COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Revision of Regulation (EC) No 1346/2000 on insolvency proceedings
Date: 2012-12-12
Institutions: European Commission
Subjects: cross-border cooperation, enforcement of ruling, financial solvency, judicial cooperation in civil matters in the EU, judicial proceedings

EUROPEAN 
COMMISSION 

Strasbourg, 12.12.2012  
SWD(2012) 416 final 

COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying the document 

Revision of Regulation (EC) No 1346/2000 on insolvency proceedings 

{COM(2012) 744 final} 
{SWD(2012) 417 final}

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COMMISSION STAFF WORKING DOCUMENT 

IMPACT ASSESSMENT 

Accompanying the document 

Revision of Regulation (EC) No 1346/2000 on insolvency proceedings 

Disclaimer: “This report commits only the Commission's services involved in its preparation 
and does not prejudge the final form of any decision to be taken by the Commission” 

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Table of Contents 

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TABLE OF CONTENTS 

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENTError! Bookmark not defined

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

Background and Policy Context .................................................................................. 7 

Procedural issues and consultation of interested parties .............................................. 8 

Impact assessment study and expertise ........................................................................ 8 

Consultation of the IAB ............................................................................................... 8 

Stakeholders' consultation............................................................................................ 8 

Analysis of Fundamental Rights .................................................................................. 9 

Problem definition........................................................................................................ 9 

The key problems identfied in the evaluation of the application of the Regulation .... 9 

Problem group 1: Problems relating to the scope of the current Regulation ............. 10 

3.2.1.  The Regulation does not cover national insolvency proceedings which aim at 

rescuing companies .................................................................................................... 11 

3.2.2.  The Regulation does not effectively cover the full range of personal insolvency 

schemes of Member States......................................................................................... 13 

3.2.3.  The Regulation does not effectively deal with the insolvency of groups of companies14 

3.3.  Who is affected by problem group 1 and what is the extent of these problems?....... 16 

3.4. 

Problem group 2: Problems in the implementation of the Regulation....................... 18 

3.4.1.  No definition for COMI and consequent difficulties relating to determining 

jurisdiction for opening insolvency proceedings (the concept of COMI) and forum 
shopping ..................................................................................................................... 18 

3.4.1.1.  Determination of jurisdiction ..................................................................................... 18 

3.4.1.2.  COMI shift ................................................................................................................. 19 

3.4.2.  Relationship between the main and the secondary proceedings under the Regulation21 

3.4.3.  Difficulties in practical implementation relating to lack of publicity of the decisions 

relating to an insolvency procedure and to lodging of claims ................................... 23 

3.5.  Who is affected by problem group 2 and what is the extent of these problems?....... 25 

3.6. 

EU right to act ............................................................................................................ 28 

3.6.1.  Legal basis.................................................................................................................. 28 

3.6.2.  Principle of subsidiarity ............................................................................................. 28 

4. 

5. 

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Policy objectives for the revision of the EIR ............................................................. 28 

Policy options............................................................................................................. 29 

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5.1. 

5.2. 

5.3. 

6. 

6.1. 

6.2. 

6.3. 

7. 

8. 

Option A..................................................................................................................... 31 

Option B ..................................................................................................................... 33 

Discarded options/elements ....................................................................................... 33 

Evaluation of the Impacts of Policy Options ............................................................. 34 

Baseline scenario (Status Quo) .................................................................................. 34 

Option A: Modernizing the framework for cross-border insolvency proceedings .... 35 

Option B: Towards approximation of national insolvency laws and proceedings..... 40 

Comparison of the options and summary of the preferred option ............................. 42 

Monitoring and evaluation ......................................................................................... 44 

Annex 1: Glossary of Legal Terms and abbreviations............................................................. 46 

Annex 2: Executive summary of the outcome of the public consultation ............................... 48 

OVERVIEW OF MAIN FINDINGS ....................................................................................... 49 

Annex 3: Data on enterprises and insolvencies in the EU ....................................................... 52 

Annex 4: Information on personal insolvency proceedings in Member States........................ 57 

Annex 5: Hybrid proceedings in Member States and their inclusion in Annex A of the 

Insolvency Regulation................................................................................................ 59 

Annex 6: Information on insolvency registers in the Member States ...................................... 67 

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Identification: AP: 2013 JUST 012; Lead DG: DG Justice 

1. 

BACKGROUND AND POLICY CONTEXT 

At a time where the European Union is facing the biggest economic crisis in its history, the 
European  Council  has  repeatedly  emphasised  the  Union's  role  in  promoting  sustainable 
growth while pushing for financial consolidation. Growth has therefore been put at the heart 
of the Commission's agenda in the area of justice (“Justice for Growth”).  

One  of  the  measures  supporting  economic  activities  in  the  area  of  justice  as  set  out  in  the 
Commission's  Action  Plan  implementing  the  Stockholm  Programme1  is  the  revision  of 
Council  Regulation  (EC)  No  1346/2000  on  insolvency  proceedings  (the  “Regulation”  or 
“EIR”).  The  Regulation  establishes  a  legal  framework  for  cross-border  insolvencies  in  the 
European Union. From 2009-2011, an average of 200,000 firms went bankrupt per year in the 
EU,  resulting  in  direct  job  losses  each  year  of  1.7  million.  About  one-quarter  of  these 
bankruptcies have a cross-border element, and so fall under the EIR. As firms that trade cross-
border tend to be larger than average, the share of the number of jobs affected is likely to be 
greater than the share of bankruptcies, even before taking into account the effects on creditors 
of these firms. 

The  Commission  has  put  the  revision  of  the  EIR  in  its  Work  Programme  for  2012.  The 
revision links in with the EU's current political priorities to promote economic recovery and 
sustainable growth, a higher investment rate and the preservation of employment, as set out in 
the Europe 2020 strategy. The reform will also contribute to ensuring a smooth development 
and  the  survival  of  businesses,  as  stated  in  the  Small  Business  Act2.  The  Annual  Growth 
Survey 2012 announces the revision of the EIR, emphasising the importance of improving the 
effectiveness  of  cross  border  insolvency  rules.3  The  revision  is  also  one  of  the  key  actions 
listed in the Single Market Act II4.  

The review of the Regulation also links in with the broader issue of improving the efficiency 
of justice in the European Union. In its experience with the Member States under an economic 
recovery  programme,  the  Commission  has  identified  the  key  role  of  judicial  reforms, 
including  reforms  of  national  insolvency  laws,  as  a  means  to  promote  economic  recovery. 
This  was  reflected  in  the  European  Semester  in  2012  by  recommendations  made  to  certain 
Member  States  relating  to  efficient  insolvency  proceedings.  In  October  2011,  the  European 
Parliament  raised  the  same  issue  when  adopting  a  resolution  calling  for  the  revision  of  the 
Regulation and further recommending the harmonisation of specific aspects of insolvency law 
and company law. 

The revision of the Regulation will be adopted together with a report on its application, in line 
with the review clause of the Regulation5.  

1 
2 
3 
4 
5 

COM(2010)171, 20.4.2010. 
COM(2008)394,25.6.2008. 
COM(2011)815 
COM(2012)573,3.10.2012 
Article  46  reads:  “No  later  than  1  June  2012,  and  every  five  years  thereafter,  the  Commission  shall 
present to the European Parliament, the Council and the Economic and Social Committee a report on 
the  application  of  this  Regulation.  The  report  shall  be  accompanied  if  need  be  by  a  proposal  for 
adaptation of this Regulation.” 

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2. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

2.1. 

Impact assessment study and expertise  

DG  Justice  contracted  two  external  studies  to  support  the  impact  assessment:  an  evaluation 
study performed by the Consortium Heidelberg/Vienna University and an impact assessment 
study by the Consortium GHK/Milieu. The reports and results of these studies have been used 
for this Impact Assessment.6  

In May 2012, DG Justice set up an expert group of 20 individual experts in the field of cross-
border insolvencies. The group met five times from May to October 2012 and provided input 
on the problems, the options and helped on the drafting of the revised Regulation. 

An IA Steering group was established in April 2012. Two meetings were organised on 3 May 
and 6 September 2012 and were attended by SG, SJ, ENTR, DGT, EMPL, COMP, MARKT, 
SANCO,  CNECT,  and  ECFIN.  The  feedback  received  from  the  DGs  has  been  taken  into 
account throughout the report. 

2.2. 

Consultation of the IAB  

This impact assessment report was presented to the Commission's Impact Assessment Board 
on 3 October 2012. The Board recommended streamlining the problem definition by grouping 
the  presented  problems  and  sub-problems.  The  Board  also  suggested  providing  more 
information on the Member States' insolvency regimes, in particular as regards the hybrid and 
pre-insolvency  proceedings.  The  presentation  of  objectives  and  options  was  asked  to  be 
rechecked  to  follow  the  streamlined  problem  definitions.  As  regards  objectives,  more 
operation  objectives  were  to  be  identified.  Furthermore,  the  IA  Board  recommended  to 
present more expressly the analysis of advantages/disadvantages of the planned measures as 
well as to strengthen the existing quantification e.g. of the administrative burdens. Finally, the 
Board proposed improving the presentation of stakeholders' views in the relevant parts of the 
report. The recommendations and suggestions are reflected in particular in chapters 3 to 6 that 
were further elaborated compared to the earlier version commented on by the IA Board and 
by the inclusion of a new Annex 5 on hybrid and pre-insolvency proceedings.  

2.3. 

Stakeholders' consultation 

Stakeholders have been consulted as follows: 

• 

• 

• 

• 

6 

7

Public consultation on the future of European Insolvency Law (29 March – 21 June 
2012);7  

European  Judicial  Network  in  civil  and  commercial  matters,  meeting  of  Contact 
Points on 27 April 2012 and national insolvency experts; 

Meetings with business organisations such as UEAPME, Business Europe. 

Meetings with insolvency practitioners' organisations, such as INSOL Europe.  

reports  of 

The 
http://ec.europa.eu/justice/civil/document/index_en.htm 

available 

studies 

the 

are 

in 

the  Europa-website  of  DG 

Justice: 

http://ec.europa.eu/yourvoice/ipm/forms/dispatch?userstate=DisplayPublishedResults&form=I

nsolvency 

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The public consultation contained 31 questions related to the scope and the functioning of the 
Regulation. 134 answers were received from stakeholders in 25 Member States. While there 
are certain differences in opinion depending on the group of stakeholders (public authorities, 
businesses,  legal  practitioners),  the  answers  to  the  consultation  confirm  the  problems  and 
options that the Commission had identified  in the questionnaire. In particular, a majority of 
respondents  consider  that  while  the  EIR  works  relatively  well  in  general,  it  should 
accommodate  national  pre-insolvency  procedures,  it  does  not  work  for  the  insolvency  of  a 
group of companies, and finally, the absence of mandatory publication of decisions relating to 
insolvency procedures is a problem. A summary of the public consultation is in Annex 2. 

The opinions of the stakeholders have been taken into account throughout the IA process in 
the  determination  of  the  problems,  in  particular  on  the  extent  of  the  problem  and  the  most 
affected groups, and further, in the identification of possible solutions. 

2.4. 

Analysis of Fundamental Rights 

With  the  Lisbon  Treaty,  the  Charter  of  Fundamental  Rights  of  the  European  Union  (“the 
Charter”)8 has become legally binding9. This means that the EU's institutions, as well as the 
Member  States  when  implementing  Union  law,  have  to  respect  the  rights,  observe  the 
principles  and  promote  the  application  of  the  Charter  in  accordance  with  their  respective 
powers10. For this reason, all legislative proposals proposed by the Commission are subject to 
systematic  and  rigorous  monitoring  to  ensure  their  compliance  with  the  Charter11.  When 
assessing  the  impact  of  the  envisaged  initiative  to  improve  cross-border  insolvency 
proceedings, this report pays particular attention to fundamental rights in order to ensure that 
the  proposed  schemes  fully  respect  the  rights  and  principles  set  out  in  the  Charter,  in 
particular those in Article 17 (right to property), Article 16 (freedom to conduct a business), 
Article 47(2) (right to a fair trial) and Article 8 (protection of personal data). The basic rights 
and freedoms protected by the Treaties as well as the Charter, in particular the free movement 
of persons, services and establisment, Article 15 of the Charter, are also very relevant for this 
measure. 

3. 

PROBLEM DEFINITION  

3.1. 

The  key  problems  identfied  in  the  evaluation  of  the  application  of  the 
Regulation 

The EIR establishes uniform EU level rules for jurisdiction, the recognition and enforcement 
of insolvency-related decisions, and applicable law. It also provides for some coordination of 
different proceedings relating to the same debtor. In short,  

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The Regulation applies to legal and natural persons, whenever the debtor has assets 
or creditors in more than one Member State.  

OJ 2010 C 83/02, 389ss. 
Cf. Article 6 TEU. 
Cf. Article 51 (1) of the Charter. 
Communication  from  the  Commission  “Compliance  with  the  Charter  of  Fundamental  Rights  in 
Commission legislative proposals. Methodology for systematic and rigorous monitoring” COM (2005) 
172; Report on the practical operation of the methodology for a systematic and rigorous monitoring of 
compliance with the Charter of fundamental rights”. COM(2009) 205. 

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• 

Jurisdiction  for  opening  main  insolvency  proceedings  lies  with  the  court  where  the 
debtor  has  its  centre  of  main  interest  (COMI).  The  opening  decision  and  all  other 
decisions  issued  by  that  court  in  the  insolvency  proceedings  are  recognised  and 
enforced in all other Member States; 

Secondary proceedings can be opened in any Member State where the debtor has an 
establishment,  i.e.  any  place  where  the  debtor  carries  out  economic  activity.  The 
effect of secondary proceedings is limited to the assets located in that Member State. 
The liquidator of the secondary proceedings has to cooperate with his counterpart in 
the main proceedings (and vice-versa) in order to coordinate the proceedings; and 

The  law  applicable  to  the  insolvency  proceedings  is,  in  principle,  the  law  of  the 
opening of proceedings. This law determines, in particular, the ranking of claims and 
the procedural rights of the creditor. 

Adopted  in  May  2000,  the  EIR  applies  since  31  May  2002.12  It  is  binding  for  all  Member 
States except Denmark.13 The Regulation unified the private international law rules related to 
insolvency proceedings for all Member States as regards cross-border insolvencies inside the 
EU.  However,  it  should  be  stressed  that  the  Regulation  did  not  harmonise  the  substantive 
insolvency  legislations  of  the  Member  States,  but  insolvency  laws  vary  from  country  to 
country.  The  different  national  solutions  relating  to  certain  aspects  of  insolvency  laws  are 
presented in Annexe 5.  

Ten years after its entry into force, the Commission has evaluated the practical application of 
the  Regulation.  While  the  EIR  is  generally  considered to operate successfully in  facilitating 
cross-border insolvency proceedings within the European Union, the evaluation shows that a 
range of problems exists in the implementation of the Regulation and that the Regulation does 
not  sufficiently  reflect  current  EU  priorities  and  national  practices  in  insolvency  law,  in 
particular in promoting the rescue of firms in difficulties. 

The evaluation of the EIR has highlighted the following key problems: 

(1) 

(2) 

(3) 

(4) 

Obstacles to the rescue of companies and to the free movement of entrepreneurs and 
debt-discharged persons; 

Difficulties in determining the appropriate jurisdiction to open proceedings;  

Inefficiencies of cross-border procedures; 

No legal framework to cover insolvency of groups of companies.  

This section analyses the four problems, linking them together as they are interrelated. This 
means grouping the above problems around two themes, first problems regarding the scope of 
the Regulation and second, problems revealed in the implementation of the Regulation. 

12 

13 

For  Cyprus,  Czech  Republic,  Estonia,  Hungary,  Latvia,  Lithuania,  Malta,  Poland,  Slovakia  and 
Slovenia, the Regulation applies as from their accession in 1 May 2004 and for Bulgaria and Romania 
as from 1 January 2007. 
Denmark has opted out from the whole area of judicial cooperation in civil matters pursuant to Protocol 
(No 22) on the position of Denmark. UK and Ireland have possibility to opt-it to the instruments in the 
area of judicial cooperation in civil matters on the basis of Protocol (No 21) on the position of the UK 
and Ireland in respect of area of freedom security and justice, and they are participating to the EIR. 

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3.2. 

Problem group 1: Problems relating to the scope of the current Regulation 

The first set of problems covers issues relating to gaps in the current scope of the Regulation, 
such  as  lack  of  provisions  on  pre-insolvency  schemes,  of  provisions  on  debt  discharge 
procedures for natural persons as well as of specific rules on groups of companies. 

Indeed,  the  current  Regulation  covers  “collective  insolvency  proceedings  which  entail  the 
partial or total divestment of the debtor and the appointment of a liquidator”14. The debtor can 
be a natural or a legal person, a trader or a private individual15. The Regulation contains a list 
of national procedures which fulfil these criteria in its Annex A. It is for each Member State 
to decide whether it wants to notify a particular national procedure to be included in Annex A 
of the EIR. 

Since  the  Regulation  was  enacted,  many  Member  States  have  modernised  their  insolvency 
laws  by  introducing  new  procedures  which  aim  at  rescuing  businesses,  providing  a  second 
chance  to  honest  entrepreneurs  and  allowing  a  debt  discharge  for  private  persons.  Many  of 
these new procedures are not covered by the Regulation and their effects are not recognised in 
other Member States. Moreover, although a large number of cross-border insolvencies involve 
groups  of  companies,  the  Regulation  does  not  contain  specific  rules  dealing  with  the 
insolvency of a multi-national enterprise group.  

3.2.1.  The  Regulation  does  not  cover  national  insolvency  proceedings  which  aim  at 

rescuing companies 

The  EIR's  definition  of  insolvency  proceedings  does  not  cover  national  procedures  which 
provide  for  the  restructuring  of  a  company  at  a  pre-insolvency  stage  (“pre-insolvency 
proceedings”)  or  leave  the  existing  management  in  place  (“hybrid  proceedings”).  However, 
such proceedings have recently been introduced in most Member States and are considered to 
increase  the  chances  of  successful  restructuring  of  businesses.  They  enable  financially 
distressed  enterprises  to  become  again  competitive  and  productive  participants  in  the 
economy, thereby benefitting not only their creditors but society at large. 

The benefits of business rescue can be summarized as follows:  

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• 

14 
15 
16 

Maximisation of asset value: The rescue of a company allows preserving the value 
of its technical know-how and business goodwill whereas liquidation is limited to the 
value of the company's physical assets16.  

