In the case of Wilson v McNamara [2020] EWHC 98 (Ch) the High Court of England and Wales (the Court) considered whether the EU principle of freedom of establishment requires that a pension held in another EU member state (Ireland) should be excluded from a bankruptcy estate under UK law in the same manner as a UK pension would be in a UK bankruptcy. Mr Justice Nugee decided in order to decide the case the Court needed to refer a preliminary reference to the European Court of Justice (CJEU) on a question of EU law.

El tribunal de un Estado miembro que conoce del procedimiento de insolvencia tiene competencia exclusiva para conocer de las acciones revocatorias ejercitadas dentro del mismo

Sentencia del Tribunal de Justicia de la Unión Europea de 14 de noviembre de 2018

In the context of globalisation, companies are often active not only in the country of incorporation but also in several other legal systems. If a company fails, there is a need for rules that make the insolvency proceedings predictable. In the EU there are two current regulations1 to take into account, one applicable before and one after 24.06.2015.

Cross-border insolvency in the EU

A common experience of most European insolvency law systems is the legislators‘ constant swinging backwards and forwards in their attempts to find a balance between the interests of the creditors (which inspired the legislator when insolvency laws were enacted for the first time in1942 in Italy) with those of the debtor and its owners, as well as the need to protect jobs and rescue viable businesses for the benefit of the economy as a whole. The first Italian insolvency law was enacted in 1942, and was modelled on the German Konkursordnung.

The Italian Government has been delegated to enact a comprehensive restatement of the whole set of rules of insolvency procedures, with specific innovative addresses regarding (to mention only the most important) the concordato preventivo procedure, venue rules, an out-of-court mediation alert process to timely address a risk of insolvency, new forms of security and a streamlined set of priorities among creditors

Introduction

Regulation 2015/848 of the European Parliament and of the Council of 20 May 2015

With commercial activities increasingly having an impact across borders in the European market, it has become increasingly necessary to introduce supranational legislation to regulate those activities. In particular, there is a need to make cross-border insolvency proceedings convenient, consistent, effective and efficient across Europe.

The pre-pack procedure is not having an easy time of it. In a previous blog, we reported that the advocate general of the European Court of Justice (ECJ) had concluded that the Dutch pre-pack procedure cannot be regarded as bankruptcy or liquidation proceedings, and that the provisions for transfer of undertaking therefore also apply to pre-packs. The ECJ has now confirmed his standpoint.

Restructuring an international group of companies in Europe continues to be challenging. While companies can transact business freely across European borders, coordination between the stakeholders involved in a cross-border restructuring has proved to be difficult. The cross-border restructuring of a corporate group is often complicated by a multitude of individual liquidation proceedings spread throughout the various countries in which the group is active.

On 29 March 2017, Advocate General Mengozzi rendered his opinion to the EU Court of Justice in the landmark case regarding the Estro pre-packed bankruptcy.

Pre-pack continues to be a hotly discussed topic. The term refers to when entrepreneurs who expect to go bankrupt request the courts to appoint a receiver to look into the possibility of a restart following bankruptcy. Courts vary as to their standpoint concerning the acceptability of applying the pre-pack method. The purpose of the proposed Continuity of Businesses Act I (WCO I) is to put an end to such uncertainty and to enshrine pre-pack in law.