)
- Re Rodenstock GmbH  EWHC 1104 (Ch) (The Court held that the EUIR was not intended to limit its ability to sanction a scheme of arrangement for a German company. PLC have prepared a case summary)
- Hellas Telecommunications (Luxembourg) II SCA  EWHC 3199 (Ch) (see client briefing) (Administration orders and pre-pack sales.)
- Syska (acting as the administrator of Elektrim SA (in bankruptcy)) and another v Vivendi Universal SA and others  EWCA Civ 677 (Effect of insolvency on arbitration.)
- Re Nortel Networks SA and other companies  EWHC 1482 (Ch) (Opening of secondary insolvency proceedings.)
- Merrill Lynch International Bank Ltd v Winterthur Swiss Insurance Co  EWHC 893 (Comm) (The High Court held that the institution of French law safeguard proceedings constituted a bankruptcy event under the ISDA Master Agreement.)
- Hans Brochier Ltd v Exner  EWHC 2594 (Ch) (Companies and the transfer of COMI.)
- Re Collins & Aikman Europe SA and other companies  EWHC 1343 (Ch)
- Ratten and another v Ultra Vehicle Design Ltd and another  EWHC 3415 (Ch)
- Re Ultra Motorhomes International Ltd  EWHC 872 (Ch)
- Shierson v Vlieland-Boddy  EWCA Civ 974 (Individuals and the transfer of COMI.)
- Re 3t Telecom Ltd  EWHC 275 (Ch)
- Mazur Media Ltd v Mazur Media Gmbh  EWHC 1566 (Ch)
- Brac Rent-a-car International Inc  EWHC 128 (Ch) (Insolvency Regulation applies to companies incorporated or registered outside of the EU, but with their COMI in a Member State.)