Better  recovery  rates  for  creditors,  i.e.  the  percentage  of their  debt  that  creditors 
get  back:  In  France,  the  median  recovery  rates  for  liquidated  firms  are  less  than 

one‐third of those for “rehabilitated” firms (31% vs. 96%); the same is true also for 

Article 1 of the EIR. 
See Recital 9 of the EIR. 
A  Second  Chance  for  Entrepreneurs,  Prevention  of  Bankruptcy,  Simplification  of  Bankruptcy 
Procedures  and  Support  for  a  Fresh  Start’,  Final  Report  of  the  Expert  Group  (January  2011),  DG 
Enterprise 
http://ec.europa.eu/enterprise/policies/sme/business-
environment/files/second_chance_final_report_en.pdf,  p.  7.;  see  also  IMF,  Orderly  and  Effective 
Insolvency Procedures (1999) available at http://www.imf.org/external/pubs/ft/orderly/#genobj  

available 

Industry, 

and 

at 

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• 

the  UK,  even  though  the  difference  between  the  median  recovery  rates  seems 
smaller.17 

Saving  jobs.  Saving  companies  saves  jobs.  This  is  an  important  benefit  given  that 
the  total  number  of  insolvency  related  job  reductions  in  2009  is  estimated  at  1.7 
million.18  

Lower costs: the costs of pre-insolvency and hybrid insolvency proceedings are on 
average lower than that of traditional insolvency proceedings.  

Avoidance  of  reputational  risks  and  directors’  liability,19  allowing  entrepreneurs 
to continue their activities. 

Encouraging entrepreneurship: fear of bankruptcy and its consequences acts as a 
deterrent  to  entrepreneurship;20  efficient  pre-insolvency  and  hybrid  insolvency 
proceedings ease entrepreneurs’ fears and encourage entrepreneurial activity. 

The aim of these rescue proceedings is to help the recovery of fundamentally sound firms that 
face temporary difficulties; they are not intended to prevent the exit of inefficient firms from 
the  market,  as  this  would  impede  the  growth  of  more  efficient  competitors  and  hamper 
structural changes in the economy.  

The Heidelberg study revealed that almost two thirds of Member States have pre-insolvency 
or  hybrid  proceedings  which  are  not  covered  by  the  Regulation  with  the  consequence  that 
there  is  no  EU-wide  recognition  of  their  effects,  notably  the  stay  of  individual  enforcement 
actions. As a result, the following problems occur: 

• 

• 

• 

Foreign  creditors  can  continue  with  individual  enforcement  actions  against  the 
company and its assets; individual enforcement action can jeopardize the success of 
the  rescue  or  restructuring.  This  possibility  can  in  particular  be  used  by  dissenting 
foreign creditors (the so-called ‘holding-out’ problem).21  

Foreign creditors will be less willing to fully engage in restructuring negotiations 
or  consent  to  rescue  plans  involving  a  certain  reduction  of  their  claims;  as  a 
consequence, the opportunity of rescuing the company may be lost.22 

Opportunities  for  the  continuation  of  businesses  through  pre-insolvency  and 
hybrid proceedings are reduced and jobs are lost. 

These problems are reflected by the views of respondents to the public consultation in which 
51% of those who expressed an opinion felt that the lack of coverage of pre-insolvency or 

17 

18 

19 

20 

21 
22 

(2011) 

Industry 

Forum  Shopping  and  the  Global  Benefits  of  Soliciting  Insolvency,  p.  9  citing  IMF,  “2  –  General 
Objectives and Features of Insolvency Procedures”, p.8. 
The Expert Group, “A Second Chance for Entrepreneurs, Prevention of Bankruptcy, Simplification of 
Bankruptcy Procedures and Support for a Fresh Start.” , Final Report for Directorate General Enterprise 
http://ec.europa.eu/enterprise/policies/sme/business-
and 
environment/files/second_chance_final_report_en.pdf)  
Nunez-Lagos, 
‘The 
reform.eu/uploads/papers/PAPER%206-2.pdf, p. 143. 
A  Second  Chance  for  Entrepreneurs,  Prevention  of  Bankruptcy,  Simplification  of  Bankruptcy 
Procedures and Support for a Fresh Start 
ibid. 
ibid. 

http://www.eir-

(available 

available 

scenario 

trends’, 

and 

A., 

at 

at 

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hybrid  insolvency  proceedings  is  problematic.  59%  also  agreed  the  EIR  should 
accommodate  national  pre-insolvency  procedures,  with  academics,  public  authorities  and 
insolvency  practitioners  particularly  in  favour  of  this.  Views  were  mixed  on  exactly 
which  proceedings  should  be  covered  and  in  particular  where  court  oversight  should  be 
required. 

Examples  of  problems  raised  included  cases  differing  views  of  Member  States  on  which 
proceedings  could  be  covered  by  the  EIR;  uncertainty  relating  to  schemes  of  arrangement 
available to UK firms in financial difficulty and how they are recognised at EU level and risks 
to workers interests.  

Case example: Rechtbank 's Gravenhage, judgment of 10 June 201023 

A Dutch national had lived for several years in Germany and had taken out loans from several 
German banks to invest in the German property market. After his return to the Netherlands, 
his business went into financial difficulties and he was unable to repay the instalments on the 
loans.  He  eventually  filed  a  petition  with  the  court  in  The  Hague  requesting  the  opening  of 
debt  reorganisation  proceedings  under  the  Dutch  Bankruptcy  Act.  In  these  proceedings,  a 
debtor can request the court to oblige dissenting creditors that have not consented to an offer 
made  by  the  debtor  to  do  so  if  the  judge  considers  that  they  are  unreasonably  withholding 
their consent from the proposed arrangement (“cram down”). However, the court refused to 
grant  the  requested  order,  arguing  that  since  the  debt  reorganisation  proceedings  were  not 
covered  by  the  EIR,  the  cram-down  of  dissenting  creditors  would  not  be  recognised  in 
Germany, where the debtor's creditors were located, and therefore be ineffective. The Dutch 
entrepreneur had to apply for insolvency and have his business liquidated. 

The case illustrates that the fact that a national pre-insolvency, hybrid or personal insolvency 
procedure  is  not  covered  by  the  EIR  can  prevent  the  successful  rescue  of  business  or 
reorganisation of personal debt in cross-border situations. 

In addition, concerns have been raised that a few Member States have included proceedings in 
Annex  A,  which  actually  do  not  fulfil  the  criteria  of  the  EIR.  Following  the  ruling  of  the 
CJEU  in  the  Eurofood  case,  a  court  cannot  challenge  the  validity  or  appropriateness  of  any 
proceedings included in the Annex of the Regulation. This situation creates a risk to mutual 
trust  since  some  courts  do  not  consider  it  appropriate  to  recognise  certain  proceedings,  yet 
they are required to.  

3.2.2.  The  Regulation  does  not  effectively  cover  the  full  range  of  personal  insolvency 

schemes of Member States 

The  growth  of  personal  over-indebtedness  in  Europe  since  the  late  1980s  has  led  to  many 
Member  States 
including  debt  discharge 
proceedings24.  Such  personal  insolvency  scheme  can  be  applicable  either  to  individuals  as 

introducing  personal 

insolvency  schemes, 

23 
24 

Full decision available at www.insolvencycases.eu .  
Denmark  (1984);  France  (1989);  Finland  (1993),  Sweden  (1994),  Austria  (1993),  Germany  (enacted 
1994 but not in force until 1999), Belgium (1998), Netherlands (1997), Luxembourg (2000), England 
and  Wales  (2002),  Portugal  (2004),  Latvia  (2008)  (based  partly  on  English  model  of  individual 
voluntary  arrangement),  Czech  Republic  (2008),  Slovakia  (2006),  Slovenia  (2008),  Poland  (2009), 
Greece (2010) (based partly on German model), Italy (2012), Ireland (on-going). Ramsay, I., ‘Between 
Neo-Liberalism and the Social Market: Approaches to Debt Adjustment and Consumer Insolvency in 
the 
at 
http://cadmus.eui.eu/bitstream/handle/1814/18255/2011_09.pdf?sequence=1  (accessed  on  17  August 
2012), p. 5. 

available 

Working 

2011/09, 

Papers 

EU’, 

EUI 

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entrepreneurs  or  consumers  or  both  of  them,  depending  of  the  Member  State's  political 
choices. This development reflects the increasing awareness that insolvency and the ensuing 
personal debt is a significant obstacle to entrepreneurship because entrepreneurs often finance 
their business using personal loans, possibly secured against their houses. The introduction of 
the  possibility  to  obtain  a  debt  discharge  also  aims  to  counter  the  negative  social  impacts 
which private over-indebtedness has on the individuals concerned and their families. 

The Regulation covers the insolvencies of natural persons, and some MSs have indeed already 
notified procedures that apply to "consumer insolvencies". There seem to be no problems in 
the  application  of  the  Regulation  to  these  proceedings  in  practice.  However  there  is  an 
obstacle to the coverage of further national personal insolvency procedures by the Regulation. 
While several personal insolvency procedures are covered by the Regulation, a considerable 
number of others are not25. This situation is partly because the proceedings do not match the 
EIR's definition - e.g. the Scandinavian procedures and some common law systems, because 
they do not foresee the appointment of a liquidator -, were only recently introduced or are not 
considered to fall within the scope of the Regulation by the respective Member States.  

As  a  consequence,  some  personal  insolvency  schemes  are  not  recognised  in  other 
Member  States  and  there  is  a  heterogeneous  situation  in  the  EU.  The  diversity  of  national 
laws adds complexity to the issue: Some Member states have no personal insolvency schemes 
at  all.  Other  have  personal  insolvency  schemes  that  apply  both  to  self-employed  or  sole-
traders  and  consumers.  A  third  group  has  schemes  only  for  consumers  and  include  self-
employed  and  sole-traders  in  company  insolvencies,  whereas  a  fourth  group  has  separate 
schemes for consumers, self-employed and sole traders.  

The current situation is a problem because it can result in debtors remaining liable to foreign 
creditors. However there is no good reason why the Regulation should discriminate between 
the personal insolvency proceedings available at national level and why it should cover some 
but  not  the  others.  Where  a  debt  discharge  procedure  is  not  covered  by  the  Regulation,  the 
debt  discharge  has  no  effect  against  foreign  creditors  of  the  individual.  Consequently,  an 
honest  entrepreneur,  who  has  been  discharged  from  its  debts  in  one  Member  State  may  be 
prevented  from  starting  a  new  business  in  or  trading  with  another  Member  State,  thereby 
affecting  his  freedom  of  establishment  or  to  provide  services  and  to  conduct  business.  The 
problem can  also discourage debtors who have  benefitted from a debt discharge at home to 
live  or  seek  employment  in  another  Member  State,  thereby  affecting  the  free  movement  of 
persons and workers. The fact that the EIR does not cover some personal insolvency schemes 
therefore constitutes an obstacle to offering a second chance to honest entrepreneurs and debt-
discharged  persons,  and  allowing  them  to  make  full  use  of  the  opportunities  of  the  single 
market. This is in contradiction with EU policies on entrepreneurship. 

Half  of  respondents  to  the  public  consultation  (49%)  agreed  that  the  EIR  should  apply  to 
private  individuals/self-employed,  while  one  third  (34%)  disagreed,  with  those  in  favour 
including judges, insolvency practitioners and academics. Some respondents did not think an 
expansion should include consumers. 

25 

Personal insolvency proceedings of AT, BE, CZ, DE, LV, NL, PL and UK are covered in the EIR but 
some  of  these  Member  States  have  not  included  all  proceedings  allowing  a  debt  discharge  of  natural 
persons  in  the  annex,  e.g.  the  Dutch  schuldsaneringsregeling  and  the  UK  debt  relief  orders  and  debt 
management  plans  are  not  covered.  The  personal  insolvency  proceedings  of  EE,  EL,  FI,  FR,  IT,  LT, 
LUX, PT, SK, SL and SV are currently not covered in the Regulation; the EIR does not apply to DK. 
Moreover, some Member States which have included personal insolvency schemes in the annex have 
not included all their schemes. 

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3.2.3.  The Regulation does not effectively deal with the insolvency of groups of companies 

The  basic  premise  of  the  Regulation  is  that  insolvency  proceedings  relate  to  a  single  legal 
entity and that, in principle, separate proceedings must be opened for each individual member 
of the group. There is no compulsory coordination of the independent insolvency proceedings 
opened for a parent company and its subsidiaries. The Regulation has no provision allowing 
corporate groups to reorganise together or – where this is not possible – at least to coordinate 
their liquidation. Neither liquidators nor courts are under a duty to coordinate the independent 
proceedings  opened  for  each  group  member.  While  it  is  possible  for  the  liquidators  in  the 
respective  main  proceedings  to  coordinate  their  work  in  order  to  maximise  the  value  of  the 
group's assets or the prospects for successful restructuring, judges in many Member States are 
currently  prevented  from  cooperating  with  each  other  because  there  is  no  legal  basis 
authorising them to do so. 

The  lack  of  specific  provisions  for  group  insolvency  is  problematic  because  it  often 
diminishes  the  prospects  of  successful  restructuring  and  reduces  the  value  of  the  group's 
assets.  An  individual  group  member  may  not  be  economically  viable  outside  the  group 
structure  because  the  group  is  structured  in  a  way  that  indispensable assets,  e.g.  intellectual 
property rights, or activities, e.g. cash management, are pooled in a different member of the 
group.  In  such  cases,  it  will  be  difficult  if  not  impossible  to  reorganise  different  group 
members separately.  

Similarly, a significant part of the value of a group may lie in the cooperation of its members, 
e.g. distribution networks tailored to particular production patterns, operational and financial 
management, or simply business goodwill such as brand recognition. This value is lost when 
assets and affairs of related group members are liquidated separately rather than as a package. 
The  following  case  is  an  example  of  how  such  piecemeal  liquidation  can  lead  to  value 
destruction: 

Case example: The insolvency of KPNQwest26 

The  KPNQwest  group  owned  cables  running  through  a  number  of  States  and  across  the 
Atlantic Ocean. However, cables in Member States were owned by subsidiaries registered in 
those States. When the Dutch parent company, KPNQwest N.V., went into bankruptcy many 
of  the  subsidiaries  had  to  enter  insolvency  proceedings  as  well.  As  a  result  it  proved  very 
difficult to coordinate the sale of the cables. The subsequent disintegration of the group likely 
resulted in much lower proceeds than if assets of the enterprise had been sold as a whole. 

Case-law  has  tried  different  ways  to  overcome  the  lack  of  specific  provisions  on  group 
insolvency:  

In the first years after the entry into force of the Regulation, some national courts interpreted 
the  Regulation's  rules  on  jurisdiction  broadly  so  as  to  bring  insolvency  proceedings  for  all 
members of the group, including those located in another Member State, before the court at 
the  parent  company's  registered  office.  The  courts  concerned  generally  justified  such  a 
consolidation  of  insolvency  proceedings  on  the  grounds  that  the  subsidiaries’  commercial 
decisions were controlled by the parent company27. This approach has obvious advantages in 

26 

27 

Van  Galen,  R.,  ‘The  European  Insolvency  Regulation  and  Groups  of  Companies’,  INSOL  Europe

Annual Congress, October 2003, p. 2. 

This approach began in England and was adopted by courts in Member States such as France, Germany, 
Hungary  and  Italy,  cf  Christoph  Paulus,  Group  Insolvencies  –  Some  thoughts  about  new  approaches, 
Texas International Law Journal, vol 42, p. 819, 822.  

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terms  of  efficiency  but  was  also  criticised  for  not  respecting  the  legitimate  expectations  of 
creditors  who  did  not  contemplate  the  application  of  the  parent  company's  law  to  the 
insolvency  proceedings  and,  in  particular,  the  ranking  of  their  claims  when  entering  into 
commercial relationships with the subsidiary28.  

The  2006  CJEU's  Eurofood  decision  considerably  reduced  the  scope  of  application  of  the 
possibility  for  such  procedural  consolidation  and  reinforced  the  rule  that  each  legal  entity 
should  be  treated  separately29.  According  to  the  Court,  control  of  corporate  direction  alone 
does  not  suffice  to  locate  the  centre  of  economic  interest  of  a  subsidiary  with  its  parent 
company, rather than at its own registered address. After Eurofood, it is still possible to open 
insolvency proceedings over a subsidiary in the Member State where the parent company has 
its registered office, but only if the factors showing that the subsidiary's COMI is located at 
the seat of the parent company are objective and ascertainable by third parties. This means in 
practice  that  courts  have  to  examine  a  complex  bundle  of  factors,  including  whether  the 
financing of a subsidiary is taken care of by the parent company, whether the parent company 
controlled  the  operational  business  (e.g.  by  approving  purchases  above  a  certain  threshold) 
and the hiring of staff, whether certain functions (e.g. the management of the IT equipment or 
the  visual/business  identity)  were  centralised30.  Essentially,  these  conditions  will  only  be 
fulfilled in the case of heavily integrated companies. 

Another approach taken in practice is the appointment of the same insolvency practitioner in 
the proceedings of all members of the group involved, or of insolvency practitioners who have 
previously  worked  together  successfully  on  group  insolvencies31.  Such  best  practices  may 
reduce the problems outlined above. However, without specific rules on group insolvency, the 
success  of  such  measures  will  depend  on  the  willingness  of  the  respective  insolvency 
practitioners and judges to cooperate.  

The reason for the lack of specific rules on enterprise groups in the Regulation is threefold: 
when the Convention that later became the Regulation was negotiated in the 1980s and 1990s, 
the phenomenon of groups of companies was not as widespread it is today. The drafters of the 
Insolvency Convention conceived multinational operations to be structured predominantly as 
“establishments” in other Member States rather than independent legal entities. Moreover, at 
that  time,  the  reorganisation  or  rescue  of  companies  was  not  a  prevailing  option  in  the 
domestic  insolvency  laws  of  Member  States  and  liquidation  was  the  norm.  Finally,  the 
creation  of  rules  for  groups  of  companies  raised  complex  problems  and  it  may  have  been 
considered politically and practically prudent to postpone it to a later date32. The UNCITRAL 
Model  Law  on  cross-border  insolvency  which  was  adopted  two  years  after  the  European 
Insolvency Convention in 1997 also does not contain any rules on group insolvency33. 

28 

29 
30 
31 
32 

33 

The  Regulation  provides  that  the  law  applicable  to  the  insolvency  proceedings  and,  in  particular,  the 
ranking of creditors is the law of the State where proceedings are opened, i.e. usually the place of the 
company's  registered  office.  If  proceedings  are  opened  in  a  different  country,  e.g.  that  of  the  parent 
company, creditors are faced with different rules than those on which they based their risk assessment 
when entering into commercial relations with the subsidiary. 
Case C-341/04 Eurofood IFSC Ltd, 2006, at para 30. 
See e.g. the decision of the High Court in Daisytek, 16.5.2003.  
E.g. Nortel  
See Bob Wessels, Multinational Groups of companies under the EC Insolvency Regulation: Where do 
we  stand,  2009  at  www.bobwessels.nl;  Alain  Stomel,  Answering  the  call  of  the  European  Court  of 
Justice  in  Eurofood,  IES  Working  Paper  10/2011;  Nicolaes  W.A.  Tollenaar,  Proposal  for  Reform: 
Improving  the  ability  to  rescue  multinational  enterprises  under  the  European  Insolvency  Regulation, 
IILR 2011, p. 252. 
A legislative guide on the treatment of enterprise groups in insolvency was only adopted in 2010. 

