Provisional text
OPINION OF ADVOCATE GENERAL
RANTOS
delivered on 24 October 2024 (1)
Case C‑431/23
AE,
CO,
DU,
and Others
v
BA, acting as insolvency administrator of Wibra België SA,
EP, acting as insolvency administrator of Wibra België SA,
RI, acting as insolvency administrator of Wibra België SA,
Wibra België SRL,
Interveners:
VT,
HL,
MO,
and Others
(Request for a preliminary ruling from the Tribunal du travail de Liège (Labour Court, Liège, Belgium))
( Reference for a preliminary ruling – Social policy – Directive 2001/23/EC – Transfers of undertakings – Safeguarding of employees’ rights – Articles 3 to 5 – Derogation – Conditions – Insolvency proceedings – Transfer of part of an undertaking prepared in the context of proceedings for legal restructuring and implemented immediately after the declaration of insolvency )
I.      Introduction
1.        In the present case, the Court is called upon once again to rule on the applicability to the transfer of an undertaking of the derogation from the system of employee protection established by Directive 2001/23/EC, (2) which is laid down in Article 5(1) of that directive in the event of insolvency proceedings.
2.        More specifically, the Tribunal du travail de Liège (Labour Court, Liège, Belgium), which made the present reference for a preliminary ruling, asks the Court, in essence, whether that derogation is applicable in a situation where the transfer was prepared in its entirety in the context of a procedure aimed at ensuring the continuation of the undertaking which failed on account of the transferee’s refusal to comply with mandatory provisions for the protection of employees, and subsequently that transfer was carried out on exactly the same terms the day after the declaration of insolvency of the transferor, which, moreover, belongs to the same group as the transferee.
3.        This case, which forms part of a line of case-law of the Court (3) aimed at clarifying the scope of the derogation laid down in Article 5(1) of Directive 2001/23, offers the Court the opportunity to provide further guidance in that regard.
4.        In order to interpret that provision, it is necessary to strike a fair balance between two requirements: on the one hand, the requirement not to undermine the use of legal instruments which pursue the laudable aim of enabling the continuation of the undertaking or parts of that undertaking, even in the event of genuine financial difficulty and, on the other, the requirement not to circumvent, through the inappropriate use of such instruments or, more generally, insolvency proceedings, the protection of employees guaranteed by EU law. (4)
II.    Legal framework
A.      European Union Law
5.        Article 3(1) of Directive 2001/23 states:
‘The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.
Member States may provide that, after the date of transfer, the transferor and the transferee shall be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer.’
6.        Article 4(1) of that directive provides that the transfer of an undertaking ‘shall not in itself constitute grounds for dismissal by the transferor or the transferee’, without prejudice to the possibility of dismissals ‘for economic, technical or organisational reasons entailing changes in the workforce’.
7.        Article 5(1) and (4) of that directive, which establishes a derogation from the system of protection as described above, provides:
‘1.      Unless Member States provide otherwise, Articles 3 and 4 shall not apply to any transfer of an undertaking, business or part of an undertaking or business where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor and are under the supervision of a competent public authority (which may be an insolvency practitioner authorised by a competent public authority).
…
4.      Member States shall take appropriate measures with a view to preventing misuse of insolvency proceedings in such a way as to deprive employees of the rights provided for in this Directive.’
B.      Belgian law
1.      The relevant rules of the Code of Economic Law on business insolvency
8.        The proceedings for judicial restructuring, as applicable at the time of the facts giving rise to the dispute in the main proceedings, were governed, under Belgian law, by Article XX.39 et seq. of the Code de droit économique (Code of Economic Law; ‘the CDE’), in the version applicable in the main proceedings. Article XX.39 stated that ‘the purpose of the proceedings for judicial restructuring is to preserve all or part of the assets or business of the undertaking under the control of the court. It allows the debtor to be granted a stay in order [in particular] to enable a transfer under judicial supervision, to one or more third parties, of all or part of the assets or business’.
9.        Pursuant to former Article XX.87(1) of the CDE, ‘the appointed legal representative shall organise and carry out the transfer ordered by the court by selling or transferring movable or immovable assets which are necessary or useful for the maintenance of all or part of the undertaking’s economic activity. It shall seek offers while ensuring that priority is given to maintaining all or part of the undertaking’s business, while having regard to the rights of creditors.’
10.      Insolvency proceedings are governed in Belgian law by Articles XX.98 to XX.201 of the CDE. It is clear from Article XX.98 of that code that the purpose of insolvency proceedings is ‘to place the debtor’s assets under the management of an insolvency administrator, who shall be responsible for administering the assets of the bankrupt entity, liquidating those assets and distributing the proceeds of the liquidation among the creditors’.
11.      The Law of 21 March 2021 (5) amended Book
XX of the CDE and introduced rules on the pre-pack procedure, which is preliminary to the restructuring of the undertaking, and during which the president of the Business Court may appoint a legal representative in order to obtain an amicable or collective agreement, where the debtor can demonstrate that the continuation of the undertaking is in jeopardy in the short or long term.
2.      Legislation on the safeguarding of employees’ rights in the event of a change of employer
12.      Directive 2001/23 was transposed into Belgian law, inter alia, by the Convention collective de travail No 32
bis, du 7
juin 1985, concernant le maintien des droits des travailleurs en cas de changement d’employeur du fait d’un transfert conventionnel d’entreprise et réglant les droits des travailleurs repris en cas de reprise de l’actif après faillite (Collective Labour Agreement No 32a of 7 June 1985 concerning the safeguarding of employees’ rights in the event of a change of employer as a result of the legal transfer of an undertaking and regulating the rights of employees re-engaged in the event of a takeover of assets following insolvency),
as amended (‘CLA No 32a’).
13.      As is clear from Article 1 of CLA No 32a, its purpose is, inter alia, first, to ensure ‘the safeguarding of employees’ rights in the event of a change of employer as a result of the legal transfer of an undertaking or part of an undertaking’ (Chapter
II) and, secondly, to guarantee ‘certain rights of employees re-engaged in the event of a takeover of assets following insolvency’ (Chapter
III).
