Summary and implications

Almost exactly one year on from the Order* coming into force, many people remain unaware that it is no longer possible to appoint an administrative receiver over an overseas incorporated company.

Lenders and indeed insolvency practitioners should be aware that this is the case even when dealing with qualifying floating charges created before 15 September 2003 but alternative strategies, including administration, may be pursued to the same effect.

Administrative receivership

 Summary

In its communication on an EU framework for crisis management in the financial sector dated 20 October 2010, the European Commission set out several major legislative proposals aimed at preventing a repeat of the recent bank failures that necessitated significant state aid.

The Commission is consulting on the application of the current Community guidelines on State aid for rescuing and restructuring firms in difficulty. It has provided Member States and other interested parties with a questionnaire, on which it asks for responses by 2 February 2011.

The Commission is consulting on the details of a framework for dealing with failing banks. Following October's Communication on a crisis management framework, the Commission wants to make a legislative proposal on technical measures for dealing with relevant institutions in summer 2011. The consultation looks at how to give authorities across the EU powers and tools to restructure or resolve all types of institutions in crisis. It covers:

On 6 January 2011, the European Commission (the “Commission”) published a consultation paper on the technical details of a possible EU framework for bank recovery and resolution (the “Consultation Paper”).1 The paper follows the communication from the Commission dated 20 October 2010 on an EU framework for crisis management in the financial sector (the “Communication”).2

On 22 February the European Council published guidelines for the rescue and restructuring of financial institutions. The objective of the initiative is to maintain a level playing field between member states granting state aid measures for the rescue and/or restructuring of a financial institution in difficulty.

Does the German restructuring clause of Sec. 8c para. 1a CTA (see our Client Alert of 10 July 2009) conform to European Community law? This will be analyzed by the European Commission which has — by circular of 24 February — announced the initiation of a formal examination procedure (Art. 108 para. 2 TFEU, former Art. 88 para. 2 of the EC Treaty). Already before completion of the formal procedure, corporations with unrestricted and restricted tax liability in Germany may face farreaching consequences.

A. The Restructuring Clause of Sec. 8c para. 1a CTA

On 28 June 2010 a motion was passed by the European Parliamentary Committee on Economic and Monetary Affairs requesting that the European Parliament pass a resolution enabling the European Commission to prepare draft legislation on cross-border crisis management in the financial sector. The proposed framework would encompass amongst other things:  

Today, the European Commission announced its approval, under EU State Aid rules, of the restructuring of Latvian bank, Parex, which was partially nationalized in November 2008.

Yesterday, the European Commission announced that it was termporarily approving, under E.U.