Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (the “Recast Insolvency Regulation”) entered into force on 26 June 2015, applies to insolvency proceedings from 26 June 2017.
The Recast Insolvency Regulation aims to improve the efficiency and effectiveness of insolvency proceedings having cross-border effects, and provides rules for determining, within the EU:
- The proper jurisdiction for a debtor’s insolvency proceedings
- The applicable law to be used in those proceedings
- The mandatory recognition of those proceedings in other member states
- Methods by which coordination and cooperation is to be, or may be, achieved within more than one member state and for insolvent groups of companies.
To whom does the Recast Insolvency Regulation apply?
The Recast Insolvency Regulation applies to insolvency proceedings in respect of corporate bodies and individuals (debtors).
It does not apply to insolvency proceedings concerning:
- Insurance undertakings
- Credit institutions
- Investment firms and other firms, institutions and undertakings to the extent that they are covered by the Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions
- Collective investment undertakings.
Where two or more members of a group of companies are subject to insolvency proceedings, an insolvency practitioner appointed to any group company, together with any courts involved, will be obliged to cooperate to facilitate the effective administration of those proceedings, to the extent it is not incompatible with the rules of such proceedings and there is no conflict of interest in doing so.
Group coordination proceedings may be requested before any court having jurisdiction over the insolvency proceedings of a group member by the insolvency practitioner appointed there.
Centre of main interests
The centre of main interests (COMI), a fundamental concept under the Recast Insolvency Regulation determines:
- Whether the Recast Insolvency Regulation applies to a debtor and its insolvency proceedings
- Where the debtor’s main insolvency proceedings within the EU are to be commenced
COMI is the place where the debtor conducts the administration of his interests on a regular basis and is ascertainable by third parties and case law of the Court of Justice of the European Union has provided guidance on issues relating to COMI.
To what proceedings does the Recast Insolvency Regulation apply?
The Recast Insolvency Regulation applies to the insolvency proceedings listed in Annex A to the Recast Insolvency Regulation, by reference to each member state. With respect to Cyprus, the Recast Insolvency Regulation recognises the following insolvency proceedings:
- Mandatory winding up by court
- Voluntary winding up by members
- Creditors’ winding-up
- Winding-up under court supervision
- Bankruptcy orders
- Administration of persons having deceased insolvent
Insolvency proceedings may be opened in more than one member state in relation to the same debtor. There may only be one set of main insolvency proceedings, opened in the member state where the debtor has their COMI.
Such proceedings are recognised as main proceedings in all other member states and will produce the same effects in all other member states as in the member state where the main proceedings are opened. Insolvency proceedings later opened in any other member state (secondary proceedings) will be restricted to the assets of the debtor located in that other member state.
In limited circumstances, insolvency proceedings may be opened in a member state where the debtor has an establishment (and not its COMI) before main proceedings are opened in the state where it has its COMI (territorial proceedings). Territorial proceedings are limited in their effect to the assets of the debtor situated in the member state where the territorial proceedings are opened.
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