14.      Chapter
II of CLA No 32a, which comprises Articles 6 to 10 thereof, concerns ‘the rights of employees in the event of a change of employer following a legal transfer of an undertaking’.
15.      Under
Article 7 of CLA No 32a, ‘the transferor’s rights and obligations arising from a contract of employment existing on the date of a transfer … shall, by reason of such transfer, be transferred to the transferee’.
16.      Article 8 of CLA No 32a provides that ‘the transferor and the transferee are jointly liable for debts existing on the date of a transfer … and arising from a contract of employment existing on that date, with the exception of debts to supplementary social benefit schemes’.
17.      Pursuant to Article 9 of CLA No 32a, ‘a change of employer does not in itself constitute grounds for dismissal by the transferor or the transferee’.
18.      Chapter
III of CLA No 32a, entitled ‘rights of employees re-engaged in the event of a takeover of assets following insolvency’, applies in the event that employees are re-engaged ‘following the takeover of all or part of the assets of an insolvent undertaking, provided that the takeover occurs within two months of the date of insolvency’ (Article 11(1)). That chapter ‘is applicable[, inter alia,] to employees who, on the date of insolvency, are still bound by a contract of employment …
[and] is applicable in the event of the re-engagement of such employees either before the takeover of assets, or at the time of the takeover of assets, or within a further period of four months following the takeover of assets’.
19.      The provisions under Chapter
III establish the safeguarding of the working conditions which existed under the former employer (Article 13 of CLA No 32a) or
the taking into account of the length of service accrued by the employee with the former employer in order to determine the notice period and severance payment (Article 14 of that agreement). By contrast, it does not provide for the transfer to the transferee of debts arising from employment contracts existing at the date of the transfer, or for joint liability of the transferee and transferor for those debts.
20.      In the event of a transfer, in the context of proceedings for judicial restructuring, the applicable workers’ rights legislation is the convention collective de travail no
102 du 5
octobre 2011 relative au maintien des droits des travailleurs en cas de changement d’employeur du fait d’une réorganisation judiciaire par transfert sous autorité de justice (Collective Labour Agreement No 102 of 5 October 2011, concerning the safeguarding of employees’ rights in the event of a change of employer as a result of judicial restructuring by transfer under judicial supervision)
(Moniteur belge of 25 April 2013, p. 25097) (‘CLA No 102’).
III. The dispute in the main proceedings, the question referred for a preliminary ruling and the procedure before the Court
21.      Wibra is a Netherlands undertaking with a number of retail stores in Belgium and the Netherlands. It specialises in selling consumer goods of all kinds at discount prices. Over the course of 2020, due to the COVID-19 pandemic, Wibra’s Belgian subsidiary, Wibra België SA – which, at the time, operated 81 stores and employed 439 workers – suffered a significant loss of turnover.
22.      Consequently, on 30 July 2020, Wibra België SA lodged a request to open proceedings for judicial restructuring before the Ondernemingsrechtbank Gent (Business Court, Ghent, Belgium), which granted a stay of proceedings until 30 October 2020 and appointed three legal representatives (BA, EP and RI) with the task of organising and transferring all or part of that undertaking’s business.
23.      On 21 September 2020, those three legal representatives accepted the takeover offer submitted by the parent company, Wibra Nederland BV, concerning 36 of Wibra België SA’s commercial premises and 183 of its 439 employees. A clause in the takeover agreement stipulated that, with regard to the members of staff who were re-engaged, the financial obligations relating to the payment of future holiday pay and ‘thirteenth month’ bonuses up to the date of approval would be borne by the seller prorata temporis.
24.      On 30 September 2020, an ad hoc undertaking, Wibra België SRL, was created in order to take over and ensure the continuation of part of Wibra België SA’s business.
25.      Hearing the three aforementioned legal representatives’ application for approval of that takeover offer, the Ondernemingsrechtbank Gent (Business Court, Ghent)
rejected that application by judgment of 8 October 2020, holding
that the provisions of the proposed takeover relating to holiday pay and end-of-year bonuses were contrary to the mandatory provisions of CLA No 102 and Directive 2001/23.
26.      By a second decision given on the same day, that court declared Wibra België SA insolvent and appointed the three legal representatives, BA, EP and RI, as insolvency administrators.
27.      Notwithstanding the rejection by that court of the application for approval of the takeover offer and the declaration of insolvency, Wibra announced, in a press release on 9 October 2020, the rapid reopening of 36 stores and the retention of 183
employees.
28.      Given the circumstances of Wibra België SA, the members of staff were immediately informed of the declaration of insolvency and of the decision to terminate their employment contract on payment of compensation in lieu of notice.
29.      The day after the declaration of insolvency, the insolvency administrators transferred part of the tangible and intangible assets of Wibra België SA to Wibra België SRL. Of all the staff who were dismissed (namely 439 employees), 183 were re-engaged by Wibra België SRL.
30.      Following the questions raised by certain employees
who were dismissed, the insolvency administrators replied, inter alia, that ‘after the declaration of insolvency, part of the intangible and tangible movable assets [had] been sold to the newly created company [Wibra België SRL]’ and that ‘no member of staff or business [had] been transferred’.
31.      By application lodged on 21 June 2021, AE and 21 other employees dismissed by Wibra België SA brought an action before the tribunal du travail de Liège (Labour Court, Liège), the referring court, against both their former insolvent employer and Wibra België SRL. In addition, 38 other employees subsequently joined that action. That group of employees (together, ‘the applicants’) sought, in particular, (i) a declaration that the transfer of business from the insolvent Wibra België SA to Wibra België SRL constituted a legal transfer of an undertaking within the meaning of CLA No 32a and Article 1 of Directive 2001/23 and,
(ii)
that
payment of damages be awarded for breach of the provisions of CLA No 32a, and that Wibra België SRL be ordered, jointly and severally or, failing that, in a personal capacity, to pay those damages. More specifically, those employees claimed that Wibra België SRL should be recognised as the transferee, with the result that it was bound by the same rights and obligations,
vis-à-vis those employees, which the latter could previously claim vis-à-vis Wibra België SA, particularly in so far as concerns the payment of amounts owed by Wibra België SA by way of damages as well as arrears of remuneration, holiday pay, bonuses and compensation, including compensation in lieu of notice following dismissal of those employees due to the declaration of insolvency. In the alternative, those employees requested a stay of proceedings pending the answer to the questions put to the Court.