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Half of respondents to the public consultation (49%) felt the EIR does not work efficiently 
for multinational group insolvencies with one third (30%) feeling it does. 

3.3.  Who is affected by problem group 1 and what is the extent of these problems? 

The problems set out above affect all parties involved in insolvency procedures. Debtors are 
affected  in  their  capacity  to  rescue  and  continue  their  business  (which  impacts  on  their 
freedom  to  conduct  business  in  the  EU);  creditors  are  affected  as  the  problems  reduce  the 
value of the assets and their recovery rate. SMEs, which tend to be heavily dependent on one 
or a small number of large customers, can be particularly affected by the liquidation of one of 
them.  Employees  are  affected  because  they  lose  their  jobs  if  a  restructuring  fails  due  to  the 
problems  outlined.  Tax  and  social  security  authorities  (as  creditors)  see  the  chances  of 
contribution payments by companies reduced.  

On  the  other  hand,  the  gaps  in  coverage  of  personal  insolvencies  primarily  affect  the 
individual debtors whether they are professionals, sole traders or consumers. However, doubts 
over the recovery of assets and difficulties that can occur with restructuring plans also reduces 
the  readiness  of  foreign  businesses  and  banks  to  grant  credit  to  natural  persons.  Ultimately, 
given  the  impacts  of  indebtedness  on  entrepreneurship  and  on  individuals  including  their 
family life, health and work, this will have impacts on society and on the economy. 

Between  2009  and  2011,  more  than  200,000  companies,  or  about  1%  of  all  EU  companies, 
went  bankrupt  per  year  in  the  EU34,  which  means  more  than  550  companies  go  bankrupt 
every day. It is estimated that about 1% of these insolvencies concern companies which are 
member of a multi-national group of companies. This means that more than 2 100 companies 
(2050 SMEs and large enterprises) are affected by inefficiencies in handling group insolvency 
(for details see Annex 6).  

The  job  losses  are  estimated  to  be  about  1.7  million  per  year.  It  is  estimated  that  25%  of 
European  companies  (about  5  Million)  have  customers,  creditors  or  business  partnerships 
(subsidiaries, joint ventures or branches) in other Member States and are therefore potentially 
affected  by  the  Regulation  as  debtors  or  creditors  in  case  of  an  insolvency.  About  50,000 
companies  (1%  of  5  Million)  per  year  will  be  debtors  and  at  least  twice  as  many  will  be 
creditors  in  a  cross-border  insolvency  to  which  the  EIR  applies.  As  to  the  relevance  of 
secondary proceedings, there are close to 700 enterprises with foreign establishments entering 
into  insolvency  procedures  every  year.  Insolvency  proceedings  for  these  companies  can 
potentially trigger secondary proceedings in the Member States where their establishments are 
located. (See Annex 3 for further details). 

Cross-border insolvencies particularly affect large companies because these are more likely to 
do  business  across  borders  than  SMEs.  The  insolvency  of  a  large  company  has  significant 
effects on the European economy because large companies, although only representing 0.2% 
of  European  companies,  provide  30%  of  jobs  in  the  EU  and  produce  41%  of  gross  added 
value.  Essentially,  the  larger  a  company,  the  more  likely  it  is  to  be  a  member  of  a  group. 
According  to  the  April  2011  report  of  the  Reflection  Group  on  the  Future  of  EU  Company 
Law, the international group of companies has become the prevailing form of European large-
sized  enterprises,  in  which  business  activity  is  typically  organised  and  conducted  through  a 
multinational network of subsidiaries. About 20% of large enterprises (ca. 8,500) have foreign 
subsidiaries  or  joint  ventures35.  By  contrast,  only  5%  of  EU  SMEs  have  reported  that  they 

34 
35 

Estimates by Creditreform; see Annex 6 for details. 
2007 Eurobarometer survey, for details see Annex XXX. 

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have  subsidiaries  or  joint  ventures  abroad.  Nevertheless,  with  over  twenty  million  SMEs  in 
the EU as a whole, this means that there are more than one million SMEs in Europe which 
have subsidiaries or joint ventures abroad36.  

Moreover, large companies will often source their supplies from smaller companies, possibly 
located  in  a  number  of  Member  States,  so  that  the  insolvency  of  a  large  company  can  have 
sizeable knock-on effects, as the following example shows: 

The bankruptcy of MG Rover 

MG  Rover  was  a  British  manufacturer.  The  company  was  formed  in  2000  out  of  the  car-
making  and  engine  manufacturing  assets  of  the  original  Rover  Group.  When  the  company 
went  into  liquidation  in  2005  more  than  6,000  workers  at  MG  Rover  lost  their  jobs  and  as 
many as 25,000 jobs were reported to have been lost in related supply industries, meaning that 
the  total  number  of  job  losses  brought  on  by  MG  Rover's  collapse  was  somewhere  in  the 
region of 30,000.  

Where  pre-insolvency  and  hybrid  proceedings  exist,  companies  increasingly  resort  to  them 
rather  than  to  traditional  insolvency  proceedings  because  they  are  considered  to  be 
particularly effective in rescuing troubled businesses. Since the French sauvegarde procedure 
was introduced in 2006, the number of enterprises resorting to it has reached more than 1000 
per year. While this number may seem small compared with the 58,195 companies that had 
recourse  to  the  traditional  insolvency  proceedings  (redressement  judiciaire  and  liquidation 
judiciaire) in 2011, many sauvegarde proceedings apply to big and medium-sized companies 
and enterprises, meaning that their impact on employment and the economy at large is out of 
all  proportion  to  the  number  of  companies  making  use  of  these  proceedings37.  The  positive 
economic effect of pre-insolvency and hybrid proceedings is also corroborated by data from 
the OECD which shows that the rate of loss of manufacturing companies is lower in countries 
where those proceedings are available (1.8 versus 2.6%)38. 

As regards personal insolvencies, it is estimated that for the 1739 Member States with personal 
insolvency schemes, there were around 470,000 insolvencies in 2011 (for details see Annex 
5).  On  the  basis  of  this  figure,  the  number  of  personal  insolvencies  which  are  currently  not 
covered by the EIR can be estimated at about 200,000 per year40. Not all of these individuals 
will want to make use of their freedom to move to another Member State but for those who 
do,  the  absence  of  the  recognition  of  their  debt  discharge  in  another  Member  State  would 
constitute a significant deterrent.  

3.4. 

Problem group 2: Problems in the implementation of the Regulation 

Various  difficulties  have  been  experienced  in  the  practical  implementation  of  the  EIR, 
concerning e.g. difficulties with the definitions and difficulties when the main and secondary 
proceedings  run  in  parallel.  There  are  also  problems  in  practice  caused  by  lack  of 
transparency or by lack of facilitation of lodging claims. 

36 
37 
38 
39 
40 

Internationalisation of European SMEs, EIM, report for DG Enterprise and Industry. 
GHK/Milieu report 
GHK/Milieu report 
Denmark is not counted because the EIR does not apply to Denmark. 
Exact figures exist for FI, FR, ES, SV and the UK. Given that only some UK schemes are covered by 
the EIR, only half of the UK personal insolvencies were counted. For the remaining five countries, the 
median rate of 12603 personal insolvencies was taken.  

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3.4.1.  No  definition  for  COMI  and  consequent  difficulties  relating  to  determining 
jurisdiction  for  opening  insolvency  proceedings  (the  concept  of  COMI)  and  forum 
shopping 

3.4.1.1.  Determination of jurisdiction 

The Regulation grants jurisdiction to open main insolvency proceedings to the courts of the 
Member State where the debtor has its centre of its main interests (“COMI”). The concept of 
COMI is crucial for the functioning of the EIR because, subject to the opening of secondary 
proceedings, the entire international insolvency case will be handled in the Member State of 
the COMI and be subject to that State's insolvency law.  

The EIR does not offer a definition of COMI. It only contains a presumption that the COMI 
of  a  company  is  located  at  the  place  of  its  registered  office.  A  recital  clarifies  that  COMI 
should correspond to the place where the company “conducts the administration of its interest 
on a regular basis and in a manner ascertainable by third parties”41.  

The  concept  of  COMI  has  considerable  merits  because  the  emphasis  on  the  real  seat  rather 
than on mere formalities ensures that the case will be handled in a jurisdiction with which the 
debtor has a genuine connection rather than in the one chosen by the incorporators. COMI has 
also  been  chosen  as  a  jurisdictional  standard  by  UNCITRAL  in  its  Model  Law  on  cross-
border insolvency.  

While there is general support for the concept of COMI as such – 77% of the respondents to 
the  public  consultation  approved  the  use  of  COMI  to  determine  jurisdiction  for  main 
proceedings – its application in practice has given rise to difficulties42. 51% considered that 
the  interpretation  of  the  term  COMI  by  case-law  caused  practical  problems,  with  the  most 
critical  being  private  individuals/self-employed  (67%),  banks  (75%),  judges  (58%),  and 
insolvency  practitioners  (61%).  While  some  felt  clarifications  given  by  the  ECJ  have  been 
very helpful to achieve a more uniform application of the term, the COMI standard has been 
criticised  for  being  too  vague  and  unclear,  making  it  difficult  for  the  parties  concerned  to 
predict  the  decision  on  jurisdiction  and  for  the  courts  involved  to  decide  in  a  coherent 
manner.43 It has also been reported (for example, in the Heidelberg study) that national courts 
are not sufficiently aware of the jurisprudence of the CJEU.  

Furthermore, the procedural framework for determining jurisdiction in many Member States 
has  been  criticised  as  being  deficient.  There  is  no  routine  examination  of  jurisdiction  in 
several  Member  States44.  Even  where  there  is,  judges  often  do  not  specify  whether  the 
proceedings  are  main  or  secondary  proceedings  under  the  EIR.  In  addition,  many  national 
procedures do not give creditors the possibility to make their views heard, because there is no 

41 
42 

43 

44 

Cf Recital 13. 
Asked whether the interpretation of the term COMI by case-law causes problems in practice, a small 
majority  of  national  reporters  of  the  Heidelberg/Vienna  study  answered  in  the  affirmative.  Most  of 
those answering in the negative did so because they were unable to report cases on COMI from their 
jurisdiction, LT, LUX, MT, HU, SL, RO, NL (cf answers to Question 7).  
It  has  notably been  argued  that  the  assessment  of  multiple  factors required by  the  Court  of  Justice  to 
determine  COMI  (e.g.  in  CJEU  C-396/09,  judgment  of  20.10.2011  Interedil  Srl,  para  53;  C-341/04, 
judgment  of  2.5.2006  Eurofood,  para  33-36)  requires  a  complex  analysis  which  is  prone  to  diverge 
between courts.  
The  EIR  does  not  contain  an  express  obligation  for  the  court  opening  insolvency  proceedings  to 
investigate the international jurisdiction, although the CJEU held repeatedly that this obligation follows 
from the system of the EIR.  

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hearing  on  the  opening  of  proceedings  or  no  effective  means  to  challenge  the  opening 
decision.  

The problems of the procedural framework make it difficult for a judge seized with a request 
to open proceedings to determine whether proceedings have already been opened in another 
Member State and, if so, which type of proceeding is still “available” to be opened by him. 
This  risks  the  opening  of  parallel  main  proceedings  with  ensuing  conflicts  of  competence. 
These  issues  also  facilitate  forum-shopping  by  debtors  applying  for  the  opening  of 
proceedings in a Member State with a more favourable insolvency regime (see immediately 
below). 

3.4.1.2.  COMI shift 

The  EIR's  jurisdiction  rules  have  also  been  criticised  for  allowing  forum  shopping  by 
companies and natural persons through abusive COMI-relocation. It does indeed happen that 
a  debtor  relocates  its  COMI  to  another  Member  State  but  not  all  such  relocations  can  be 
considered abusive.  

There are various reasons for moving COMI to another country. Most of these are not directly 
related to insolvency: the move may be driven by the desire to benefit from the better market 
conditions, working opportunities, tax regime or company law of another country. 

In  relation  to  companies,  such  moves  have  been  accepted  by  the  Court  of  Justice  as  a 
legitimate exercise of the freedom of establishment. Thus, the Court of Justice clarified in its 
Centros decision that doing business in a Member State through a company incorporated in 
another  Member  State  is  covered  by  the  freedom  of  establishment,  even  if  the  company's 
registered  seat  was  chosen  to  avoid  the  minimum  capital  requirement  rules  of  the  Member 
State of the company's real seat and it was never intended to conduct business in the State of 
incorporation45. There are also cases of companies relocating their COMI specifically with the 
aim of benefitting from a more favourable foreign insolvency regime. Such COMI shifts often 
occur with the consent or at the instigation of the (senior) creditors in order to facilitate the 
company's restructuring. There are several cases where COMI relocation to the UK allowed 
the successful restructuring of a company because of the flexibility which English insolvency 
law grants companies in this respect46.  

COMI-relocation has also been reported with respect to over-indebted natural persons. This 
phenomenon  has  been  termed  “bankruptcy  tourism”  and  has  recently  become  popular  with 
Irish debtors moving – really or allegedly - to the UK to get a quicker discharge of their debts 
(the  discharge  period  currently  being  1  year  in  the  UK  vs.  12  years  in  Ireland,  although 
reforms of bankruptcy laws currently being considered would cut this to 3 years). The UK is 
also  a  popular  destination  for  over-indebted  persons  from  Germany  and  Eastern  Europe. 
Cases of bankruptcy tourism are also reported from northeast France where German nationals 
seek  to  obtain  a  quicker  discharge  of  their  debt,  and  from  Latvia  where  over-indebted 
Lithuanians  seek  relief  in  the  absence  of  a  personal  insolvency  regime  in  their  home 

45 
46 

CFEU, Case C-217/97, judgement of 9.3.1999, Centros Ltd. 
E.g. the companies Deutsche Nickel and Schefenacker where COMI was shifted from Germany to the 
UK by way of a transfer of assets and liabilities, thereby allowing the companies to apply for an English 
company  voluntary  arrangement  (CVA).  The  moves  were  vital  for  the  survival  of  the  companies 
because the English CVA allowed a debt for equity swap and the release of guarantees without which 
the  group  was  were  likely  to  have  collapsed,  see  Webb  and  Butler,  p.  39;  in  the  Damovo  and  Wind 
Hellas  cases,  COMI  was  shifted  from  Luxemburg  to  the  UK  in  order  to  benefit  from  the  English 
possibility of a pre-packaged administration sale. 

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jurisdiction47. Bankruptcy tourism is problematic because a debtor takes advantage of a more 
favourable insolvency regime in another jurisdiction without genuinely relocating to the other 
Member  State,  to  the  detriment  of  his  creditors  who  are  prevented  from  enforcing  their 
claims. A genuine relocation to another Member State is an exercise of the right to freedom of 
movement  and  establishment  and  justifies  the  application  of  the  insolvency  regime  of  that 
other country; a sham move does not.  

The problem of abusive COMI relocation can be illustrated by the following case: 

Case example Sparkasse Velbert v. Benk48 

Mr. Benk was a German notary who had run into financial difficulties, notably owing €3 Mio 
to  his  bank,  the  Sparkasse  Velbert.  Enforcement  proceedings  by  the  Sparkasse  against  Mr 
Benk's real estate and pension fund in Germany were pending. In June 2009, Mr. Benk was 
suspended  from  his  practice  as  a  German  notary  because  of  his  unsound  financial  situation 
and  filed  for  bankruptcy  in  the  UK  later  that  month.  Mr  Benk  alleged  COMI  in  the  UK 
claiming that he had lived in Birmingham since late 2008 and exercised a professional activity 
as a sports photographer. The discharge order was granted on 17 June 2010 following which 
Mr. Benk moved back to Germany.  

On  appeal  by  the  Sparkasse,  the  High  Court  carried  out  an  in-depth  examination  of  the 
circumstances  of  the  case.  It  discovered  that  Mr.  Benk  had  relocated  with  the  help  of  a 
German  relocation  agency  which  had  assisted  him  with  renting  a  furnished  room  in 
Birmingham  as  well  as  purchasing  and  registering  a  car  in  the  UK.  Moreover,  Mr.  Benk's 
business as a sports photographer was loss-making from day one as his only client was an old 
friend  from  Germany  and  he  had  not  even  owned  a  camera  in  the  first  months  in  his  new 
“job”. The court concluded from the evidence that Mr Benk’s COMI was in Germany at the 
time  of  the  presentation  of  the  bankruptcy  petition  because  he  had  neither  his  habitual 
residence  nor  his  professional  domicile  in  England,  as  his  presence  in  England  was  only 
temporary and the photography business was merely window-dressing, with no potential for 
any  significant  degree  of  permanence.  Consequently,  the  discharge  order  was  annulled  and 
the Sparkasse could continue enforcing its claim against Mr. Benk. However, the appeal cost 
the Sparkasse about €50000 in lawyers' fees beca use on appeal, it is the creditor who has to 
prove that a COMI shift was not genuine. The high costs of appealing a court decision in the 
UK deter many creditors from challenging a debt discharge for their debtor because they are 
not sure to be able to recover the legal costs from the insolvent debtor. 

The problem of forum shopping is essentially driven by differences in national insolvency and 
company laws. In the absence of harmonisation at EU or international level, Member States' 
insolvency  laws  and  procedures  vary  considerably  and  offer  a  range  of  advantages  and 
disadvantages  to  companies  and  individuals.  For  example,  the  flexible  regime  for 
restructuring  companies  offered  by  English  law,  and,  in  particular,  the  pre-packaged 
administration  sales  which  enables  a  company  to  restructure  by  wiping  out  some  of  its 
creditors and converting into a new company shorn of its liabilities49, attracts companies from 

47 

48 

49 

This  situation  is  likely  to  change  with  the  introduction  of  a  new  law  on  personal  insolvency  in 
Lithuania. 
Decision  of  29.8.2012  by  Judge  Purle  QC,  High  Court,  Chancery  Division,  Birmingham  District 
Registry, [2012] EWHC 2432 (Ch). 
The English pre-packaged administration sale (or prepack) is a procedure by which a company is put 
into  administration  and  where  the  administrators,  immediately  following  their  appointment,  sell  the 
business  and  its  assets  under  a  sale  that  was  arranged  with  their  knowledge  prior  to  their  formal 
appointment. The central appeal of a pre-pack lies in its speed and its ability to preserve the value of the 

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other European jurisdiction. Even more strikingly, periods for the discharge of personal debts 
vary widely across the EU: in some Member states there is no discharge at all (e.g. Bulgaria), 
meaning that debtors remain liable for life, while in others it is possible to obtain discharge 
within a few or even one year (e.g. UK). 

Half of the respondents (49%) indicated evidence of abusive relocation of COMI with less 
than  one  third  (29%)  feeling  there  was  no  abusive  relocation.  The  most  common  situation 
cited was moves to UK in particular from Ireland and Germany with relief of the debtor and 
the promotion of rescue culture towards businesses in the UK being suggested as drivers. 

