Cadwalader partner Richard Nevins discusses developments in European restructurings with Doug Mintz, Restructuring Review's Co-Editor-in-Chief and Cadwalader Special Counsel.
Europe has struggled mightily during the last several years to triage a long series of critical blows to the economies of the 27 countries that comprise the European Union, as well as the collective viability of eurozone economies. Here we provide a snapshot of some recent developments relating to insolvency and restructuring in the EU.
Poland – protective and secondary insolvency proceedings can run in parallel in different Member States
Secondary insolvency proceedings may be begun in the member state where the debtor has an establishment, when main proceedings with a protective purpose are already pending in another member state, according to the ECJ.
Protective proceedings (known as ‘sauvegarde’ proceedings) are those where the debtor proves that he is not insolvent but is faced with difficulties, financial and otherwise, that he cannot overcome.
The proposal for a regulation of the European Parliament and of the Council (SWD(2012) 416 and SWD(2012) 417) amending Council Regulation (EC) n°1346/2000 on insolvency proceedings aims to extend its scope of application by revising the definition of insolvency proceedings to include the proceedings in which the debtor retains some control albeit subject to the control / supervision by a court / a judicial administrator, including preinsolvency proceedings.
Following a broad consultation, the European Commission presented, on 13 December 2012, its proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) n°1346/2000 on insolvency proceedings. Ten years after the Regulation's entry into force, the Commission has deemed it necessary to amend it in order to solve difficulties related to its practical implementation.
On the 12 December, the European Commission announced the proposal to update Council Regulation 1346/2000 on insolvency proceedings. They also announce a separate initiative whereby it will be highlighting the differences between national laws that have the greatest potential to hamper an efficient insolvency legal framework across the EU.
On 11 May 2012, the Commission announced that it has approved a 2009 restructuring plan for ING, following a General Court judgment which had partially annulled the Commission’s previous clearance decision. Therefore, the Commission has essentially confirmed its earlier decision and has decided to appeal the General Court judgment. It has also opened an in-depth State aid investigation into the subsequent amendments to the restructuring plan made by the Dutch State and ING. The Commission believes that the complexity of the issues justifies an in-depth analysis.
On 22 June 2012, Almunia, Vice President of the European Commission responsible for Competition Policy gave a speech on competition policy in times of restructuring. He considered the challenges that the EU has been facing over the past weeks and months and how these challenges are shaped by the urgent need for economic restructuring and growth in Europe, the rapid globalisation of economic activity, and the fast evolving technological environment.
EIOPA has published the outcome of its November 2011 consultation on draft Guidelines for Own Risk and Solvency Assessment (ORSA). ORSA is an internal risk management tool aimed at capturing and dealing with all risks that might impact on a (re)insurance company’s solvency. ORSA processes need to be proportionate and tailored to fit the company’s structure and systems. This report by EIOPA focuses on its expectations about what ORSA should achieve rather than on how it should achieve it.
Following some delay, on June 6, 2012 the European Commission finally published its Proposal for a Directive of the European Parliament and the Council establishing a framework for the recovery and resolution of credit institutions and investment firms (so-called Crisis Management Directive1 or CMD), which — once adopted — will apply to the 27 member states of the European Union (EU), but may also have relevance for those three contracting states of the Treaty on the European Economic Area (EEA), which are not member states of the EU.