32.      In its request for a preliminary ruling, the referring court considered that Wibra België SA was liable, in respect of each of the applicants, for damages on account of the failure to fulfil its information and consultation obligations preceding a collective redundancy. However, in the light of the insolvency declared by the judgment of 8 October 2020, the claims of
the dismissed workers should primarily be included in the liabilities in insolvency, while the assets in insolvency should still be sufficient for the applicants to obtain effective payment.
33.      Consequently, if the transaction carried out between the insolvent Wibra België SA and Wibra België SRL was to be regarded as a ‘legal transfer of an undertaking’, for the purposes of CLA No 32a, the second undertaking would be held jointly and severally liable for the obligations of the first undertaking, and for the debts existing on the date of the transfer, pursuant to Articles 7 and 8 of CLA No 32a.
34.      In that context, the referring court is uncertain as to the legal classification of the transfer of assets from Wibra België SA to Wibra België SRL. That court asks, in particular, whether the transaction in question should be classified as a ‘legal transfer of an undertaking’ within the meaning of Chapter
II of CLA No 32a, or as a ‘takeover of assets following insolvency’ within the meaning of Chapter
III of that agreement.
35.      In that regard, the referring court notes that, notwithstanding the refusal to approve the takeover of assets following the insolvency, the plan for the transfer of the undertaking by the parent company Wibra Nederland, prepared during the proceedings for judicial restructuring by the legal representatives appointed by the Ondernemingsrechtbank Gent (Business Court, Ghent), was ultimately carried out by those representatives the day after the declaration of insolvency, albeit in their capacity as insolvency administrators.
36.      In addition, that court also notes that it is not disputed that the manner in which
the transaction between the two undertakings was conducted, the day after the insolvency, is identical to that of the takeover offer submitted to the Ondernemingsrechtbank Gent (Business Court, Ghent) in the context of the proceedings for judicial restructuring, and the only difference between the two transactions lies in the identity of the transferee. However, the referring court observes that, in so far as Wibra België SRL is a subsidiary of the parent company, that difference has no bearing on the present case.
37.      That court
considers that the transaction at issue in the main proceedings may ‘indisputably’ be classified as a ‘pre-pack transfer’, and refers to the case-law of the Court, (6) which allows the transferee to rely on the derogation laid down in Article 5 of Directive 2001/23, provided that that transaction is governed by statutory or regulatory provisions.
38.      However, there are no such provisions under Belgian law, according to that court. In particular, the amendments introduced by the Belgian legislature to the CDE, in particular by the Law of 21 March 2021, concern the preparatory stage (‘pre-pack plan’) and not the transfer stage (‘pre-pack transfer’).
39.      The referring court states that, in the present case, the first part of the transaction – the preparation of the transfer – took place under the supervision of the legal representatives appointed by the Ondernemingsrechtbank Gent (Business Court, Ghent) in the context of the proceedings for judicial restructuring. The second part of that transaction – the transfer of assets and employees
–immediately followed the refusal of the Business Court to approve the transaction originally agreed, on a ground relating, moreover, to the protection of the rights of employees (in the present case, the refusal of the transferee to take over social liabilities linked to holiday pay and end-of-year bonuses).
40.      It is in those circumstances that the tribunal du travail de Liège (Labour Court, Liège) reserved judgment on the claims made against Wibra België SRL and decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling:
‘Must Article 5(1) of [Directive 2001/23/EC] be interpreted as meaning that the condition which it lays down, according to which Articles 3 and 4 of that directive are not to apply to the transfer of an undertaking where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings instituted with a view to the liquidation of the assets of the transferor, is not satisfied where the transfer of all or part of an undertaking is prepared prior to the opening of insolvency proceedings with a view to the liquidation of the assets of the transferor, in the present case in the context of proceedings for judicial restructuring ending in a transfer agreement approval of which is refused by the court having jurisdiction but which is then carried out immediately after the declaration of insolvency, outside the application of any statutory or regulatory provisions under national law?’
41.      Written observations were lodged by the applicants, Wibra België SRL, the Belgian Government and the European Commission.
IV.    Analysis
A.      Introduction
42.      By the question referred for a preliminary ruling, the referring court asks, in essence, whether Article 5(1) of Directive 2001/23 is to be interpreted as meaning that the condition laid down therein, according to which Articles 3 and 4 of that directive do not apply to the transfer of an undertaking ‘where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor’, is not satisfied where the transfer of all or part of an undertaking is prepared prior to the opening of insolvency proceedings in the context of a procedure aimed at ensuring the continuation of the undertaking, such as proceedings for judicial restructuring, which ends in a transfer agreement approval of which is refused by the court having jurisdiction, and that transfer is then carried out immediately after the declaration of insolvency.
43.      That question is raised in the context of a dispute in which a number of employees who were dismissed following the restructuring of Wibra claim that the transfer between their former employer, Wibra België SA, and Wibra België SRL should be classified as a ‘legal transfer of an undertaking’, within the meaning of Article 1 of Directive 2001/23, and that, in this case, the conditions for the application of the exception laid down in Article 5(1) of that directive are not satisfied. It follows, it is argued, that the rights and obligations which Wibra België SA previously had towards those employees must be transferred to Wibra België SRL as transferee, in accordance with Articles 7 and 8 of CLA No 32a, which correspond, in essence, to Article 3 of Directive 2001/23.