3.4.2.  Relationship between the main and the secondary proceedings under the Regulation  

The EIR allows  secondary proceedings to be opened where the debtor has an  establishment 
but provides that secondary proceedings must be winding-up or liquidation proceedings, that 
is,  cannot  be  restructuring  or  rehabilitation  proceedings.  This  requirement  has  triggered 
criticism  that  the  EIR  is  oriented  towards  liquidation  rather  than  rehabilitation,  and  is 
therefore  incompatible  with  today's  “corporate  rescue”  culture.  A  vast  majority  of 
stakeholders consider this to be a problem.  

The  narrow  scope  of  secondary  proceedings  can  constitute  an  obstacle  to  the  successful 
restructuring  of  a  company  having  branches  in  several  Member  States,  thereby  diminishing 
the  total  value  of  the  debtor's  assets  and  destroying  jobs.  This  sub-problem  therefore 
reinforces  the  first  sub-problem  that  the  current  Regulation  constitutes  an  obstacle  for  the 
continuation of business and the saving of jobs.  

The  problem  can  be  illustrated  by  a  case  which  is  currently  pending  before  the  Court  of 
Justice of the European Union:  

Case example: Bank Handlowy and Ryszard Adamiak v. Christianopol sp.zoo (C116/11) 

Christianapol is a Polish company specialised in the production of furniture. It is part of the 
Cauval Industries Group with its head office in France to which it supplies all its production. 
The  group  suffered  from  the  recession  and  went  into  financial  difficulties.  In  an  attempt  to 
rescue the group, several members, including Christianapol, filed for sauvegarde proceedings 
in France. These proceedings aim at permitting solvent companies to restructure themselves 
under court protection at a pre-insolvency stage. They are covered by the Regulation although 
concerns have been raised as to whether they comply with the definition 

One  of  the  Polish  creditors  of  Christianapol,  Bank  Handlowy,  applied  for  secondary 
proceedings in Poland where the company's furniture factory was located. The winding-up of 
the  factory  would  have  prevented  the  successful  implementation  of  the  restructuring  plan 
elaborated in the French sauvegarde proceedings. This problem prompted the Polish court to 
seek a preliminary ruling from the CJEU. 

In  her  conclusions  of  24  May  2012,  advocate-general  Kokott  strongly  encouraged  the 
European Legislator to modify the Regulation:  

55. « L’exposé de la juridiction de renvoi montre clairement qu’une procédure secondaire de 
liquidation  peut  gêner,  voire  mettre  en  échec  les  objectifs  d’une  telle  procédure  de 
redressement [procédure de Sauvegarde]. Ce résultat n’est effectivement pas souhaitable. Si 

business  because  the  sale  of  solvent  parts  of  the  business  can  take  place  before  the  financial  and 
reputational damage that results from prolonged insolvency can occur.  

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l’on  songe  en  particulier  que  la  législation  en  matière  d’insolvabilité  de  nombreux  États 
membres  s’est  éloignée  des  procédures  de  liquidation  «pures»  au  profit  de  procédures  de 
redressement et de réorganisation, et compte tenu des ajouts qui ont été de ce fait apportés à 
l’annexe A  du  règlement  ces  dernières  années,  intégrant  également  de  plus  en  plus  de 
procédures de redressement, il apparaît que ces procédures sont de plus en plus importantes et 
devraient, par conséquent, également relever du champ d’application du règlement. 

56.  Indépendamment  de  ces  ajouts  apportés  à  l’annexe,  le  texte  même  du  règlement  n’a 
cependant  pour  le  reste  subi  aucune  modification,  ce  qui  peut  concrètement  générer  des 
contradictions ou des problèmes pratiques, comme en atteste cette affaire. » 

Moreover,  the  opening  of  secondary  proceedings  can  jeopardize  the  efficient  administration 
of the estate: Under the current Regulation, main insolvency proceedings have EU-wide effect 
and encompass all of the debtor's assets. Secondary insolvency proceedings can be opened in 
any  other  Member  State  where  the  debtor  has  an  establishment.  The  system  of  secondary 
proceedings  was  introduced  to  protect  the  interests  of  local  creditors  and/or  to  facilitate  the 
administration  of  complex  cases.  In  practice,  however,  secondary  proceedings  can  obstruct 
both the effective administration of the estate and the successful reorganisation of a company, 
because the opening of secondary proceedings removes part of the assets from the control of 
the  insolvency  administrator  of  the  main  proceedings.  Secondary  proceedings  also  increase 
the costs of proceedings because an additional insolvency practitioner has to be paid.  

The problems  arising  from  a  lack  of coordination  between  main  and  secondary  proceedings 
are illustrated by the following case:  

Case example: The liquidation of Alitalia 

By August 2008, the well-known airline Alitalia was heavily insolvent. In September of the 
same  year,  extraordinary  administration  proceedings  aiming  at  reorganising  the  company 
were  opened  in  Italy  and  an  administrator  was  appointed.  Since  Alitalia's  COMI  was  in 
Italy,  these  proceedings  were  main  proceedings  for  the  purposes  of  the  EIR.  The 
administrator found a buyer for the company's assets which, however, took over only those 
employees indispensable for the operational activity. All other employment contracts were 
terminated but the administrator reached an agreement with the employees which provided 
for a payment of an equivalent of 3 months' salary in compensation for the failure to comply 
with  the  information  and  consultation  requirements  under  the  Directive  on  Transfer  of 
Undertakings. The administrator kept one of the company's UK bank accounts with funds 
sufficient to make the compensation payment to the 46 UK employees.  

In November 2008, secondary proceedings over the UK branch of Alitalia were opened in 
the  UK.  The  UK  liquidator  blocked  the  distribution  of  the  monies  to  the  UK  employees, 
arguing that under UK law employees had no priority rights and divided the sum among all 
of  Alitalia's  UK  creditors.  This  argument  was  approved  by  the  High  Court50.  As  a 
consequence, the Italian administrator was obliged to pay the UK employees from the funds 
of the Italian estate to the detriment of other unsecured creditors.  

This  shows  that  the  opening  of  secondary  proceedings  can  jeopardize  the  efficient 
administration  of  cross-border  insolvency  because  the  main  administrator  is  no  longer  in 
control of assets located in the country where secondary proceedings have been opened. 

50 

Judgment by Justice Newey, High Court of Justice, Chancery Division, Companies Court, 18.1. 2011, 
[2011] EWHC 15 (Ch). 

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When  secondary  proceedings  are  opened,  all  actors  involved  report  that  there  is  a  lack  of 
coordination between the main and secondary procedure. In order to ensure the coordination 
of  proceedings  opened  in  several  Member  States,  the  Regulation  obliges  insolvency 
practitioners  to  communicate  information  and  cooperate  with  each  other.  Several  guidelines 
for  practitioners  on  cooperation  and  communication  in  cross-border  insolvencies  have  been 
developed by associations of practitioners51. In practice, this cooperation works well when the 
practitioners  have  common  interests  and/  or  have  developed  a  working  relationship  but  is 
more difficult where this is not the case.  

However,  cooperation  between  liquidators  alone  does  not  suffice  to  ensure  efficient 
coordination of cross-border proceedings. There are no similar duties of cooperation between 
the courts and between insolvency administrators and the courts. As a result, the judge in the 
main  proceedings  is  not  informed  of  relevant  developments  in  the  secondary  proceedings 
before deciding on further actions and vice-versa. Further the judge who exercises control of 
the activities of the liquidator in the main or secondary proceedings has no means to control 
the coordination. 

The  failure  to  co-ordinate  can  result  in  numerous  problems  and  impacts  which  reduce  the 
efficiency  of  proceedings,  and  increase  their  length  and  costs.  Ultimately,  chances  to 
maximise  the  value  of  the  assets  may  be  lost.  Problems  are  disagreements  over  the 
distribution  of  assets,  difficulties  in  achieving  restructuring  plans,  and  a  lack  of  notice  or 
information  about  proceedings  which  prevents  creditors  from  effectively  participating  in 
them.  

Difficulties  in  cooperation  may  arise  when  the  liquidators  of  the  main  and  secondary 
proceedings  are  effectively  in  competition  with  each  other  to  maximise  assets  for  their 
creditors,  despite  the  fact  that  a  coordinated  approach  may  result  in  greater  overall  returns. 
The additional cost of cooperation, language barriers and national procedural rules preventing 
the disclosure of information may also be a source of difficulties in cooperation. 

Finally,  the  absence  of  rules  in  the  EIR  for  cooperation  between  judges  makes  this 
cooperation between practitioners difficult to control. 

3.4.3.  Difficulties in practical implementation relating to lack of publicity of the decisions 

relating to an insolvency procedure and to lodging of claims 

The good functioning of cross-border insolvency proceedings relies to a significant extent on 
the  publicity  of  all  relevant  decisions  relating  to  an  insolvency  procedure.  In  particular,  a 
court  opening  insolvency  proceedings  needs  to  know  whether  the  company  or  person  is 
already subject to insolvency proceedings in another Member State.  

The  Regulation  leaves  it  up  to  the  insolvency  practitioners  to  decide  whether  to  request 
publication  and  registration  of  the  opening  judgment  in  another  Member  State,  or  up  to 
Member  States  to  impose  mandatory  publication  and  registration.  Today  there  is  no 
systematic  publication  or  registration  of  the  decisions  in  the  Member  States  where  a 
proceeding is opened, nor in Member States where there is an establishment. There is also no 
European Insolvency Register which would permit searches in several national registers. 

51 

The  most  recent  example  are  the  Global  Principles  for  Cooperation  in  international  insolvency  cases 
from the American Law Institute and the International Insolvency Institute, elaborated by Ian Fletcher 
and Bob Wessels (2012). 

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Therefore  there  is  always  the  risk  that  a  judge  does  not  know  that  a  procedure  has  already 
been  opened  in  another  Member  State.  This  situation  results  in  judicial  battles  and  wrong 
decisions that cannot be reversed once the assets have been liquidated. 

The  lack  of  information  on  existing  proceedings  has  resulted  in  unnecessary  concurrent 
proceedings being launched. Even if the problem is resolved on appeal, parallel proceedings 
may have been going on for several weeks, thereby entailing not only legal uncertainty about 
who  has  the  power  to  direct  the  debtor's  estate  but  also  legal  costs  for  determining  the 
procedure which takes priority.  

The problem is illustrated by the German – UK case set out below:52  

Case example: Opening of parallel insolvency proceedings53  

A  temporary  insolvency  administrator,  charged  with  the  divestment  of  a  debtor,  was 
designated  by  a  German  court.  Four  days  after  the  designation,  main  insolvency 
proceedings were opened in England. Upon appeal by the German liquidator, the Croydon 
County Court held that the designation of a temporary main insolvency administrator had to 
be  recognised  as  if  the  main  proceedings  had  been  opened  in  Germany  and,  since  the 
opening  of  the  German  proceedings  occurred  prior  to  the  opening  of  the  English 
proceedings, reversed the decision opening proceedings in England. 

Further, when the decisions are not publicly available in the EU, there is always the risk that 
unknown  creditors  are  unaware  of  the  on-going  procedure,  and  further  that  potential 
customers,  employers  or  banks  do  not  know  that  a  company  or  a  person  is  subject  to  an 
insolvency proceeding or debt-discharge scheme. 

For the good coordination of proceedings, the information contained in the decision, such as 
the  type  of  procedure,  the  name  of  the  administrators,  their  tasks  and  mandate,  are  also 
essential elements. This information is also necessary for the efficient lodging of claims for 
creditors in another Member State. Today it is sufficient to publish only notice of the opening 
decision. 

It is also essential that the decision closing a procedure, e.g. a liquidation or debt discharge, be 
accessible, as being registered as insolvent may have serious consequences on the capacity of 
persons/companies  and  on  their  rights.  The  Regulation  currently  takes  now  account  of  this 
issue.  A  ruling  of  the  ECtHR  against  Italy  has  held  that  the  entry  of  a  debtor's  name  in  the 
bankruptcy  register  without  any  subsequent  possibilities  of  updating  or  deleting  it  had 
prevented  the  applicants  from  developing  their  social  and  business  relationships  with  the 
outside world which resulted in violation of the right to respect for their private life.54 

There  is  widespread  support  for  the  conclusion  that  the  failure  to  publish  the  opening  of 
proceedings  in  a  public  registry  reduces  considerably  the  ability  of  stakeholders  to  know 
about  proceedings.  The  public  consultation  results  showed  that  the  vast  majority  of 
respondents  (86%)  who  expressed  an  opinion  agreed  that  the  absence  of  mandatory 
publication of the decision opening proceedings is a problem.  

52 

53 
54 

Other  examples  include  Local  Court  (AG)  Koln  6/11/2008,  487/07,  NZI  2009,  133;  AG  Nürnberg 
15.8.2006 and 1.10.2006 
County Court Croydon 21/10/2008 1258/08, NZI 2009, 136  
Albanese; Campagnano and Vitiello v Italy App no 77924/01, 77955/01 and 77962/01 (ECtHR 23 

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The  evaluation  study  and  respondents  to  the  public  consultation  (in  particular  the  European 
Association for SMEs) have reported that creditors experience difficulties in lodging claims 
under the Regulation.  

In the first place, it is sometimes difficult for creditors to obtain information on the opening of 
proceedings and the person designated as insolvency practitioner. Furthermore, liquidators do 
not always inform creditors in due time about their right to lodge a claim. This may entail the 
total loss of the claim if it is lodged after deadlines under national law have expired. In some 
Member States, deadlines for lodging claims are very short and do not take into account the 
additional  time  a  cross-border  filing  may  require.  Creditors  also  complain  about  being 
insufficiently  informed  about  the  formalities  regarding  the  lodging  of  their  claim  and  about 
how to contest decisions by the liquidator to reject a claim. In addition, it is not clear under 
the current Regulation whether claims must be lodged in the language of the country in which 
the proceedings are conducted.  

As a result, foreign creditors lodging their claims often have to bear not only translation costs 
but  also  legal  costs  in  order  to  obtain  advice  on  the  foreign  insolvency  law.  Moreover,  in 
certain Member States, representation by a lawyer in the lodging of claims is mandatory. The 
costs and difficulties act as a deterrent for small creditors.  

Case example55 

A  foreign  creditor  had  not  been  informed  in  time  by  the  French  administrator  of  the 
insolvency  proceedings  and  therefore  was  unable  to  lodge  a  claim  within  the  proscribed 
deadline.  The  French  Court  of  appeal  dismissed  the  creditor's  claim,  arguing  that  the 
Regulation  did  not  provide  for  extensions  to  deadlines  under  national  law  and  that  French 
national law did not provide for remedies against a violation of the duty to inform creditors 
under Article 40 EIR. 

3.5.  Who is affected by problem group 2 and what is the extent of these problems? 

The  problems  relating  to  determining  jurisdiction  for  opening  insolvency  proceedings  and 
forum-shopping  affect  in  the  first  place  creditors  and  their  expectations  as  to  the  law 
applicable  to  the  insolvency.  It  is  again  mostly  creditors,  both  of  the  main  and  secondary 
proceedings,  who  are  affected  by  the  coordination  problems  as  there  is  no  maximisation  of 
assets  and  the  recovery  rate  is  smaller.  Viable  companies  and  their  employees  are  also 
affected as any plans for restructuring the business are thwarted by the opening of secondary 
proceedings. 

The transparency and claiming problems affect all stakeholders: 

• 

• 

55 

Judges, as they are not informed of other proceedings being opened already, with the 
risk of the wrong decisions being made. They can lack of information before taking 
decisions and also lack of means to control the coordination. 

Insolvency  practitioners,  as  the  burden  of  publication  relies  heavily  on  them.  They 
are  faced  with  a  variety  of  practices  and  obligations  in  each  Member  State.  This 
increases  their  costs  at  the  expense  of  all  creditors.  There  are  also  problems  when 
they are unable to cooperate and maximise the efficiency and the value of assets. 

CA Bordeaux (Mankowski) 3/1/2011 No. 09/04655, IILR 2012, 72. 

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• 

• 

• 

• 

Existing  creditors,  as  the  information  about  insolvency  proceedings  in  which  they 
might be involved is not readily available and might prevent them from lodging their 
claims.  

Potential new creditors including consumers who are not informed of their situation  

Debtors (companies and natural persons), as the decision closing the proceedings is 
not always publically known or available. 

All  foreign  creditors  and  in  particular  SMEs  are  affected  with  claiming  problems, 
since the costs of translation and legal advice are often too high for them. 

As  regards  the  extent  of  the  problems,  issues  relating  to  determining  COMI  are  a  frequent 
source  of  litigation  although  practitioners  confirm  that  COMI  litigation  is  becoming  less 
frequent.  Research  on  the  basis  of  500  cases  reviewed  concluded  that  COMI  issues  arise  in 
40-50% of the cases albeit sometimes not as a contested issue but simply as a statement of the 
court satisfying itself of its jurisdiction56. A study carried out by a UK academic revealed that 
the COMI concept is actually applied with some consistency throughout the EU57.  

There are no comprehensive figures as to the examination of jurisdiction in insolvency cases. 
According to the Heidelberg/Vienna study, judges in several Member States do not routinely 
examine their jurisdiction.58 Research carried out by a Polish judge of the decisions opening 
insolvency proceedings in the district court of Poznan revealed that although about 60% of the 
cases  contained  an  international  element  making  the  EIR  applicable,  judges  only  examined 
their international jurisdiction in about 1% of the cases59.  

The  extent  of  abusive  COMI-relocation  is  difficult  to  quantify,  partly  because  of  diverging 
views  as  to  whether  a  COMI  relocation  is  actually  abusive  and  partly  because  due  to  the 
deficiencies in the procedural framework not all abusive COMI-shifts are detected. In the area 
of personal insolvency, the problem is limited to a few regions in the EU – UK, north-eastern 
France and – to a lesser extent - Latvia. In France, the court of appeal of Colmar delivered 
24  judgments  between  2009  and  2011,  all  but  one60  rejecting  applications  from  German 
nationals seeking to open insolvency proceedings in France. As to the UK, a survey suggests 
that out of about 200 bankruptcy orders relating to foreign nationals in the two years ending 
31 March 2010, 14 orders have been annulled on the grounds that there was no real relocation 
to the UK ; in about half of the cases there were circumstances to suggest that the relocation 
may  not  be  real61.  This  means  that  there  are  less  than  100  cases  per  year  in  the  UK  in 
which the COMI-shift could be considered to be abusive. The recent Irish financial crisis 
may have increased these statistics but evidence on the numbers of Irish flocking to the UK 

56 
57 

58 
59 
60 

61 

GHK/Milieu report. 
Irit  Mevorach,  Jurisdiction  in  Insolvency:  A  study  of  European  Courts'  Decisions,  Journal  of  Private 
International Law 2009, p. 327, 352. The study analysed 104 decisions from several EU countries from 
2002 until 2009. 
For example Poland and the Czech Republic. 
Anna Hrycaj 
In  this  case,  the  court  found  that  a  German  national  who  had  moved  to  France  5  years  before  his 
financial difficulties , had built a house there and whose daughter had been entirely educated in France, 
had  genuinely  relocated  to  France  (CA  Colmar,  19  May  2009,  see  Heidelberg  study,  French  country 
report (Cuniberti), Question 9.  
GHK/Milieu report, p. 17; given that the majority of foreign petitioners were German, the development 
has been commented as a “quiet invasion” of German nationals petitioning for their own bankruptcy in 
England  and  Wales;  Walters  and  Smith,  Bankruptcy  tourism  under  the  EC  Regulation  on  Insolvency 
Proceedings: A view from England and Wales.  

