A look at the recast EC regulation on insolvency proceedings - with particular focus on corporate insolvencies

Abstract: The overall objective of the recast EIR is to make cross-border insolvency proceedings operate more efficiently and effectively. The EU legislator has identified a number of main issues that need to be addressed in order to achieve this overall objective. One of the main issues identified by the EU legislator is the shift away from the traditional liquidation approach to a ‘economic rescue approach’ or ‘second-chance approach’ in the national insolvency laws of the Member States since the original EIR’s entry into force in 2002. One of the key objectives of the EIR is therefore to bring the EIR more in line with current priorities of insolvency law of the Member States, i.e. to move away from the traditional liquidation approach towards a restructuring approach. A number of the changes in the recast EIR must be seen against this background, in particular: a wider scope (it covers more types of insolvency proceedings than the original EIR), enhanced cooperation between different proceedings, various mechanism to minimise the need to open secondary proceedings, the establishment of insolvency registers, and the new provisions dealing with multi-national groups of companies. My conclusion is the recast EIR will improve the efficiency and effectiveness of cross-border insolvency proceedings in general. However, it is questionable whether the improvements will be significant regarding insolvency proceedings relating to members of a group of companies.