New regulation on insolvency proceedings from June 2017
In May 2015 the European Parliament and the Council of the European Union had adopted the new regulation No. 2015/848 on insolvency proceedings, which entered into force on 26 June 2017. The regulation targets to facilitate debt recovery in cross-border insolvency proceedings, and to make it easier for businesses to restructure and for creditors to get their money back. The rules also aim at resolving the conflicts of jurisdiction and laws in cross-border insolvency proceedings and ensuring the recognition of insolvency-related judgments across the EU. According to the new provisions, the modern and efficient types of national restructuring proceedings could be used in cross-border cases as well.
The new rules include safeguards against “bankruptcy tourism” in a way that the competent court will have to carefully check whether the debtor is not aiming to take advantage of more lenient bankruptcy rules, i.e. not acting as a “bankruptcy tourist”. Thanks to the new regulation, the so-called secondary proceedings (proceedings opened by courts in an EU country other than the one where the company’s registered office is based) will be avoidable, which will ease to restructure companies in a cross-border context. The regulation introduces the group insolvency proceedings and (by 26 June 2019) the EU-wide interconnection of electronic national insolvency registers, which will facilitate to obtain information on insolvency proceedings in other EU countries.