EN 

27 

   EN 

 
                                                 
remains anecdotal. A newspaper identified 55 Irish residents relocating to the UK with the 
help of an Irish solicitor to escape more than € 1bn of debt 62.  

The use of secondary procedures has declined since the EIR was enacted because companies 
tend  to  organise  their  cross-border  activities  through  subsidiaries  rather  than  branches. 
However,  the  use  of  branches  remains  the  norm  in  the  aviation  sector,  with  big  assets  and 
many employees. It is estimated that about 700 companies with branches in another Member 
State  go  bankrupt  every  year;  some  of  these  companies  will  have  more  than  one  branch 
abroad.  In  practice,  secondary  proceedings  are  also  sometimes  opened  in  cases  of  group 
insolvencies to liquidate assets of the subsidiary in situations where main proceedings for the 
subsidiary have been opened at the seat of the parent company. Secondary proceedings are not 
opened  in  every  case:  the  assets  of  the  branch  may  not  justify  the  opening  of  secondary 
proceedings, there may be no local creditors requesting such opening, or the main liquidator 
may  have  reached  an  agreement  with  the  local  creditors.  There  are  no  exact  figures  of  the 
number of secondary proceedings opened in the EU. On the basis of the number of companies 
with branches, it can be estimated that there are several hundred cases per year.  

The  costs  of  secondary  proceedings  vary  considerably  between  legal  systems.  Costs 
essentially consist of liquidator's fees and court costs. In some countries, the fees charged by 
liquidators are based on a percentage of the monies recovered (typically 3% or 5%), in others, 
in  the  Netherlands).63  Costs  of 
they  are  based  on  an  hourly  rate  (e.g.  around  €250  per  hour 
proceedings are also significantly higher in systems where creditors' committees are involved 
than in systems where this is not the case.  

Problems of coordination have been reported by judges and insolvency practitioners. Results 
of  the  public  consultation  and  of  the  evaluation  study  provide  strong  indications  that  the 
current provisions on coordination are insufficient. 70% of those expressing an opinion in the 
public  consultation  were  dissatisfied  with  the  coordination  between  main  and  secondary 
proceedings,  with  61%  stating  that  the  duty  to  cooperate  does  not  work  efficiently  and 
effectively. In addition 75% of those expressing an opinion stated that the lack of a duty of 
cooperation  between  practitioners  and  the  foreign  court,  or  between  the  courts,  has  created 
problems.  Similar  results  were  reported  in  the  initial  findings  of  the  Heidelberg  report  with 
61% of those expressing an opinion stating that co-operation was inefficient. 

Turning  to  the  extent  of  transparency  problems,  in  all  but  two  Member  States,  information 
about insolvency proceedings is collected at a central point, but the procedures for registration 
and  the  accessibility  of  the  information  to  the  public  vary  considerably.  While  insolvency 
proceedings of legal entities are registered in every Member State, insolvencies of individuals 
are only registered in some. In some Member States, the information is published in a register 
(either in a separate insolvency register, in others, in a commercial register) or in an official 
bulletin.  Some  Member  States  publish  the  court  decisions  opening  and  closing  insolvency 
proceedings  in  the  relevant  register,  others  publish  only  information  on  the  status  of  the 
company or individual (e.g. “in liquidation”) and, partly, the name of the liquidator and the 
competent court, without registering the court decision itself.  

62 

63 

Henry McDonald, ‘Irish Dodge Debts through UK ‘bankruptcy tourism’ The Guardian (Sunday 27 May 
2010)  (available  at:  http://www.guardian.co.uk/world/2012/may/27/irish-dodge-debts-uk-bankruptcy-
tourism) 
GHK/Milieu report,  

EN 

28 

   EN 

 
                                                 
Currently,  only  14  Member  States  publish  decisions  relating  to  insolvency  in  an 
insolvency  register  accessible  online  by  the  public  free  of  charge64.  In  9  other  Member 
States, some information on insolvency is available in an electronic register or database, e.g. a 
company  register  or  an  electronic  version  of  the  official  bulletin.  Detailed  information  on 
national insolvency registers is in Annex 6. 

Finally,  the  average  cost  of  lodging  a  claim  for  a  foreign  creditor  has  been  estimated  at 
between  €2,000  and  €5,000  in  a  cross-border  situ ation.  This  sum  covers  the  costs  for 
reviewing the file, defining priority rights, compiling documents, liaising with the court and 
trustee65.  

46%  of  those  who  expressed  an  opinion  in  the  public  consultation  considered  there  were 
problems  with  lodging  claims.  Crucially,  a  significant  proportion  of  key  stakeholders  who 
will often be the entities making claims felt there was a problem – 83% of private individuals/ 
self-employed and 75% of banks.  

3.6. 

EU right to act 

3.6.1.  Legal basis 

The original EIR was adopted under Article 61(c) TEC stipulating that the Council shall adopt 
measures in the field of judicial cooperation in civil matters and Article 67(1) TEC defining 
the legislative procedure to be followed. Following the entry into force of the Lisbon Treaty, 
any revision to the EIR will be based on Articles 81(2) (a), (c) and (f) TFEU. Article 81(1) 
TFEU  provides  that  ‘The  Union  shall  develop  judicial  cooperation  in  civil  matters  having 
cross-border implications, based on the principle of mutual recognition of judgments and of 
decisions in extrajudicial cases. Such cooperation may include the adoption of measures for 
the  approximation  of  the  laws  and  regulations  of  the  Member  States’,  and  related  Article 
81(2) TFEU under points (a), (c) and (f) empowers the EU to adopt measures aimed at 

– 

– 

– 

ensuring  the  mutual  recognition  and  enforcement  of  judgments  between  Member 
States; 

the  compatibility  of  the  rules  applicable  in  Member  States  concerning  conflict  of 
laws and of jurisdiction; and  

the elimination of obstacles for proper functioning of civil proceedings. 

The adoption of the measures will take place in ordinary legislative procedure. 

3.6.2.  Principle of subsidiarity 

The  development  by  the  EU  of  more  efficient  cross-border  insolvency  rules  is  in  complete 
compliance  with  principle  of  subsidiarity.  First,  the  issue  being  addressed  has  transnational 
aspects,  which  cannot  satisfactorily  be  dealt  by  the  Member  States’  individual  action.  The 
need  to  establish  rules  for  the  insolvency  of  companies  operating  on  a  cross-border  basis, 
including groups of companies, is well recognized by all Member States and the international 
community.  This  is  especially  true  in  view  of  the  increasing  number  of  companies  and 

64 

65 

EN 

These Member States are: AT, CZ, FI, DE, HU, LV, NL, PL, PT, RO, SI and SE. SK has established a 
register  as  a  pilot  project;  the  UK  has  a  division  of  registers  between  Scotland,  North  Ireland  and 
England 
https://e-
justice.europa.eu/content_insolvency_registers- 
GHK/Milieu report,  

in 
110-en.do . 

and  Wales. 

Information 

available 

E-justice 

portal: 

the 

29 

   EN 

 
                                                 
traders/self-employed  persons  that  operate  in  more  than  one  Member  State,  the  rise  in  the 
number of groups of companies, and the constantly growing number of companies that have 
to make recourse to insolvency proceedings because of the economic crisis. The objective of 
facilitating  the  expansion  of  cross-border  operations  for  businesses  in  the  internal  market 
cannot  be  fully  achieved  if  the  way  cross-border  insolvency  proceedings  operate  is  not 
amended to better reflect developments since 2000. Furthermore, action at the EU level would 
produce clear benefits (compared to Member States’ action) in terms of effectiveness as the 
amended  Regulation  will  rectify  the  deficits  identified  in  the  previous  Regulation,  thus 
rendering its application more effective.  

4. 

POLICY OBJECTIVES FOR THE REVISION OF THE EIR 

The  general  and  specific  objectives  for  the  revision  of  the  Regulation  in  relation  to  the 
problems described above are summarised in the following table: 

General Objective 

To improve the efficiency of the European framework for resolving cross-border insolvency cases in view 
of improving the functioning of the internal market and its resilience in economic crises. 

Specific Objectives 

To  ensure  EU-wide  recognition  of  national  insolvency-related  proceedings  contributing  to  rescuing 
businesses,  protecting  investments,  preserving  jobs  and  encouraging  entrepreneurship;  and  providing  a 
second chance to honest entrepreneurs and over-indebted consumers; 

To increase legal certainty for creditors, thereby encouraging cross-border trade and investment; 

To improve the efficient administration of cross-border insolvencies that protects the interest of all creditors 
and other interested persons, including the debtor; 

To improve the efficiency of handling the insolvency of members of a multi-national group of companies, 
thereby maximising the value of their assets and facilitating rescue. 

Operational Objectives 

To address the problem of scope of the Regulation that does not take into account the increased use of non-
liquidation oriented proceedings (e.g. pre-insolvency and hybrid proceedings);  

To set up a process that enables the Regulation better to adapt to the evolution of national insolvency law 
and to allow secondary proceedings to be restructuring, pre-insolvency and hybrid proceedings; 

To  clarify  the  rules  relating  to  jurisdiction  for  opening  insolvency  proceedings  without  prejudice  to  the 
rights of companies' and natural persons’ legitimate exercise of the freedom of establishment and movement 
in the Union;  

To reduce the number of cases where the determination of jurisdiction has been an issue; 

To improve the procedural framework for taking the decision on jurisdiction and ensuring the possibility for 
judicial review for interested parties; 

To reduce the number of secondary proceedings opened outside of the main jurisdiction;  

EN 

30 

   EN 

 
To  improve  coordination  between  courts  and  practitioners,  both  prior  to  the  opening  of  and  during  the 
proceedings;  

To  increase  transparency  by  requesting  mandatory  publication  of  all  relevant  decisions  in  each  Member 
State; 

To increase number of insolvency related decisions that have been made public; 

To  improve  access  to  justice,  in  particular  for  SMEs,  by  devising  measures  to  facilitate  the  lodging  of 
claims;  

To create a specific legal framework for group insolvency 

5. 

POLICY OPTIONS 

There are three composite policy options that have been identified as to tackle with the above 
problems in order to achieve the above-mentioned objectives: These are 

1) Status Quo, or baseline scenario;  

2)  Option  A,  modernising  the  existing  Regulation  while  preserving  the  current  balance 
between creditors and debtors and between universality versus territoriality; and  

3)  Option  B,  modifying  the  fundamentals  of  the  Regulation  and  requiring  some 
approximation or convergence of national insolvency laws and proceedings.  

The elements (or suboptions) of which these composite options consist are explained below 
against the problems that have been streamlined into four categories (after the table). Certain 
elements are common to both options A and B: both options would provide for an extension 
of  the  scope,  for  the  introduction  of  national  insolvency  registers  and  for  the  simplified 
procedures for lodging a claim 

Problem 

Status Quo (Baseline 
scenario) 

Limited  scope  of  the 
Insolvency Regulation 

The  scope  and  definition 
of  the  EIR  do  not  cover 
pre-insolvency,  hybrid  and 
most  personal  insolvency 
proceedings 

Option A 
“Modernizing the 
framework for cross-
border insolvency 
proceedings” 

First element: 

Option B “Towards 
approximation of 
national insolvency laws 
and proceedings”  

the  EIR 

the  scope  of 

Extend 
include  hybrid 
proceedings,  pre-insolvency  proceedings  and  personal 
insolvency  proceedings  and  do  away  with 
the 
requirement  that  secondary  proceedings  have  to  be 
winding-up proceedings 

to 

No  rules  for  groups  of 
companies 

element: 
Second 
of  main 
Coordination 
through 
proceedings 
cooperation 
general 
the 
mechanisms,  with 
possibility, 
when 
appropriate, to nominate a 
lead 
insolvency 
practitioner 

Second element: 

Single  court  competent  for 
all main proceedings; single 
insolvency 
administrator 
appointed  for  all  members 
of  the  group  (“procedural 
consolidation”) 

EN 

31 

   EN 

 
Difficulties 
implementing 
Insolvency Regulation 

in 
the 

No  obligation  to  publish 
and  not  all  MS  have  an 
electronic 
insolvency 
register 

Third element : 

that  Member  States  publish  all  relevant 
Require 
decisions  of 
in  a  national 
insolvency  proceedings 
electronic  register  and  define  common  categories  for 
interconnection of national registers through the e-justice 
portal 

forms 

No  standard 
for 
lodging  of  claims.  The 
procedures are entirely left 
to national law 

Fourth element: 

Introduce  procedures  and  standardised  form  and  at  EU 
level  for  the  lodging  of  claims  and  encourage  Member 
States  to  set-up  electronic  means  for  the  lodging  of 
claims 

Jurisdiction  remains  at  the 
COMI,  which  is  defined 
by case law 

Fifth element: 

Fifth element: 

Improve  the  procedural 
train 
and 
framework 
judges on the EIR. 

Harmonise 
national insolvency laws  

elements 

of 

The coordination is limited 
to  coordination  between 
practitioners 

Sixth element: 

Sixth element: 

Abolish 
proceedings  

secondary 

secondary 
Maintain 
proceedings  but  improve 
coordination  with 
the 
main  proceedings  prior 
and 
the  opening 
to 
during 
secondary 
proceedings 

5.1. 

Option A 

First  element:  Extend  the  scope  of  the  EIR  to  include  hybrid  proceedings,  pre-
insolvency  proceedings  and  personal  insolvency  proceedings  and  do  away  with  the 
requirement that secondary proceedings have to be winding-up proceedings  

Under  the  first  element  of  Option  A,  the  definition  of  insolvency  proceedings  would  be 
broadened  to  include  hybrid,  pre-insolvency  and  personal  insolvency  proceedings.  National 
insolvency procedures notified by Member States and which fall under the definition included 
in  the  Regulation  would  be  listed  in  the  Annex.  The  definition  would  require,  in  particular, 
that  the  insolvency  proceeding  entail  some  degree  of  court  supervision,  as  a  necessary 
condition  for  recognition  based  on  mutual  trust.  The  Commission  would  be  tasked  with 
ensuring that only proceedings which comply with the definition are listed in the Annex of the 
Regulation. 

In  addition,  the  current  requirement  that  secondary  proceedings  have  to  be  “winding-up 
proceedings” would be abolished in order to include proceedings promoting restructuring in 
the scope of secondary proceedings. 

Second  element:  Coordination  of  main  proceedings  through  general  cooperation 
mechanisms,  with  the  possibility,  when  appropriate,  to  nominate  a  lead  insolvency 
practitioner 

EN 

32 

   EN 

 
 
 
Option A would retain the entity-by-entity approach of the Insolvency Regulation but provide 
for a coordination of the insolvency proceedings concerning members of the same group.  

The coordination would apply in three respects:  

(1) 

(2) 

(3) 

There would be an obligation of the liquidators of the different main proceedings to 
communicate  and  cooperate,  notably  by  trying to  develop  a  reorganisation  plan  for 
the  insolvent  members  of  the  group.  This  obligation  would  build  on  the  existing 
mechanism for coordination between liquidators in main and secondary proceedings.  

Secondly,  the  Regulation  would  oblige  the  courts  competent  for  the  different  main 
proceedings to communicate information and cooperate, e.g. by appointing the same 
liquidator or  several liquidators which have indicated they can cooperate with each 
other.  

Thirdly,  the  liquidator  in  the  main  proceedings  for  one  group  member  would  be 
under  a  duty  to  communicate  and  cooperate  with  the  courts  competent  for  the 
proceedings relating to another group member.  

For  certain  companies,  e.g.  wholly-owned  subsidiaries,  the  coordination  mechanisms  above 
would  be  complemented  by  the  possibility  to  grant  a  “leading  role”  to  the  liquidator  of  the 
parent company. The “lead” liquidator would have the power to direct the reorganisation of 
the insolvent group members, in particular, by requesting the competent court to order a stay 
of the process of liquidation of a subsidiary, to obtain information from the other liquidators 
or courts involved or to propose a restructuring plan.  

Third  element:  Require  Member  States  to  publish  decisions  opening  and  closing 
insolvency proceedings as well as other decisions issued in the proceedings in a national 
electronic  register  and  define  common  categories  for  the  interconnection  of  national 
registers through the e-justice portal 

Option  A  would  require  all  Member  States  to  set  up  and  maintain  an  electronic  register  for 
insolvency  decisions,  both  for  companies  and  private  persons.  It  would  further  define 
common categories for the interconnection of national registers through the e-justice portal66 . 
The interlinking of national registers would lead to the creation of a generally accessible and 
comprehensive  EU  database  of  insolvency  proceedings  allowing  creditors,  shareholders, 
employees  and  courts  to  determine  whether  insolvency  proceedings  have  been  opened  in 
another Member State. 

Fourth  element:  Introduce  procedures  and  a  standardised  form  at  EU  level  for  the 
lodging  of  claims  and  encourage  Member  States  to  set-up  electronic  means  for  the 
lodging of claims 

Option A would define a standard form in all EU languages that could be used for the lodging 
of  claims  by  all  creditors  in  a  cross-border  proceeding.  It  would  also  define  some  EU 
procedures for the lodging of claims in order to ensure that national laws take into account the 
cross-border  dimension  of  certain  proceedings,  e.g.  reasonable  time  for  lodging  a  claim, 
sanction when practitioner did not respect the procedure, information to creditors on the fate 
of their claim. 

66 

The e-justice portal is intended to be a “one-stop shop” in the area of justice, providing information and 
improving access to justice throughout the EU.  

EN 

33 

   EN 

 
                                                 
This element of Option A would also encourage Member States to set-up electronic interfaces 
for the lodging of claims that would be available to foreign creditors. These could be set up 
through private means and not necessarily by public authorities. 

Fifth element: Improve the procedural framework and train judges on the EIR 

Under Option A, the EIR would clarify the definition of COMI by codifying certain elements 
of the CJEU case-law. The Regulation would also provide that the court opening insolvency 
proceedings  is  obliged  to  examine  ex  officio  its  basis  of  jurisdiction  and  to  specify  in  the 
opening  decision  whether  the  proceedings  are  main  or  secondary  proceedings.  Where  the 
COMI-shift has occurred recently and debts remain in the original Member State, the courts 
would  be  obliged  to  examine  already  at  first  instance,  i.e.  prior  to  pronouncing  the  debt 
discharge,  whether  the  relocation  is  genuine.  This  could  be  done  by,  e.g.  requesting  further 
documents from the debtor or hearing foreign creditors. In addition, creditors would have an 
effective  remedy  against  the  decision  opening  insolvency  proceedings;  in  particular,  they 
would be informed of the decision in due time to be able to challenge it.  