44.      As I will explain in points 65 to 71 of this Opinion, it is apparent from the information before the Court that the transfer at issue was initially prepared in the course of proceedings for judicial restructuring under Belgian law but that, in view of the refusal of the court having jurisdiction to approve the proposed transfer, it was ultimately carried out the day after Wibra België SA was declared insolvent.
45.      The parties which submitted written observations to the Court differ as to how the question referred for a preliminary ruling should be answered. While the applicants and the Commission take the view that a transfer such as that at issue in the main proceedings should not fall within the exception laid down in Article 5(1) of Directive 2001/23, Wibra België SRL and the Belgian Government maintain, by contrast, that the conditions for the application of that exception are satisfied in the present case.
B.      Consideration of the question referred
1.      Applicability of Directive 2001/23
46.      In order to answer the question referred for a preliminary ruling by the referring court, it is necessary first of all to ascertain whether the transfer at issue falls within the scope of Directive 2001/23.
47.      In that regard, that directive is applicable,
according to Article 1(2) thereof, to any transfer of an undertaking, business, or part of an undertaking or business to another employer as a result of a legal transfer or merger.
48.      It is clear from the case-law of the Court that that directive is applicable wherever, in the context of contractual relations, there is a change of legal or natural person responsible for carrying on the undertaking and who,
therefore,
enters into the obligations of an employer vis-à-vis the employees of the undertaking, irrespective of whether or not ownership of the tangible assets is transferred. In that regard, the Court has specified that the decisive criterion for establishing the existence of a transfer within the meaning of that directive is based on the fact that the entity in question retains its identity, as indicated inter alia by the fact that its operation is actually continued or resumed. (7) In its case-law, the Court has provided a number of indications which make it possible to establish the existence of a transfer within the meaning of Directive 2001/23. (8)
49.      In the present case, as the Commission observes, the order for reference mentions a letter from the insolvency administrators indicating that ‘no staff or business [had been] transferred’. (9) However, other indications contained in that order for reference, such as the press release of 9 October 2020 from the same insolvency administrators, announcing the rapid reopening of 36 stores and the retention of 183 employees, (10) appear to lead to the conclusion that, in this case, there was indeed a ‘transfer of an undertaking’ within the meaning of Article 1(1) of Directive 2001/23. Moreover, the referring court, which is ultimately responsible for determining in concreto whether there has been a transfer under that provision, appears to presuppose that that directive is applicable in the case pending before it. It must therefore be considered that that is so in the present case.
2.      The derogation laid down in Article 5(1) of Directive 2001/23
50.      As regards the specific subject matter of the question referred for a preliminary ruling, namely the applicability of the derogation laid down in Article 5(1) of Directive 2001/23 to the transfer at issue in the main proceedings, it should be recalled, first of all, that the purpose of that directive is to protect employees, as is clear from recital 3, in particular by ensuring that their rights are safeguarded in the event of a change of employer. (11)
51.      In pursuit of that objective, Directive 2001/23 provides, first, in the first subparagraph of Article 3(1), that the transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer are to be automatically transferred to the transferee by the mere fact of the transfer. In that context, the second subparagraph of Article 3(1) of that directive specifies that Member States may provide that the transferor and the transferee are to be jointly and severally liable in respect of obligations which arose before the date of transfer from a contract of employment or an employment relationship existing on the date of the transfer. Second, Article 4(1) of that directive protects employees from dismissal solely on the basis of the transfer by either the transferor or transferee. (12)
52.      Article 5(1) of Directive 2001/23, the interpretation of which lies at the heart of the question referred to the Court for a preliminary ruling, constitutes a derogation from the system of protection referred to in Articles 3 and 4 of that directive. (13) As such, according to the settled case-law of the Court, that provision must necessarily be interpreted strictly. (14) Moreover, the introduction of that derogation stems from the development of the Court’s case-law. (15)
53.      Under Article 5(1) of that directive, unless Member States provide otherwise, that system of protection is not to apply to any transfer of an undertaking or part of an undertaking where three cumulative conditions are met: first, the transferor must be the subject of bankruptcy proceedings or analogous insolvency proceedings; second, those proceedings must have been instituted with a view to the liquidation of the transferor’s assets; and third, those proceedings are under the supervision of a competent public authority.
54.      This Opinion will focus on the second condition, which is central to the present case. First, it is not disputed that, in this case, the first condition is satisfied, since Wibra België SA has been the subject of judicial restructuring and insolvency proceedings. Secondly, in the Belgian legal system, both sets of proceedings take place under the supervision of a competent public authority, so the third condition also appears to be satisfied in the present case.
55.      In so far as concerns the second condition that bankruptcy proceedings or any analogous insolvency proceedings in which a transfer has occurred be instituted ‘with a view to liquidation of the assets of the transferor’, it is clear from the settled case-law of the Court that a procedure aimed at ensuring the continuation of the undertaking in question does not satisfy that requirement. (16)
56.      In that regard, again according to the settled case-law of the Court, a procedure is aimed at ensuring the continuation of the undertaking where that procedure is designed to preserve the operational character of the undertaking or of its viable units. By contrast, a procedure focusing on the liquidation of assets is aimed at maximising satisfaction of creditors’ collective claims. (17)
57.      In that context, the Court has stated that, although there may be some overlap of those two objectives within the aims of any given procedure, the primary objective of a procedure aimed at ensuring the continuation of the undertaking is, in any event, the safeguarding of the undertaking concerned. (18)
58.      In the present case, it should be noted that the referring court, in its order for reference, describes the transaction in the present case as a ‘pre-pack transfer’. In that regard, that court refers to the case-law of the Court concerning the interpretation of Articles 3 to 5 of Directive 2001/23 with regard to so-called ‘pre-pack’ processes.