In addition, judges would be trained about the Regulation and about the case-law of CJEU on 
COMI. 

Sixth element: Maintain secondary proceedings but improve coordination with the main 
proceeding prior to the opening and during secondary proceedings 

Option A would 

• 

• 

• 

Require  that  the  court  hears  the  practitioner  of  the  main  proceeding,  prior  to  the 
opening of secondary proceedings. 

Enable the court to postpone or refuse the opening of secondary proceedings if this 
would  obstruct  the  effective  administration  of  the  estate  and  further  benefit  local 
creditors. The liquidator and the courts may further undertake to treat local creditors 
as if secondary proceedings had been opened (“synthetic secondary proceedings”).  

Oblige courts and insolvency practitioners to cooperate with one another, as well as 
courts to communicate and cooperate between themselves.  

5.2. 

Option B 

Those elements that are common to both options A and B are already explained above; they 
are 

– 

– 

– 

First element: Extend the scope of the EIR. 

Third  element:  Require  Member  States  to  publish  decisions  in  a  national 
electronic register. 

Fourth element: Introduce procedures and a standardised form for the lodging 
of claims. 

As regards the elements specific to Option B, second element: single court competent for 
all main proceedings and single insolvency administrator appointed for all members of 
the  group  (“procedural  consolidation”)  would  contain  a  single  insolvency  administrator 
appointed for all members of the group (“procedural consolidation”), whereby the insolvency 

EN 

34 

   EN 

 
proceedings for all members of the group would be consolidated in a single court at the place 
of the COMI of the parent company. The same insolvency practitioner would be appointed in 
all main proceedings of the subsidiaries.  

Fifth  element:  Harmonise  elements  of  national  insolvency  laws  would  involve  a 
harmonisation  of  certain  aspects  of  national  insolvency  procedures,  in  particular,  debt 
discharge periods, conditions and rules for opening proceedings, rules on hearing of creditors 
and effective remedy. 

Finally,  there  is  sixth  element:  Abolish  secondary  proceedings  to  Option  B.  This  would 
abandon  secondary  proceedings  and  have  one,  single  main  insolvency  proceeding  with  EU 
wide effect dealing with the parent company and all branches and establishments.  

5.3. 

Discarded options/elements 

There were certain other elements identified or proposed by stakeholders as possible options 
to solve the problems. In particular, there was an option of introducing a suspension period in 
relationship  to  the  removing  of  COMI  (relating  to  lack  of  definition):  This  option  would 
provide  that  following  a  shift  in  COMI  to  another  Member  State,  jurisdiction  remains  for  a 
certain period (e.g. 1 year) with the courts of the Member State of origin. 

A  preliminary  screening  of  the  options  have  led  to  discarding  an  element  under  option  A 
addressing  the  difficulty  to  determine  jurisdiction  as  follows:  Introducing  a  suspension 
period  is  not  sufficiently  effective  to  achieve  the  desired  objectives:  this  element  primarily 
aims  at  preventing  forum-shopping  by  providing  that  jurisdiction  for  opening  insolvency 
proceedings  stays  with  the  original  Member  State  for  a  certain  period  of  time  (e.g.  1  year) 
after  the  COMI  has  shifted.  However,  it  is  doubtful  whether  this  element  would  effectively 
achieve this objective because it may be expected that the legal advisors of big companies will 
find a way to circumvent the suspect period or to hold out until it has elapsed. Moreover, the 
element  does  not  improve  legal  certainty  for  creditors  because  it  would  replace  the  current 
uncertainty relating to the determination of COMI by a new uncertainty relating to the time 
the COMI shifted. New creditors would have difficulties to determine whether the suspension 
period was still running – with the consequence that the law applicable to their claims would 
be  the  one  of  the  Member  State  where  COMI  was  previously  located  –  or  whether  it  had 
already ended; also, the judge's assessment of the moment of the COMI shift could very well 
vary from that of the creditors. Consequently, such element would not improve legal certainty 
with respect to the Status Quo. 

6. 

EVALUATION OF THE IMPACTS OF POLICY OPTIONS 

6.1. 

Baseline scenario (Status Quo) 

The situation under the Status Quo, i.e. without any measures taken, would evolve as follows: 

Problem Group 1: Problems relating to the scope of the Regulation 

The insolvency laws of Member States have evolved in the past ten years to respond to new 
economic thinking and realities and it is likely that this process will continue. In a few years 
one can expect virtually all Member States to have pre-insolvency and hybrid procedures, as 
well  as  personal  insolvency  procedures.  Consequently,  problem  1  is  likely  to  increase,  with 
more  national  proceedings  falling  outside  the  scope  of  the  Regulation  because  they  do  not 

EN 

35 

   EN 

 
match the EIR's definition and the Regulation being increasingly out of tune with the reality 
in the Member States.  

Further,  the  EIR  having  been  adopted  before  the  entry  into  force  of  the  Lisbon  Treaty,  the 
mechanism for updating its Annex which lists the national procedures within the scope of the 
EIR is inconsistent with the Treaty. The updated Annex is adopted via a Council Regulation 
upon notification of Member States, while there is no explicit mechanism for controlling the 
content. 

The  Status  Quo  in  relation  to  insolvencies  of  groups  of  companies  only  allows  for  efficient 
handling of the insolvency of heavily integrated groups where the COMI of the subsidiary is 
located at the registered office of the parent company. For all other groups, maintaining the 
Status  Quo  would  have  no  effect  on  the  problem  identified  and  would  not  contribute  to 
achieving the objectives set out above.  

Problem Group 2: Problem in the implementation of the Regulation 

The problem of  forum-shopping is likely  to  decrease to some extent even in the absence of 
EU  action  because  regulatory  competition  and  a  focus  on  enabling  ‘second  chances’  will 
inevitably  drive  some  convergence  in  national  legislation,  which  will  reduce  incentives  for 
forum shopping. Thus, the Council Conclusions of May 2011 endorsing the recommendation 
of  the  Second  Chance  group  to  provide  a  three  year  discharge  period  have  already  been 
followed  by  some  Member  States.  However,  the  current  differences  in  Member  States' 
approaches to insolvency and, in particular, the issue of personal insolvency, make complete 
convergence  in  the  short  and  medium  term  unlikely  so  incentives  for  forum-shopping  will 
remain.  

Although the use of branches as a means to structure cross-border activities has declined since 
the time when the EIR was enacted, secondary procedures will remain relevant proceedings 
under  the  EIR  because  they  can  also  be  used  in  the  context  of  group  insolvency  if  the 
subsidiary's  COMI  is  located  at  the  registered  office  of  the  parent  company.  In  practice, 
insolvency  practitioners  have  sometimes  managed  to  avoid  the  opening  of  secondary 
proceedings by undertaking to treat the local creditors as if such proceedings had been opened 
(so-called “synthetic secondary proceedings”). This solution is accepted by the courts in the 
UK but is not permitted under the procedural laws of most other Member States.  

The problems of coordination are expected to increase as more cross-border restructurings are 
being  attempted  to  try  to  rescue  viable  business  and  save  jobs.  Without  an  obligation  on 
courts  to  coordinate  between  themselves  and  with  the  insolvency  practitioners,  current 
experience shows that this coordination will not function effectively.  

The problems related to the publicity and the absence of registers will partially improve by the 
interconnection of national company registers at EU level by the recently adopted Directive 
2012/17/EU on the interconnection of central, commercial and companies' registers which is 
planned for 2017 at the latest. The Directive  

1. 

2. 

creates the interconnection of national business registers through a European portal; 

requires  that  the  register  shall,  through  the  system  of  interconnection  of  registers, 
make available, without delay, the information on the opening and termination of any 
winding-up or insolvency proceedings of the company;  

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3. 

ensures that companies have a unique identifier allowing them to  be  unequivocally 
identified in communication between registers through the system of interconnection 
of central, commercial and companies' registers. 

However, the Directive solves the problem of publicity only partially because 

1. 

2. 

3. 

in  most  Member  States  the  register  does  not  cover  all  companies  (only  limited 
liability companies); 

the Directive does not include natural persons, sole traders or self-employed; and 

the  information  provided  is  not  sufficient:  it  is  not  enough  to  know  that  a 
company/person  is  subject  to  an  insolvency  proceeding;  courts  and  creditors  need 
additional information, in particular the name and address of the liquidator, the type 
of  insolvency  procedure  and  the  exact  powers  of  the  liquidator  and  the  extent  to 
which the debtor has been divested. 

The problem with the EIR will not be solved sufficiently by the interconnection of business 
registers. 

Regarding the lodging of claims, standardised national forms are being developed. However, 
no standard European form could be imposed without intervention by the legislator, and the 
difficulties faced by foreign creditors described above will remain A few Member States are 
putting  in  place  electronic  interfaces  for  the  lodging  of  claims67  which  could  –  if  the 
(linguistic)  needs  of  foreign  creditors  are  taken  into  account  –  significantly  facilitate  the 
lodging of claims. However, it is unlikely that all Member States will embark on such projects 
in the short or medium term.  

6.2. 

Option A: Modernizing the framework for cross-border insolvency proceedings  

Effectiveness in achieving the objectives 

Strengths: Option A will be effective in achieving the objectives. 

Weaknesses:  Theoretically  there  is  a  risk  that  extending  the  scope  to  cover  a  higher 
number of insolvency schemes would have an effect on forum shopping. 

The new scope  of  the EIR and  EU-wide recognition  of hybrid,  pre-insolvency and personal 
insolvency  schemes  will  be  effective  as  the  new  rules  for  determining  which  schemes  fall 
within  the  scope  of  the  EIR  will  ensure  that  the  scope  of  the  EIR  remains  in  synch  with 
national developments and that these are taken into account in a more consistent manner. 

Improving the procedural framework for determining the jurisdiction, together with training 
of  judges,  would  considerably  improve  legal  certainty  in  this  area.  Routine  examination  of 
jurisdiction before opening insolvency proceedings will allow judges to request further proof 
from  the  applicant  debtor  in  case  of  doubts  as  to  whether  COMI  is  really  located  in  that 
Member  State  or  to  give  creditors  the  opportunity  to  be  heard  on  the  issue  before  opening 
proceedings. It would discourage sham claims as to jurisdiction or false statements of affairs 
by the debtor, thereby reducing the possibilities for forum shopping. It would also facilitate 
the tasks of courts seized with a request relating to the same debtor to determine which type of 

67 

Such a scheme is being developed for example by the French association of liquidators and insolvency 
practitioners. 

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proceedings  is  still  “available”.  The  coordination  of  proceedings,  whether  secondary 
proceedings  or  parallel  proceedings,  publicly  available  information  on  all  proceedings,  and 
standardised  forms  for  lodging  claims  will  all  contribute  positively  to  the  efficiency  and 
fairness  of  cross-border  proceedings,  protecting  the  interests  of  all  parties  and  improving 
access to justice. 

The risk of forum shopping by debtors seeking to relocate abusively their COMI in countries 
where pre-insolvency schemes and discharge of debt exist is limited in practice by the criteria 
laid  down  by  domestic  insolvency  law  for  opening  proceedings,  as  well  as  the  powers  of 
national courts to examine the circumstances of the case. 

Impacts on Fundamental Rights 

Strengths:  Option  A  will  improve  the  rights  of  persons  involved  in  cross-border 
insolvencies (right to property, freedom to conduct business and right to engage in work, 
freedom of movement and residence, and right to an effective remedy). 

Weaknesses:  It  will  also  affect  their  rights  of  protection  of  personal  data  and  right  to 
property, in a way which is proportionate to the objectives. Measures need to be put in 
place to ensure compliance with Directive 95/46/EC on data protection. 

Right to property: Hybrid, pre-insolvency and personal insolvency schemes affect the rights 
to  property  of  creditors  compared  to  liquidation  procedures,  because  these  schemes  are  all 
based on some form of arrangement between the debtor and a majority of creditors. In these 
schemes,  dissenting  creditors  can  be  overruled  by  the  majority.  This  impact  on  the  right  to 
property is considered to be proportionate to the objective of rescuing businesses and saving 
jobs, not the least since it has been shown that the median recovery rate for creditors may be 
significantly higher in case of restructuring as compared to liquidation.  

The  reduction  in  abusive  forum-shopping  combined  with  a  right  for  all  creditors  of  judicial 
review  of  the  jurisdiction,  would  improve  the  protection  of  the  creditor's  right  to  property 
because there would be fewer cases where his claim was lost or diminished in value due to the 
shift of his debtor's COMI to another country. 

Freedom  to  conduct  business  and  right  to  engage  in  work:  The  EU-wide  recognition  of 
personal  insolvency  schemes  and  ensuing  debt  discharge  will  impact  positively  on  the 
freedom  to  conduct  business  and  right  to  engage  in  work  in  the  EU  as  it  facilitates  the 
possibility of a second chance for debt-discharged entrepreneurs and natural persons. Further 
the  EU-wide  recognition  of  national  hybrid  and  pre-insolvency  proceedings  will  positively 
affect  the  freedom  to  conduct  businesses  for  companies,  as  these  proceedings  will  be 
recognised by all their creditors EU-wide. 

Freedom of movement and of residence: The EU-wide recognition of personal insolvency 
schemes and ensuing debt discharge will impact positively on the freedom of movement and 
of residence of natural persons within the EU as the arrangements of the schemes, including 
payment  plans  and  possible  debt  discharge  would  be  recognised  by  all  creditors  and  other 
authorities. 

Protection of personal data: The inclusion of data on companies, but also especially natural 
persons and other debtors who are subject to insolvency proceedings within public electronic 
registers constitutes a data processing activity. Thereby it affects the right to the protection of 
personal  data.  The  obligation  of  Member  States  to  comply  with  Directive  95/46/EC  is  self-

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38 

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evident,  but  needs  to  be  referred  to  expressly  in  the  amending  Regulation  as  Regulation 
1346/2000  does  not  refer  to  it  in  any  way.  Information  on  the  opening  and  closing  of 
proceedings is necessary on the one hand to allow the debtors to exercise their right of free 
movement  or  the  right  to  conduct  business  in  another  Member  State,  and  on  the  other  to 
protect  potential  creditors,  customers  or  employers.  It  is  also  necessary  for  the  good  and 
efficient  administration  of  the  proceedings  themselves.  For  this  impact  to  be  considered 
necessary  and  proportionate  with  respect  to  the  objectives  of  the  policy,  specific  provisions 
will need to be introduced in the amending Regulation to justify the necessity and purpose of 
each category of data to be published by Member States. Further, the right to access to data 
subjects encompassing the right to rectification and erasure will need to be highlighted.  

Finally, access to the data in the register of another Member State, especially data on natural 
persons  subject  to  insolvency  proceedings,  must  be  for  legitimate  reasons.  The  usage  and 
processing of this data shall be regulated. 

Right  to  an  effective  remedy:  This  option  would  improve  the  situation  with  respect  to 
creditors’ right to an effective remedy and fair trial. It would ensure that creditors in another 
Member  State  have  the  possibility  of  judicial  review  of  the  decision  opening  insolvency 
proceedings, either by being heard before the decision is taken or by being effectively able to 
challenge it. 

Economic Impacts  

Strengths: Option A will have a positive impact on economic growth, investment and the 
Single  Market.  By  providing  greater  legal  certainty,  preventing  unnecessary  bankruptcies, 
reducing  obstacles  to  second  chance  for  entrepreneurs,  improving  the  availability  of 
information,  and  cutting  litigation  costs,  it  will  contribute  to  improving  the  conditions  for 
investment in Member States. All these improvements are likely to have a positive effect on 
cross-border  transactions,  whether  contracts,  partnerships,  acquisitions,  or  developments  of 
new branches/subsidiaries. 

Weaknesses: There is a risk that giving a second chance to debtors would impact other 
entrepreneurs' access to affordable credit. 

Hybrid  and  pre-insolvency  schemes  rescue  more  company  value,  help  viable  businesses  to 
survive temporary financial difficulties, improve recovery rates for creditors, and contribute to 
saving jobs. There are 50,000 cross-border insolvencies per year, meaning that at least twice 
as  many  companies  are  involved  in  cross-border  insolvency  proceedings  and  could  benefit 
from  broadening  the  scope  of  the  EIR.  SMEs  will  especially  benefit  from  the  EU-wide 
recognition of hybrid and pre-insolvency schemes. The rescue of large businesses requires the 
business to go on during the procedure and therefore requires that creditors such as suppliers 
are still being paid. This would benefit many SMEs that tend to be heavily dependent on one 
or  a  small  number  of  large  customers.  Moreover,  ensuring  that  the  effects  of  personal 
insolvency schemes are recognised throughout the EU will reduce obstacles to second chance 
for entrepreneurs. 

Rescue  procedures,  second  chance  and  discharge  of  debt  are  deemed  to  encourage  moral 
hazard, debt forgiveness and subsequent increase of credit cost where such proceedings would 
not be sufficiently tightened and closely monitored. However the organisation of the judicial 
systems is a competence of Member States; the option only aims at the recognition of such 
national proceedings in the EU. 

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Allowing  secondary  proceedings  to  participate  in  restructuring  and  pre-insolvencies  will 
further facilitate the survival of viable businesses, as will the efficient coordination of parallel 
proceedings for a group of companies. This will benefit the business as a whole but also the 
branches/establishments of parent companies that would have a possibility to be rescued on 
their own. This is particularly relevant for SMEs that are establishments/subsidiaries of parent 
companies, as it would allow them to be re-organised or acquired when the parent company 
goes  insolvent  and  they  have  a  viable  business.  Maximisation  of  assets  and  value  of 
companies will also be supported by these provisions. 

Effective  and  less  expensive  lodging  of  claims  will  benefit  all  companies  as  creditors.  It  is 
estimated that the costs for lodging a claim by a foreign creditor would be at least halved to a 
mean  value  of  less  than  €1,000  compared  with  the  current  average  of  between  €2,000  and 
€5,000.  This  reduction  in  costs  should  particularly   benefit  SMEs  as  foreign  creditors,  for 
which the additional costs of lodging claims abroad entail important costs with regard to their 
turnover and cash-flow and may even deter them from lodging the claim. 

The  publication  of  all  relevant  decisions  in  national  insolvency  registers  will  benefit 
companies as creditors. They will have the means to be informed of the on-going insolvency 
proceedings,  thereby  being  able  to  take  all  necessary  measures  including  the  lodging  of 
claims.  It  also  benefits  companies  as  potential  customers  or  suppliers  as  they  can  anticipate 
and possibly avoid potential difficulties in fulfilling contracts. 

Cooperation between insolvency practitioners would entail certain additional costs, but these 
costs would be offset against the savings which the cooperation would achieve.  

Social Impacts – Impact on employees 

Option A will facilitate the preservation of jobs, as viable businesses are able to continue. 
The  impact  will  be  more  significant  for  employees  of  large  companies  (more  than  250 
employees)  as  these  are  more  likely  to  be  involved  in  EU  insolvency  procedures.  Also,  the 
survival  of  branches/establishments  is  particularly  important  for  saving  jobs  whenever 
manufacturing or job-intensive activities tend to be situated in another Member State than the 
parent  company,  and  this  would  be  supported  by  extending  the  scope  of  secondary 
proceedings. 

There  is  no  evidence  of  any  additional  impact  on  the  situation  of  employees  as  to  the  law 
applicable  to  their  contracts of  employment,  the  guarantees  and  protection  already  provided 
by Directive 2008/94/EC68 in the Status Quo. There is a need to avoid the automatic opening 
of  local  secondary  proceedings  for  the  purpose  of  the  payment  of  wage  claims,  as  this 
happened to be counter-productive in the Alitalia case. Instead, the reassurance given by the 
main  liquidator  in  the  proposed  "synthetic"  secondary  proceedings  should  include  the 
protection of workers' rights. 

Impacts on Member States 

Option A will have a low impact on national insolvency laws, mostly procedural, while it 
will contribute to the development of rescue schemes in all Member States. It has costs 
for the insolvency register and the training of judges. However, these will be justified by the 
expected  benefits  for  society  of  increased  efficiency  and  quality  of  cross-border  insolvency 

68 

Directive 2008/94/EC of the European Parliament and of the Council of 22.10.2008 on the protection of 
employees in the event of insolvency of their employer, OJ L283, 28.10.2008, p.36. 

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procedures, even if these lead to the rescue and restructuring of only a small percentage of the 
tens of thousands of cross-border bankruptcies and associated job losses and lost output.  

It will have an indirect consequence on the Member States who do not have national hybrid 
and pre-insolvency proceedings (11) (BG, HU, LT, NL, SK, SI, SV, IRL, PT, CY, FI) as it 
will  increase  the  pressure  to  adopt  such  proceedings.  Further,  it  would  put  pressure  on 
Member  States  which  do  not  have  personal  insolvency  proceedings  (9  MS),  second,  it  will 
encourage in the medium term some convergence in the personal insolvency proceedings (for 
whom, purpose, discharge periods…) as today the EU landscape is very diverse.  

The scrutiny procedure to include national proceedings in the Annex and the information to 
be provided on these national procedures will have a positive impact on the judicial systems 
of  Member  States  and  on  the  European  area  of  justice  as  a  whole  by  increasing  confidence 
and mutual trust of judges in the procedures from other Member States. 

Member States will not have to bear any additional costs due to standard forms as they will 
only entail costs for the EU Institutions. 

There  exist  no  specific  data  on  the  administrative  burden  relating  to  the  new  information 
obligation to publish all court decisions. However, such a requirement may be attenuated and 
confined  to  those  decisions  which  most  Member  States  publish  anyway  in  order  to  reduce 
additional costs. 

Specific Costs 

Training  of  insolvency  judges  will  be  incurred  by  national  public  administrations,  i.e. 
Member  States’  budgets.  Part  of  these  costs  could  be  taken  on  by  the  EU  as  part  of  the 
programme  on  training.  Member  States  will  also  incur  costs  related  to  the  development, 
upgrading, and interconnecting of national insolvency registers, as set out in the table below: 

Action 

Estimated cost  

Training of judges  

€950 - 1300/judge 

€7 - 10 million (10% of all judges) for all Member States 

National 
insolvency register  

electronic 

Development of new insolvency register: €0.5 - 1 million 
(per MS concerned) 

Upgrading existing insolvency register: €100k - 300k 
(per MS concerned) 

Maintenance: €100k- 150k per MS per year  

Interconnection  of  national 
registers 

Development central interconnection) : €0.5 - 1 million 
(EU budget) 

Maintenance central interconnection: €100k - 300k per 
year (EU budget) 

Development and maintenance (per MS): €50k /year 

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The costs for the national register distinguish costs between those Member States that need to 
develop  a  new  system  or  profoundly  change  the  architecture  of  their  current  system,  and 
Member States that need only to upgrade an existing system. The former (as FR, FI) are not 
favourable to a compulsory register; the later have concerns that additional obligation is put 
on the courts (UK) and that the obligation extends to natural persons (SE, FI). Nevertheless 
the majority of countries that have currently a register do not oppose the plans, e.g. AT sees 
some  benefits  in  a  cross-border  situation.  The  interconnection  of  national  registers  in  the 
framework of the e-Justice Portal would affect both Member States and the EU budget, and 
comes in addition to the costs of the national registers. However the Commission will ensure 
that  the  risk  of  parallel  overlapping  network  of  registers  is  minimised  because  the  revised 
Regulation  would  allow  Member  States  to  build  on  the  network  established  by  Directive 
2012/17/EU in order to avoid the costly creation of new registers. 

The  requirement  that  courts  cooperate  and  communicate  with each  other  would  entail  some 
additional  costs  in  terms  of  working  time  and  possible  costs  of  translation.  As  a  specific 
impact,  the  requirement  to  hear  the  main  liquidator  before  opening  secondary  proceedings 
would  entail  certain  costs  for  the  court  but  these  costs  are  likely  to  be  outbalanced  byte 
guidance  the  liquidator  can  give  the  court  in  determining  whether  to  open  secondary 
proceedings.  About  10%  of  the  50,000  cross-border  insolvencies  per  year  involve 
establishments  and  subsidiaries.  That  means  that  judges  will  have  additional  coordination 
work for up to 5,000 cases per year (compared with the total of about 200,000 insolvencies 
per year in the EU). Thus, the number of cases involved is relatively small compared to the 
total number of insolvency cases, and the costs of additional working time would, moreover, 
be  at  least  partly  offset  by  savings  of  working  time  achieved  by  a  more  efficient  flow  of 
information which the cooperation between courts would bring about. Costs for translation of 
documents or other may be borne by the proceedings. Based on average costs of translation of 
€30 per page, the translation costs can be  estimated at between €90 and €300, depending on 
the length of the court decision to be translated. Additional costs incurred by courts are also 
likely  to  be  compensated  by  a  decrease  of  legal  dispute  resulting  from  the  proposed 
procedural improvements and the consequent diminution of judicial claims. 

6.3. 

Option B: Towards approximation of national insolvency laws and proceedings  

Effectiveness in achieving the objectives 

Option B will be very effective in achieving the objectives. It will address the underlying 
problems of the EIR. 

Having a single proceeding for companies with establishments and for groups of companies, 
would  ensure  efficient  handling  of  the  insolvency  proceedings  because  they  would  be 
consolidated  before  a  single  judge,  administered  by  a  single  insolvency  practitioner  and 
governed by a single law, that of the state of the opening of proceedings. There would be no 
efficiency  losses  due  to  multiple  proceedings  being  opened  in  different  jurisdictions  or 
divergences  of  opinion  between  different  liquidators  involved.  They  also  have  positive 
economic impacts on companies as debtors. 

Impacts on Fundamental Rights 

Similarly  to  option  A,  option  B  will  improve  the  rights  of  persons  involved  in  cross-
border  insolvencies  (right  to  property,  freedom  to  conduct  business  and  right  to  engage  in 
work,  freedom  of  movement  and  residence  and  right  to  an  effective  remedy).  It  will  also 
affect  their  rights  of  protection  of  personal  data,  in  a  way  which  is  proportionate  to  the 

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42 

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objectives. Measures need to be put in place to ensure compliance with Directive 95/46/EC. 
Finally, to avoid disproportionate impacts on the right to property, measures allowing the fair 
treatment of all creditors, such as harmonised European provisions on the treatment of foreign 
creditors will need to be put in place. 

Right to property: Option B would change the approach towards the rights of the creditor, 
as, in contrast to the Status Quo, the ranking of creditors will no longer be determined by the 
law of the seat of the company with whom he established a legal relationship. 

Weaknesses: Having a single proceeding for companies with establishments and for groups 
of companies has significant negative repercussions on the right to property of the creditors of 
establishments or subsidiaries with respect to the Status Quo. The creditors of establishments 
or  subsidiaries,  that  could  be  in  particular  local  SMEs,  but  include  also  employees,  social 
security and tax authorities, would lose all possibility to open a local insolvency proceeding 
governed  by  the  law  of  the  state  of  the  establishment/subsidiary.  This  negative  impact  on 
creditors would in turn also mitigate the economic and social benefits of these options. The 
impacts on the right to property seem disproportionate with respect to the objectives. In order 
to  reduce  this  important  negative  impact  on  some  creditors,  option  B  would  have  to  be 
accompanied  by  measures  allowing  the  fair  treatment  of  all  creditors,  such  as  harmonised 
European provisions on the treatment of foreign creditors (of an establishment or subsidiary 
in another Member State). 

Freedom  to  conduct  business  and  right  to  engage  in  work:  Option  B  may  affect  the 
freedom of companies to conduct business and to organise themselves, because there would 
be only one procedure for a group of companies. 

Freedom  of  movement  and  of  residence:  The  positive  impacts  of  Option  B  are  similar  to 
Option A. 

Protection  of  personal  data:  The  impacts  on  the  right  to  protection  of  personal  data  are 
similar to Option A 

Right  to  an  effective  remedy:  The  harmonisation  of  the  procedural  framework  for  cross-
border  insolvencies  and  national  insolvencies  would  improve  the  rights  to  an  effective 
remedy. 

Economic Impacts 

Similarly  to  Option  A,  Option  B  will  have  a  positive  impact  on  economic  growth, 
investment and the Single Market.  

On top of the economic benefits of Option A, harmonised rules e.g. on certain procedures, on 
treatment  of  foreign  creditors  and  on  discharge  periods,  will  considerably  increase  legal 
certainty  for  creditors,  take  away  a  large  part  of  the  incentives  for  abusive  forum-shopping, 
which  will  contribute  to  improving  conditions  for  investment  in  Member  States  and  benefit 
the  Single  Market.  Option  B  may  further  improve  the  resilience  of  the  Single  Market  in 
economic crises, as the effectiveness of national insolvency laws is essential in alleviating the 
effects of the crisis.  

Harmonised rules may also facilitate investments from third countries. 

As with Option A, Option B will facilitate the survival of viable businesses by ensuring EU-
wide recognition of hybrid and pre-insolvency proceedings. 

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43 

   EN 

 
Having a unique proceeding for companies with establishments or groups of companies will 
simplify proceedings for companies as debtors and creditors, and would also generate savings 
by reducing the number of insolvency administrators and courts involved. It will also benefit 
SMEs that are establishments/subsidiaries of parent companies and have a viable business, as 
they  can  be  integrated  in  the  rescue  of  the  whole  company  and  they  do  not  have  to  bear 
additional costs of a local procedure.  

Businesses,  as  debtors  and  creditors,  will  benefit  from  more  harmonized  rules.  These  will 
have  a  positive  effect  on  cross-border  transactions  in  the  Single  Market,  whether  contracts, 
partnerships,  acquisitions,  developments  of  new  branches/subsidiaries.  Indeed,  business 
stakeholders 
(Eurochambers,  UEAPME,  Business  Europe)  often  complain  about 
inefficiencies  of  national  insolvency  laws.  SMEs  would  particularly  benefit  from  the 
harmonisation  of  discharge  periods  throughout  the  EU.  The  great  divergence  of  discharge 
periods, and in particular the excessive length of discharge periods in certain Member states, 
has been identified as a major obstacle to providing a second chance to SMEs. 

Similarly  to  option  A,  more  effective  and  less  expensive  lodging  of  claims  will  benefit  all 
companies, and in particular SMEs, as creditors. The publication of all relevant decisions in 
national insolvency registers will also benefit companies as creditors.  

Social Impacts – Impact on employees 

As  Option  A,  also  Option  B  is  likely  to  facilitate  the  preservation  of  jobs,  as  viable 
businesses are able to continue. The impact will be more significant for employees of large 
companies  (more  than  250  employees)  as  these  are  more  likely  to  be  involved  in  EU 
insolvency procedures. Also, the survival of branches/establishments is particularly important 
for  saving  jobs  whenever  manufacturing  or  job-intensive  activities  are  situated  in  another 
Member  State  than  the  parent  company,  and  this  would  be  supported  by  having  unique 
procedures that can efficiently define and implement a rescue plan for the whole company or 
group of companies. 

Impacts on Member States 

Weaknesses:  Option  B  would  entail  a  substantial  element  of  harmonisation.  It  would 
therefore have an important impact on Member States’ insolvency laws and on national 
judicial systems.  

The  harmonisation  or  convergence  of  discharge  periods  would  affect  those  Member  States 
that have not yet implemented the Council Conclusions of May 2011 on the Small Business 
Act.  

Option B would modify the rules on the applicable law and on the rights of creditors that are 
now  defined  in  the  EIR.  The  harmonisation  of  certain  procedural  aspects,  regarding  the 
opening  of  procedures,  the  availability  of  an  effective  remedy  for  creditors,  and  on  the 
ranking  of  creditors,  will  have  important  consequences  on  national  laws  as  the  differences 
between national systems are important. The approximation of national insolvency laws and 
procedures  would  therefore  require  an  in-depth  comparative-law  analysis  of  national 
insolvency laws and procedures which would enable the Commission to identify the precise 
areas  in  which  procedural  harmonisation  would  be  necessary  and  feasible,  and  not  too 
intrusive to the national legislations and insolvency systems.  

EN 

44 

   EN 

 
Costs  relating  to  training  and  to  establishing,  upgrading  and  interconnecting  insolvency 
registers would be incurred as in option A. 

7. 

COMPARISON OF THE OPTIONS AND SUMMARY OF THE PREFERRED OPTION  

The Status Quo would not solve the problems identified and would allow the negative effects 
of  the  two  groups  of  problems  to  continue.  Although  a  degree  of  regulatory  convergence 
between Member States might be expected in some areas, in others the problems are likely to 
become more acute. 

Option  A  has  overall  positive  impacts  with  respect  to  the  baseline.  It  would  effectively 
achieve  the  policy  objectives  and  address  the  problems  identified,  without  intrusion  in 
national legislation or policies. It would increase the efficiency of the Regulation, extend its 
scope  to  proceedings  that  aim  at  rescuing  viable  business  and  saving  jobs  and  promoting 
second chance, and make provisions for groups of companies.  

Option A will have a positive impact on economic growth, investment and the Single Market. 
By providing greater legal certainty, preventing unnecessary bankruptcies, reducing obstacles 
to  second  chance  for  entrepreneurs,  improving  the  availability  of  information,  and  cutting 
litigation  costs,  it  will  contribute  to  improving  the  conditions  for  investment  in  Member 
States. All of these improvements will also have a positive effect on cross-border transactions, 
whether contracts, partnerships, acquisitions, or developments of new branches/subsidiaries.  

Option A will benefit all business, in particular groups of companies and SMEs as debtors and 
creditors.  It  will  increase  efficiency,  fairness  and  transparency  of  cross-border  insolvency 
proceedings and improve access to justice. 

Option  A  imposes  some  costs  on  Member  States’  authorities  related  to  insolvency  registers 
and training of judges, which is largely justified by the benefits and savings for society of the 
increased efficiency and quality of cross-border insolvency procedures. 

Option  A  will  have  a  positive  impact  on  mutual  trust  between  Member  States’  judicial 
authorities.  It  preserves  the  current  balance  between  debtor  and  creditor  and  between 
universality  and  territoriality.  However,  one  important  cause  of  the  problems  identified  - 
inefficiencies  and  differences  in  the  national  insolvency  laws  themselves  -  would  not  be 
addressed. 

Option B is potentially more effective than Option A in reaching the objectives and providing 
economic  and  social  benefits  for  the  Single  Market.  It  would  increase  the  effectiveness  and 
efficiency of insolvency proceedings in the EU as a whole; it would create elements of a fully 
universal system, going towards features of the regulation of insolvency in the 50 States of the 
US under the US Insolvency Act.  

Option  B  would  be  more  completely  address  the  European  Parliament’s  Resolution  of 
November  2011,  in  which  it  gave  recommendations  to  the  Commission  regarding  the 
harmonisation  of  specific  aspects  of  insolvency  proceedings  on  the  basis  that  the  internal 
market  would  benefit  from  a  level  playing  field,  and  that  disparities  between  national 
insolvency  laws  create  competitive  advantages  or  disadvantages  and  difficulties  for 
companies  with  cross-border  activities,  which  could  become  obstacles  to  a  successful 
restructuring of insolvent companies and favour forum-shopping.  

EN 

45 

   EN 

 
However, option B’s impact on national systems is more significant. The  proposed changes 
go beyond the modernising of the EIR, and would require an in-depth comparative analysis of 
national  insolvency  laws,  preventing  the  immediate  implementation  of  option  B.  In  the 
meantime, the current problems would persist, and could even worsen. 

Therefore, while there is a lack of supporting evidence in favour of option B, option A seems 
a more proportionate option at this stage. Accordingly the preferred option for the revision 
of the Insolvency Regulation is option A: 

 Extending the scope by revising the definition of insolvency proceedings:  

- to include hybrid and pre-insolvency,  

- and include debt discharge and those insolvency proceedings for natural persons which 
currently do not fit the definition, 

-  and  opening  the  scope  of  secondary  proceedings  to  large  categories  of  proceedings 
promoting restructuring. 

Task  the  Commission  with  ensuring  that  only  procedures  which  comply  with  the 
definition are listed in the annex. 

Improving  the  procedural  framework:  the  EIR  would  clarify  that  the  court  opening 
insolvency proceedings is obliged to examine its basis of jurisdiction and to specify in the 
opening decision whether the proceedings are main or secondary proceedings; in addition, 
creditors would have a right to judicial review of the opening decision.  

Enable  the  court  to  postpone  or  refuse  the  opening  of  secondary  proceedings  if  this 
would obstruct the efficient administration of the estate. 

Require  the  court  to  hear  the  liquidator  in  the  main  proceedings  prior  to  opening 
secondary proceedings. 

Extend  the  cooperation  requirements  to  courts  by  obliging  courts  of  the  main  and 
secondary proceedings to cooperate between themselves and by obliging liquidators and 
courts to cooperate with each other. 

Require Member States to publish all court decisions relating to cross-border insolvency 
cases in a publicly accessible electronic register; 

Oblige  liquidators  of  the  main  proceedings  to  publish  these  court  decisions  in  the 
insolvency  register  of  other  Member  States  where  the  debtor  has  an  establishment  or 
creditors; 

Enable definition of common entries for the interconnection of national registers. 

Introduce standardized forms in all EU languages for the lodging of claims; 

Encourage Member States to set up electronic systems for the lodging of claims. 

Coordinating  main  proceedings  through  general  cooperation  mechanisms:  This 
option  would  retain  the  entity-by-entity  approach  of  the  Insolvency  Regulation  but 
provide for a coordination of the insolvency proceedings concerning members of the same 

EN 

46 

   EN 

 
group in three respects:  

(i)  by  obliging  the  liquidators  of  the  different  main  proceedings  to  communicate  and 
cooperate, notably by trying to develop a reorganisation plan for the insolvent members of 
the group; 

(ii) by obliging the courts competent for the different main proceedings to communicate 
information  and  cooperate,  e.g.  by  appointing  several  liquidators  which  have  indicated 
they can cooperate with each other;  

(iii)  by  obliging  the  liquidator  in  the  main  proceedings  for  one  group  member  to 
communicate  and  cooperate  with  the  courts  competent  for  the  proceedings  relating  to 
another group member. 