59.      The term ‘pre-pack’ generally refers to a transfer of the assets of an undertaking in difficulties (an assignment) which is prepared before the commencement of insolvency proceedings (most often, bankruptcy or liquidation) with the assistance of an administrator (in some jurisdictions, appointed by a court), and which is usually implemented immediately after the commencement of insolvency proceedings. (19)
60.      It is important to note that the Court has had occasion, in recent years, to rule on the applicability of the derogation, laid down in Article 5(1) of Directive 2001/23, to the pre-pack mechanism, more specifically in the judgments in Smallsteps and Pre-pack procedure. Those two judgments concerned pre-pack processes in the Netherlands.
61.      In the first
of those judgments,
Smallsteps, the Court
found – having observed that, in the Netherlands, at the date of adoption of that judgment, the pre-pack mechanism was not regulated by national law, but rather stemmed from practice (20) –
that a pre-pack process, such as that at issue in that case, was aimed at preparing the transfer of the undertaking down to its every last detail in order to enable a swift relaunch of the undertaking’s viable units once the insolvency was declared and in order to avoid the disruption that would result from an abrupt cessation of the undertaking’s business on the day of the declaration of insolvency, so as to safeguard the value of the undertaking and the employment posts. It thus ruled that since such a procedure was not ultimately aimed at liquidating the undertaking, the economic and social objectives it pursued were no explanation of, or justification for, the employees of the undertaking concerned losing the rights conferred on them by Directive 2001/23 when all or part of that undertaking is transferred. (21)
62.      In the subsequent judgment, Pre-pack procedure, in so far as concerns
the second of the three conditions which must be satisfied in order for the derogation provided for in Article 5(1) of Directive 2001/23 to be applicable, mentioned in point 52 of this Opinion, the Court stated that where the main purpose of a pre-pack procedure followed by insolvency proceedings is to obtain, following the declaration of insolvency of the transferor and its liquidation, the highest possible reimbursement of all its creditors, those procedures, taken together, satisfy, in principle, that second condition. (22) However, the Court also ruled that it is necessary in that respect, in the first place, to verify, in each situation, whether the pre-pack procedure and the insolvency proceedings at issue were carried out with a view to the liquidation of the undertaking as a result of the established insolvency of the transferor and not with a view to the mere reorganisation of that undertaking, and in the second place, to establish not only that those proceedings have as their primary objective to satisfy to the greatest extent possible the claims of all the creditors, but also that the implementation of the liquidation through the transfer of the undertaking or a part thereof as a going concern, as prepared in the pre-pack procedure and carried out following the insolvency proceedings, enables the achievement of that primary objective. The aim of the use of the pre-pack procedure, for the purposes of liquidating a company, is to enable the insolvency administrator and the supervisory judge appointed by the court after the declaration of that company’s insolvency to increase the chances of satisfying the creditors’ claims. (23)
63.      It is in the light of the aforementioned principles that it is necessary to ascertain, in order to be able to answer the question submitted by the referring court for a preliminary ruling, whether the transfer which took place in the present case satisfies the three conditions, set out in point 52 of this Opinion, with a view to applying the derogation laid down in Article 5(1) of Directive 2001/23.
3.      The applicability in the present case of the derogation laid down in Article 5(1) of Directive 2001/23
(a)    The transfer which took place in this case
64.      In this case, as is apparent from the order for reference and as explained in detail by Wibra België SRL in its written observations, the transfer took place, formally, in two stages.
65.      First, Wibra België SA lodged a request for judicial restructuring with the Ondernemingsrechtbank Gent (Business Court, Ghent) and sought authorisation to transfer part of the business under judicial supervision.
66.      In the context of those proceedings, the legal representatives appointed by that court accepted the offer made by the parent company Wibra Nederland BV concerning the acquisition of 36 commercial premises and the company headquarters, and all the tangible and intangible assets necessary to enable that acquisition, and providing for the re-engagement of 183 members of staff (out of a total of 439 employees).
67.      However, that transfer was not authorised by the Business Court and therefore could not be effectively implemented. Accordingly, the proceedings for judicial restructuring ended.
68.      As is clear from the order for reference, the proposed transfer was not approved by the Business Court on the ground that the provisions of the proposal concerning holiday pay and end-of-year bonuses were contrary to the mandatory provisions of CLA No 102 – relating to the safeguarding of employees’ rights in the event of judicial restructuring (24) –
and to Directive 2001/23. The reason for that contradiction was the refusal of the transferee, Wibra België SRL, to take over social liabilities linked to holiday pay and end-of-year bonuses.
69.      Second, following the failure of the proceedings for judicial restructuring, aimed at ensuring the continuation of Wibra België SA’s business, as a result of the refusal referred to in the preceding point, the Business Court, by decision of the same day, declared that undertaking insolvent. The day after that decision was delivered, the aforementioned transfer was implemented and Wibra announced the reopening of 36 stores.
70.      In this case, the parties do not dispute that the manner in which
the transfer between Wibra België SA and Wibra België SRL was conducted, the day after the declaration of insolvency, is identical to that of the takeover offer submitted to the Business Court in the context of the proceedings for judicial restructuring, the only difference being the formal identity of the transferee. However, since the ultimate transferee, Wibra België SRL, is a subsidiary of the parent company Wibra Nederland, which had made the successful offer in the context of the proceedings for judicial restructuring, that difference is purely formal and has no bearing, as the referring court expressly states.
71.      In conclusion, the transfer at issue in this case was fully prepared in the context of the first stage, namely the proceedings for judicial restructuring, but, following the refusal to approve the proposed transfer, it was implemented immediately after the declaration of insolvency.
(b)    The applicability of the derogation
72.      Can a transfer such as that described in the preceding points benefit from the derogation laid down in Article 5(1) of Directive 2001/23? In that connection, I would make the following observations.
73.      In the first place, it should be noted that the judgment in Plessers concerned a transfer which took place in the context of proceedings for judicial restructuring by transfer under judicial supervision under Belgian law. Consequently, those proceedings were exactly the same as those initially instituted by Wibra België SA in the present case.
74.      Moreover, in that judgment, the Court expressly ruled that those proceedings were aimed at ensuring the continuation of the undertaking concerned and were not, therefore, instituted with a view to the liquidation of the transferor’s assets, within the meaning of Article 5(1) of Directive 2001/23. (25)
75.      It follows that, in the present case, it must be regarded as having been established that the transfer at issue was prepared in its entirety in the context of proceedings aimed at ensuring the continuation of the undertaking, and does not fall within the scope of the derogation from the system of employee protection laid down by Article 5(1) of that directive.
76.      In the second place, in the present case, not only was the transfer entirely prepared in the context of those proceedings, but it was implemented immediately – more specifically, one day – after the declaration of insolvency.
77.      In such circumstances, where the transfer in the context of insolvency proceedings was implemented in a single day, it is legitimate to question whether or not the proceedings in this case were real insolvency proceedings. It would appear that what took place in this case were, in essence, what may be defined as ‘technical insolvency proceedings’, which is an insolvency used, in reality, as a means of restarting the undertaking. (26) Although it is not disputed that the weak financial position of the undertaking in question was real, the transfer had nevertheless been prepared down to its last detail prior to the declaration of insolvency, so that the transfer could be implemented in the space of a single day.
78.      In that context, it should also be noted that it is in no way apparent from the information submitted to the Court that, in the course of the insolvency proceedings, other offers were sought which could potentially satisfy creditors’ claims to a greater extent than the offer already made (by the parent company Wibra Nederland) and accepted in the first stage, namely the proceedings for judicial restructuring.
79.      Nor is it apparent from the case file communicated to the Court that, in the context of the insolvency proceedings, the insolvency administrators took actions seeking to maximise satisfaction of the creditors’ claims in other ways.
80.      By contrast, it appears that the insolvency proceedings were initiated solely in order to be able to implement, in the space of a day, the transfer already prepared in the context of the proceedings for judicial restructuring.
81.      Furthermore, in the third place, it is clear that the declaration of insolvency was made solely on account of the failure of the proceedings for judicial restructuring, which was due to the refusal of the transferee (which was also part of the Wibra group) to comply with the mandatory provisions for the protection of employees. That failure enabled the transferee to carry out exactly the same transaction which had not been approved, but benefiting from the derogation laid down in Article 5(1) of Directive 2001/23, without having to comply with the mandatory provisions for the protection of employees, the infringement of which had led to the refusal to approve the transaction during the proceedings for judicial restructuring.
82.      In those circumstances, I do not believe that it is possible to artificially separate the two procedures, namely the proceedings for judicial restructuring and the ‘technical’ insolvency proceedings (which facilitated
the transfer being implemented in the space of a single day) by arguing that, since the latter procedure is aimed at the liquidation of the transferor’s assets, the transfer in question should benefit from the derogation laid down in Article 5(1) of Directive 2001/23.
83.      In fact, subject to the factual findings which it is for the referring court to make, it is clear, in my view, from the facts set out that the present case concerns a single transaction the objective of which was, from the outset, to enable the continuation of the undertaking concerned, not only in the context of the first stage but also in that of the second stage, namely the ‘technical’ insolvency proceedings which served essentially to implement the transfer which had already been prepared.
84.      In that regard, there is nothing in the case file before the Court to suggest that the primary objective of the two procedures which led to the transfer at issue was to obtain the highest possible return for all the creditors. (27) Although, subject to the determinations which are to be made by the referring court alone, the insolvency in question may be considered an established insolvency, the proceedings initiated did not have the objective of liquidating the undertaking and better satisfying the claims of all the creditors, but sought, from start to finish, to ensure the continuation of that undertaking by restructuring it. (28)
85.      Moreover, as the applicants rightly point out in their written observations, there was no divestment of the bankrupt entity in this case. The objective pursued by Wibra was to continue part of its business itself, by implementing the restructuring plan which it had initially attempted to achieve by means of the proceedings for judicial restructuring. However, such a situation does not fall within the concept of ‘bankruptcy’, within the meaning of Article 5(1) of Directive 2001/23, which, as is apparent from the case-law referred to in points 55 to 62 of this Opinion, presupposes the liquidation of the undertaking and the divestment of the bankrupt entity as a result of its insolvency, and not a mere reorganisation of the undertaking.
86.      In the fourth and last place, as regards the referring court’s classification of the transfer in question as a ‘pre-pack’, I am not convinced that the transaction described in points 65 to 71 of this Opinion can be formally classified as such. The term ‘pre-pack’ indicates a specific type of transaction, as mentioned in point 59 of this Opinion. That type of transaction is now regulated in Belgian law, although the legislation in question is not in any event applicable ratione temporis to the dispute in the main proceedings. However, the transaction at issue in the present case was not prepared in the context of a ‘pre-pack’ procedure as such, but in the context of specific legal proceedings aimed at restructuring the undertaking.
87.      That said, it is nevertheless undeniable, in my opinion, that there are significant similarities between the transaction which took place in the present case and the pre-pack processes examined by the Court, whose case-law is referred to in points 60 to 62 of this Opinion. In any event, the transfer in question was prepared prior to the declaration of insolvency and implemented immediately thereafter.
88.      From that point of view, the aforementioned case-law of the Court on pre-pack processes is undoubtedly relevant to the analysis of a transaction such as that at issue in the present case.
89.      As stated in point 62 of this Opinion, it is clear from that case-law that, in order for the derogation laid down in Article 5(1) of Directive 2001/23 to be applicable, it must be ascertained, first, that the all the proceedings at issue were carried out with a view to the liquidation of the undertaking as a result of the established insolvency of the transferor, and not with a view to the mere reorganisation of that undertaking, and, secondly, it must be established not only that the primary objective of those proceedings is to satisfy to the greatest extent possible the claims of all the creditors, but also that the implementation of the liquidation through the transfer of the undertaking as a going concern, as prepared prior to the declaration of insolvency and carried out thereafter, allows that primary objective to be attained.
90.      It is clear from points 73 to 85 of this Opinion that that is not the case in so far as concerns the transfer at issue in the case pending before the referring court.
91.      In view of all the foregoing, I propose that the answer to the question referred for a preliminary ruling should be that Article 5(1) of Directive 2001/23 must be interpreted as meaning that the condition, laid down therein, whereby
Articles 3 and 4 of that directive do not apply to the transfer of an undertaking ‘where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor’, is not satisfied where the transfer of all or part of an undertaking is prepared prior to the opening of insolvency proceedings in the context of a procedure aimed at ensuring the continuation of the undertaking, which ends in a transfer agreement approval of which is refused by the court having jurisdiction, and that transfer is then carried out immediately after the declaration of insolvency.
4.      Consequences of the inapplicability in this case of the derogation provided for in Article 5(1) of Directive 2001/23
92.      In the light of the observations submitted to the Court, I consider it appropriate to make a number of additional observations concerning the consequences arising from the inapplicability, in the present case, of the derogation laid down in Article 5(1) of Directive 2001/23.
93.      In the first place, both Wibra België SRL and the Commission refer in their written observations to the case-law of the Court concerning the absence of horizontal direct effect of a directive. In addition, Wibra België SRL also refers to the limitations of the principle of interpreting national law in conformity with EU law, which may not serve as the basis for interpreting national law contra legem. Wibra België SRL claims, in particular, that, even assuming that the transfer at issue in the main proceedings did not fall within the scope of the derogation laid down in Article 5(1) of Directive 2001/23, since Chapter
III of CLA No 32a, which is applicable to transfers of all or part of the business of an insolvent undertaking, makes no provision for the joint and several liability of the transferee, it is not possible for the referring court to interpret national law in conformity with that directive. That court cannot, therefore, classify the transaction at issue as a ‘legal transfer of an undertaking’ within the meaning of Chapter
II of CLA No 32a, if it is not to interpret that national law contra legem.
94.      In that regard, it follows, admittedly, from the settled case-law of the Court that a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against that individual before a national court. In accordance with the third paragraph of Article 288 TFEU, the binding nature of a directive, which constitutes the basis for the possibility of relying on it, exists only in relation to ‘each Member State to which it is addressed’; the European Union has the power to enact, in a general and abstract manner, obligations for individuals with immediate effect only where it is empowered to adopt regulations. Therefore, even a clear, precise and unconditional provision of a directive does not allow a national court to disapply a provision of its national law which conflicts with it if, were that court to do so, an additional obligation would be imposed on an individual. (29)
95.      However, the Court has also repeatedly held that Member States’ obligation arising from a directive to achieve the result envisaged by that directive and their duty to take all appropriate measures, whether general or particular, to ensure the fulfilment of that obligation are binding on all the authorities of the Member States, including, for matters within their jurisdiction, the courts. In applying national law, national courts called upon to interpret that law are required to consider the whole body of rules of national law and to apply methods of interpretation that are recognised by those rules in order to interpret it, so far as possible, in the light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive and, consequently, to comply with the third paragraph of Article 288 TFEU. (30)
96.      It is ultimately for the referring court to determine whether, and to what extent, the transfer at issue in the case pending before it must be classified as such as a result of any interpretation
by the Court, should it adopt the approach I suggest, namely that the derogation laid down in Article 5(1) of Directive 2001/23 is not applicable to a transfer such as that which took place in the present case.
97.      If the national court were to consider, on the basis of the criteria set out in point 95 of this Opinion, that it could, in the light of the circumstances of the present case, classify the transaction at issue as a ‘legal transfer of an undertaking’ within the meaning of Chapter
II of CLA No 32a, then the provisions of Articles 7 and 8 of CLA No 32a would indeed be applicable.
98.      In the second place, the Commission envisages, whilst recalling the wording of Article 5(4) of Directive 2001/23, that the national court should ascertain whether, in the present case, there has been any abuse of insolvency law in so far as the use of (‘technical’) insolvency proceedings made it possible to implement a transfer which had not been approved in the proceedings for judicial restructuring offering greater protection to employees, which was, furthermore, due to the transferee’s refusal to comply with mandatory provisions for the protection of employees.
99.      In that regard, Article 5(4) of Directive 2001/23 is the expression of the general principle of EU law that the application of the rules of EU law cannot be extended to cover abusive or fraudulent transactions. (31)
100. It is for the referring court to verify, in accordance with the rules of evidence of national law, provided the effectiveness of EU law is not undermined, whether the factors constituting an abusive or fraudulent practice are present in the case before it. (32) When giving preliminary rulings, the Court may, if appropriate, specify indicia in order to guide national courts in the assessment of the cases that they have to decide. (33)
101. A finding of an abusive practice requires a combination of objective and subjective elements. More specifically, in accordance with the
case-law of the Court, (34) proof of an abusive practice requires, first, a combination of objective circumstances in which, despite formal observance of the conditions laid down by the EU rules, the purpose of those rules has not been achieved and, second, a subjective element consisting in the intention to obtain an advantage from the EU rules by artificially creating the conditions laid down for obtaining it.
102. In the present case, as regards the objective element, it appears to be established that the objective of Directive 2001/23, referred to in point 50 of this Opinion, was not achieved on account of the ‘technical’ insolvency which took place in the present case, and which led to the non-application of the system of protection laid down in that directive, on account of the application of the derogation under
Article 5(1) thereof.
103. As regards the subjective element, the referring court must check whether it follows from a number of objective factors that the essential aim of the abusive practice was to obtain an undue advantage. (35)
104. Thus, on the basis of those indications, the referring court can check for abuse, taking into consideration that checking for such an abuse requires that that court take into account all the facts and circumstances of the case, including anything preceding and following the transaction which is alleged to constitute an abuse. (36)
V.      Conclusion
105. In the light of the foregoing considerations, I propose that the Court should answer the question referred for a preliminary ruling by the tribunal du travail de Liège (Labour Court, Liège, Belgium) as follows:
Article 5(1) of Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses
must be interpreted as meaning that
the condition laid down therein, according to which Articles 3 and 4 of that directive do not apply to the transfer of an undertaking ‘where the transferor is the subject of bankruptcy proceedings or any analogous insolvency proceedings which have been instituted with a view to the liquidation of the assets of the transferor’, is not satisfied where the transfer of all or part of an undertaking is prepared prior to the opening of insolvency proceedings in the context of a procedure aimed at ensuring the continuation of the undertaking, which ends in a transfer agreement approval of which is refused by the competent court, and that transfer is then carried out immediately after the declaration of insolvency.
1      Original language: French.
2      Council Directive of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses (OJ 2001 L 82, p. 16).
3      See, inter alia, judgments of 22 June 2017, Federatie Nederlandse Vakvereniging and Others (C‑126/16, EU:C:2017:489; ‘the judgment in Smallsteps’); of 16 May 2019, Plessers (C‑509/17, EU:C:2019:424; ‘the judgment in Plessers’); and of 28 April 2022, Federatie Nederlandse Vakbeweging (Pre-pack procedure) (C‑237/20, EU:C:2022:321; ‘the judgment in Pre-pack procedure’).
4      See, to that effect, also, the Opinion of Advocate General Mengozzi in Federatie Nederlandse Vakvereniging and Others (C‑126/16, EU:C:2017:241, points 6 and 41 to 48; ‘the Opinion of Advocate General Mengozzi in Smallsteps’).
5      Loi du 21 mars 2021 modifiant le livre XX du Code de droit économique et le Code des impôts sur les revenus 1992 (Law of 21 March 2021 amending Book XX of the Code of Economic Law and the Income Tax Code 1992) (Moniteur belge of 26 March 2021, p. 28193).
6      More specifically, it mentions the judgments in Smallsteps and Pre-pack procedure.
7      See judgments of 7 August 2018, Colino Sigüenza (C‑472/16, EU:C:2018:646, paragraphs 28 and 29 and the case-law cited) and of 16 February 2023, Strong Charon (C‑675/21, EU:C:2023:108, paragraphs 47 and 48 and the case-law cited).
8      See, in more detail, the criteria set out in paragraph 30 of the judgment in Colino Sigüenza
and in paragraph 49 of the judgment in Strong Charon, mentioned in the footnote above, and the case-law cited therein.
9      See the order for reference, point II.4, final paragraph, p. 7.
10      See the order for reference, point II.4, first paragraph, p. 6, and point 29 of this Opinion.
11      See the judgment in Smallsteps (paragraph 38). As regards the objectives pursued by Directive 2001/23, see, also, in more detail, the Opinion of Advocate General Pitruzzella in Federatie Nederlandse Vakbeweging (Pre-pack procedure) (C‑237/20, EU:C:2021:997, points 31 to 35 and the case-law cited).
12      See the judgment in Smallsteps (paragraph 39). That provision does not, however, stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes in the workforce. See, in that regard, the judgment in Plessers (paragraph 54).
13      See the judgment in Smallsteps (paragraph 40).
14      See the judgment in Plessers (paragraph 38 and the case-law cited).
15      See the judgment in Pre-pack procedure (paragraph 38 and the case-law cited). See also, for an in-depth analysis of the case-law which ultimately led to the introduction of the provision now set out in Article 5(1) of Directive 2001/23, the Opinion of Advocate General Mengozzi in Smallsteps (points 41 to 48), and the Opinion of Advocate General Szpunar in Plessers (C‑509/17, EU:C:2019:50, points 42 to 47 and the case-law cited).
16      See the judgments in Pre-pack procedure (paragraph 43) and in Smallsteps (paragraph 47 and the case-law cited).
17      See the judgments in Pre-pack procedure (paragraph 44) and in Smallsteps (paragraph 48 and the case-law cited).
18      See the judgments in Pre-pack procedure (paragraph 44) and in Smallsteps (paragraph 48 and the case-law cited).
19      See the Opinion of Advocate General Mengozzi in Smallsteps  (point 2). See also, as regards the description of the pre-pack mechanism in the Netherlands, the judgment in Pre-pack procedure  (paragraphs 18 to 24).
20      Judgment in Smallsteps (paragraph 15).
21      Judgment in Smallsteps (paragraphs 49 and 50 and the case-law cited).
22      Judgment in Pre-pack procedure (paragraph 52).
23      Judgment in Pre-pack procedure (paragraph 53).
24      See point 20 of this Opinion.
25      See the judgment in Plessers (paragraphs 44 and 45 and the case-law cited).
26      See, in that regard, the Opinion of Advocate General Mengozzi in Smallsteps (point 76).
27      See, in that regard, the judgment in Pre-pack procedure (paragraph 46).
28      See, in that regard, the judgment in Pre-pack procedure (paragraph 53).
29      Judgment of 20 February 2024, X (Lack of reasons for termination) (C‑715/20, EU:C:2024:139, paragraph 73 and the case-law cited).
30      See, in that regard, the judgment in Plessers (paragraphs 28 and 29 and the case-law cited).
31      See, as regards that general principle, the Opinion of Advocate General Szpunar in Matmut (C‑236/23, EU:C:2024:560, point 58).
32      See, to that effect, judgment of 28 July 2016, Kratzer (C‑423/15, EU:C:2016:604, paragraph 42 and the case-law cited).
33      See judgment of 26 February 2019, N Luxembourg 1 and Others (C‑115/16, C‑118/16, C‑119/16 and C‑299/16, EU:C:2019:134, paragraph 126).
34      See, for a recent example, judgment of 21 December 2023, BMW Bank and Others (C‑38/21, C‑47/21 and C‑232/21, EU:C:2023:1014, paragraph 285 and the case-law cited).
35      See, to that effect, judgment of 28 July 2016, Kratzer (C‑423/15, EU:C:2016:604, paragraph 40).
36      See, to that effect, judgment of 13 March 2014, SICES and Others (C‑155/13, EU:C:2014:145, paragraph 34 and the case-law cited).