The coordination mechanisms above can be complemented by the nomination of a “lead” 
insolvency  practitioner  and  court  with  the  power  to  direct  the  reorganisation  of  the 
insolvent group members, when the structure and level of integration of the group allows 
for it. 

The “lead” insolvency practitioner would, in particular, have the power to request a stay 
of the process of liquidation of a subsidiary, to propose a restructuring plan and to obtain 
information  from  the  other  insolvency  practitioners  or  courts  involved.  The  “lead” 
insolvency  practitioner  could  either  be  the  liquidator  of  the  parent  company  or  an 
additional liquidator nominated by the “leading” court. 

8. 

MONITORING AND EVALUATION 

In  order  to  monitor  the  effective  application  of  the  amended  Regulation,  regular  evaluation 
and reporting by the Commission will take place. To fulfil these tasks, the Commission will 
prepare regular evaluation reports on the application of the Regulation, based on consultations 
with Member States, stakeholders and external experts. Regular expert meetings will also take 
place to discuss application problems and exchange best practices between Member States in 
the framework of the European Judicial Network in civil and commercial matters. 

In most Member States, there is no systematic collection of statistical data on the application 
of the EIR, which makes it very difficult to measure how the Regulation operates for cross-
border  insolvencies.  The  Commission  will  therefore  include  in  the  revision  of  the  EIR  a 
requirement  on  Member  States  to  provide  information  on  the  application  of  the  EIR  in 
practice, notably on the number of secondary proceedings and proceedings concerning groups 
of companies. 

EN 

47 

   EN 

 
 ANNEX 1: GLOSSARY OF LEGAL TERMS AND ABBREVIATIONS 

Term 

COMI  

EIR 

Meaning 

Centre of main interest of the insolvent debtor. For a company it is 
deemed  to  be  the  place  of  its  registered  office;  for  a  private 
individual it is in general its habitual residence 

Council Regulation (EC) No 1346/2000 on insolvency proceedings 
(or "European Insolvency Regulation") 

Jurisdiction/international 
jurisdiction 

Jurisdiction is the power conferred upon a court or tribunal to hear 
a  specific  case;  international  jurisdiction  is  the  competence  of  the 
courts of a particular country to hear a case. The EIR only defines 
the international jurisdiction for opening insolvency proceedings 

Main 
proceedings 

Secondary 
proceedings 

Liquidator 

Winding-up 

insolvency 

Insolvency  proceedings  which  have  been  opened  in  the  Member 
State where the debtor has its centre of main interests 

insolvency 

Insolvency  proceedings  opened  in  the  Member  State  where  the 
debtor has an establishment but not its COMI.  

Person or body whose function is to administer or liquidate assets 
of  which  the  debtor  has  been  divested  or  to  supervise  the 
administration of his affairs 

Insolvency proceedings involving realising the assets of the debtor 
(liquidation), including where the proceedings have been closed by 
a  composition  or  other  measures  terminating  the  insolvency,  or 
closed by reason of the insufficiency of the assets 

Insolvency practitioner 

Liquidator 

Insolvency proceedings 

Collective  proceedings  –subject  to  court  supervision,  either  for 
reorganisation  or  liquidation,  which  entail  the  partial  or  total 
divestment of a debtor and the appointment of a liquidator 

Insolvency 

Inability to pay one's debts as they fall due 

Bankruptcy 

Hybrid proceedings 

Determination of insolvency made by a court of law with resulting 
legal orders intended to resolve the insolvency; another meaning is 
a synonym of winding-up/liquidation 

At  the  border  between  out-of-court  arrangements  (contracts, 
conciliation) and formal judicial insolvency proceedings, they are a 
mix  combining  the  advantages  of  both  types  of  proceedings 
(flexibility,  enforceability).  In  such  proceedings  the  debtor  can 
continue to manage its assets ("debtor in possession") 

Pre-Insolvency 
Proceedings 

Semi-collective  proceedings  (conducted  between  a  debtor  in 
financial distress and its main secured creditors) starting at an early 

EN 

48 

   EN 

 
 
 
stage  prior  to  insolvency,  in  view  of  maximising  the  chance  of 
successful  reorganisation.  They  may  be  out-of-court  arrangements 
or under the supervision of the court 

Establishment 

Any place of operations where the same debtor carries out a non -
transitory  economic  activity  with  human  means  and  goods  or 
services 

Branch 

Establishment 

Group of Companies 

Consists  of  separate  units,  each  with  its  own  legal  personality,  its 
own  assets,  contracts  and  creditors.  The  companies  of  the  group 
may  have  an  integrated  business,  a  market  stronger  position,  an 
integration of assets or a financial integration (holding). In case of 
horizontal  integration  several  units  in  different  countries  have 
similar  activities;  in  the  vertical  integration  each  of  the  units  is 
responsible for a separate activity in the process 

Parent Company 

Company  which  owns  a  majority  of  shares  of  its  subsidiaries.  It 
may determine the common policy of the group at its headquarters 

Subsidiary 

Companies owned and controlled by a parent company  

EN 

49 

   EN 

 
ANNEX 2: EXECUTIVE SUMMARY OF THE OUTCOME OF THE PUBLIC CONSULTATION 

Regulation (EC) No 1346/2000 on Insolvency proceedings came into force in May 2002. It 
includes an obligation on the Commission to review the application of the Regulation and to 
make a proposal for adaption of the Regulation if needed in 2012. Such a review is included 
in the European Commission’s 2012 work programme and has gained greater impetus in view 
of  the  current  financial  crisis  and  the  positive  impact  that  effective  insolvency  regimes  can 
have on entrepreneurship and economic growth.69  

As  part  of  the  Commission’s  review,  it  is  not  only  examining  issues  in  relation  to  the 
implementation  of  the  Regulation  but  also  considering  whether  the  Regulation  continues  to 
reflect current trends in insolvency practice. To this end, it launched a public consultation on 
30 March 2012 asking a total of 31 questions related to the Insolvency Regulation as well as 
seeking  broader  opinions  on  problems  faced  and  possible  solutions  including  how  the 
Regulation might be amended.  

This  report  aims  at  providing  a  general  overview  of  the  main  results  of  the  public 
consultation. 

Overview of respondents 

The public consultation was closed on 21 June 2012 having received 103 replies via the IPM 
tool. Additional replies were received by email, including full responses to the consultation, 
comments  on  specific  points  and  documents.  A  total  of  136  responses  were  recorded.  For 
statistical purposes, 126 responses were analysed since a number of responses did not cover 
all questions and were not suitable for statistical purposes.  

Replies  have  been  received  from  all  Member  States  except  Bulgaria  and  Malta  with  the  UK  (21%), 
Romania (20%) and Italy (12%) representing more than 50% of all respondents.  

Replies were received from a wide range of stakeholders with academics, legal practitioners 
and public authorities providing the greatest number of replies. 

69 

Communication  from  the  Commission:  Commission  work  programme  2012,  delivering  European 
renewal. 

EN 

50 

   EN 

 
 
                                                 
OVERVIEW OF MAIN FINDINGS 

A  narrow  majority  (52%)  of  respondents  agreed  that  the  European  Insolvency  Regulation 
(EIR)  operates  efficiently  (Question  1),  with  legal  practitioners,  public  authorities  and 
academics  expressing  the  most  positive  views.  Less  favourable  views  were  expressed  by 
private individuals/self-employed and bank/credit institution/investment funds.  

SCOPE  OF  THE  INSOLVENCY  REGULATION:  Pre  Insolvency,  Hybrid  Proceedings, 
private individual and extra EU Proceedings - (Question 3, 4, 5, 6) 

Views were evenly balanced between those who felt the lack of coverage of pre-insolvency or 
hybrid  proceedings  was  problematic  (43%)  and  those  who  did  not  (42%).  Nevertheless,  a 
significant majority (59%) felt the EIR should cover such proceedings with academics, public 
authorities  and  insolvency  practitioners  particularly  in  favour  of  this.  Views  were  mixed  on 
exactly which proceedings should be covered and in particularly where court oversight should 
be required. 

Examples  of  problems  raised  included  cases  differing  views  of  Member  States  on  which 
proceedings could be covered by the EIR; uncertainty relating to schemes of arrangement and 
how they are recognised at EU level and risks to workers interests.  

A  majority  of  respondents  (49%)  agreed  that  the  EIR  should  apply  to  private 
individuals/self-employed,  with  34%  disagreeing  with  those  in  favour  including  judges, 

EN 

51 

   EN 

 
 
 
insolvency practitioners and academics. Some respondents did not think an expansion should 
include consumers. 

Opinion  was  evenly  spread  on  whether  the  lack  of  provisions  for  the  recognition  or 
coordination  of  extra-EU  insolvency  proceedings  had  created  problems  with  44% 
agreeing and 37% disagreeing. Most banks, judges, insolvency practitioners considered this as 
problematic.  

Suggestions  for  improving  the  scope  of  the  EIR  include  removing  the  requirement  of  the 
appointment of an office holder; clarifying the definition of COM; creating a special agency 
to  address  problems  of  over  indebtedness;  harmonising  rules  on  consumer  insolvencies; 
incorporating  the  UNICITRAL  model  law  or  at  least  some  concepts  of  it  into  the  EIR  and 
include pre-insolvency and hybrid proceedings in scope of EIR. 

COMPETENT COURT TO OPEN INSOLVENCY PROCEEDINGS (Question 7, 8, 9, 
10) 

A significant majority of respondents (77%) approved of the use of the COMI to locate the 
main  proceedings  whilst  only  25%  of  banks  approved.  However  51%  considered  that  the 
interpretation of the term COMI  by case-law caused practical problems,  with  the  most 
critical  being  private  individuals/self-employed  (67%),  banks  (75%),  judges  (58%),  and 
insolvency practitioners (61%).  

Nevertheless,  some  felt  clarifications  given  by  the  ECJ  have  been  very  helpful  to  achieve  a 
more  uniform  application  of  the  term  whilst  others  felt  the  COMI  concept  should  not  be 
revised.  

Almost  half  of  the  respondents  (49%)  indicated  evidence  of  abusive  relocation  of  COMI 
with  29%  feeling  there  was  no  abusive  relocation.  The  most  common  situation  cited  was 
moves  to  UK  in  particular  from  Ireland  and  Germany  with  relief  of  the  debtor  and  the 
promotion of rescue culture towards businesses in the UK being suggested as drivers.  

44%  of  respondents  reported  no  problems  with  the  interaction  between  the  EIR  and 
Brussels I which have not been satisfactorily solved by case-law. 

Groups of Companies - (Question 11) 

Almost  half  of  respondents  (49%)  felt  the  EIR  does  not  work  efficiently  for  multinational 
group insolvencies with 30% feeling it does.  

CO-ORDINATION  BETWEEN  MAIN  AND  SECONDARY  PROCEEDINGS  - 
(Questions 12, 13, 14, 15) 

36%  of  respondents  felt  the  division  between  main  and  secondary  proceedings  was  helpful 
with 37% disagreeing. However, 48% were dissatisfied with the coordination between main 
and secondary proceedings with 21% being satisfied. 40% also felt that the duty to cooperate 
between  insolvency  practitioners  did  not  work  effectively  compared  with  26%  who  thought 
they  did.  These  concerns  were  reflected  in  the  fact  that  53%  felt  that  the  lack  of  a  duty  of 
cooperation  between  practitioners  and  the  foreign  courts  or  between  courts  had  created 
problems with 18% stating that it had not. 

APPLICABLE LAW – (QUESTIONS 16-19) 

EN 

52 

   EN 

 
A  majority  of  respondents  (55%)  agreed  the  EIR’s  provisions  on  applicable  law  are 
satisfactory while 32% disagreed. A majority (56%) also agreed that the exceptions in the 
EIR to the general rule on applicable law are justified to protect legitimate expectations and 
legal  certainty  whilst  19%  disagreed.  Almost  half  of  the  respondents  (49%)  stated  that  the 
provision  on  rights  in  rem  operates  satisfactorily  in  practice,  while  25%  said  it  did  not. 
Views  on  the  provision  on  detrimental  acts  were  rather  divided,  with  33%  stating  they 
operated satisfactorily in practice, 37% stating they did not. 

RECOGNITION AND ENFORCEMENT – (QUESTIONS 20-22) 

40%  of  respondents  thought  that  there  were  problems  of  recognition  and  enforcement  of 
the  decision  opening  the  proceedings  or  with  the  recognition  and  enforcement  of  further 
decisions during the proceedings whilst 34% disagreed  

Only  23%  of  respondents  stated  that  they  were  aware  of  cases  where  a  Member  State  has 
refused  to  recognise  insolvency  proceedings  or  to  enforce  a  decision  on  the  grounds  of 
public policy (Question 21). 56% stated that they were not aware of such cases. 

Half of the respondents (51%) agreed that the definition of the decision ‘opening insolvency 
proceedings’  should  be  amended  to  take  into  account  national  legal  regimes  where  there  is 
not an actual court opening the proceedings. 

PUBLICATION  OF  PROCEEDINGS  AND  LODGING  OF  CLAIMS-  (QUESTIONS 
23-25) 

Three quarters of respondents (75%) agreed that the  absence of  mandatory publication of 
the decision opening insolvency is a problem. Those stakeholders who mostly thought it was 
a  problem  belonged  to  the  group  of  insolvency  practitioners,  companies  and  public 
authorities.  

46% of those who expressed an opinion considered there were problems with lodging claims 
(question  24).  Crucially,  a  significant  proportion  of  key  stakeholders  who  will  often  be  the 
entities making claims felt there was a problem – 83% of private individuals/ self-employed 
and 75% of banks.  

45% of respondents stated that there were no difficulties with the EIR”s rules on languages 
for informing creditors and lodging claims and 23% felt that there were problems. 

DIFFERENCES IN NATIONAL INSOLVENCY LAWS – (QUESTIONS 26-28) 

Over  half  of  the  respondents  felt  that  the  differences  in  national  insolvency  laws  create 
obstacles for the administration of proceedings or difficulties for companies with cross-border 
assets whilst 21% disagreed. On the other hand 38% felt there were important inefficiencies 
in their national insolvency law with 43% feeling there were not inefficiencies. A majority 
(55%), however, considered that their national insolvency laws strike an adequate balance 
between the need for efficient proceedings and the parties’ right to an effective remedy. Only 
23% of respondents disagreed. 

COSTS OF PROCEEDINGS – (QUESTIONS 29-31) 

32%  of  respondents  indicated  that  the  costs  were  disproportionate  with  regard  to  debt  with 
36% disagreeing. The issue of disproportionate costs for natural persons and small firms was 

EN 

53 

   EN 

 
raised. Similarly, close to a third (36 %) considered that the costs of cross-border restructuring 
or reorganisation were not disproportionate and 21% felt that they were.  

Opinions  were  divided  on  the  question  of  whether  there  should  be  a  simplified  insolvency 
regime at reduced costs for certain debtors in particular for self-employed persons and SMEs 
(Question 31), with 37% in favour of the idea, 36% against, and 27% expressing no opinion. 
Stakeholders called for simplified proceedings and enhanced use of information technology to 
expedite proceedings.  

EN 

54 

   EN 

 
ANNEX 3: DATA ON ENTERPRISES AND INSOLVENCIES IN THE EU 

to 

Number of enterprises, employment and gross value added  
According 
the  2010/2011  Annual  Report  on  EU  Small  and  Medium  sized 
Enterprises70SMEs  comprise  99.8%  of  all  enterprises  (20,796,192  SMEs)  while  large 
enterprises account only for 0.2% (43,034 large enterprises). In employment terms, in the 
non-financial  business  economy71  SMEs  provide  about  two-thirds  of  workers  with  large 
enterprises  accounting  for  the  remainder.72  This  means  that  large  enterprises,  despite  their 
smaller number are extremely important for the European economy as 33.1% of the working 
population is employed by them. Table 1 provides an overview of the number of enterprises, 
employment and gross value added in EU-27, by size class, in 2010. 
Table  1  Number  of  enterprises,  employment  and  gross  value  added  in  EU-27,  by  size 
class, 2010 (estimates)73 

Micro (1 – 
9  persons 
employed) 

Small  (10 
– 
49 
persons 
employed) 

Medium 
(50  –  249 
persons 
employed) 

SMEs (1 – 
249 
persons 
employed) 

Total 

Large (250 
+  persons 
employed) 

19,198,53
9 
92.1 

1,378,401 

219,252 

6.6 

1.1 

20,796,19
2 
99.8 

43,034 

20,839,226 

0.2 

100 

38,905,51
9 
29.8 

26,605,16
6 
20.4 

21,950,10
7 
16.8 

87,460,79
2 
66.9 

43,257,09
8 
33.1 

130,717,89
0 
100 

1,293,391 

1,132,202 

% 
Gross  Value 
Added 
EUR 
Millions 
% 
Source: 
Econometrics/Ecorys 
Note  that  the  six  largest  EU  economies,  i.e.,  France,  Germany,  Italy,  Poland,  Spain  and  the 
UK represent over 70% of all EU-27 SMEs.74 

17.9 
Statistics  Offices 

41.6 
of  Member 

Eurostat/National 

States/Cambridge 

2,485,457 

1,067,387 

3,492,979 

5,978,436 

58.4 

18.9 

21.6 

100 

Enterprises 

Number 

% 
Employmen
t 

Number 

70 

71 

72 
73 
74 

Wymenga  P.  et  al,  ‘Are  EU  SMEs  recovering  from  the  crisis?  Annual  Report  on  EU  Small  and  Medium  sized 
Enterprises  2010/2011’,  Report  for  the  European  Commission,  DG  Enterprise  and  Industry,  available  at 
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/files/supporting-
documents/2010-2011/annual-report_en.pdf (last accessed on 9 July 2012).  
Note  that  the  statistics  in the  report  mentioned  in  Wymenga  P. et  al, ‘Are  EU  SMEs  recovering  from  the  crisis? 
Annual Report on EU Small and Medium sized Enterprises 2010/2011’ include NACE Rev. 1.1., sections C to K 
thus exlcluding agriculture, forestry, fishing, education, health, etc. ibid, p. 5, footnote 1.  
ibid, p. 7 – 8. 
ibid, p. 8. 
Internationalisation  of  European  SMEs’,  EIM,  Report  for  DG  Enterprise  and  Industry  available  at 
http://ec.europa.eu/enterprise/policies/sme/market-
access/files/internationalisation_of_european_smes_final_en.pdf, p. 23. 

EN 

55 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Scale of cross-border business 
It  has  been  estimated  that  25%  of  small  and  medium-sized  enterprises  (SMEs)  in  Europe 
export and 29% import within the single market75. This means that 5000 000 European SMEs 
have transactions with consumers,  creditors or business partners from other Member  States. 
Eurostat’s  database  of  multinational  enterprise  groups  (Eurogroups  Register  —  EGR)  also 
adds  to  this  picture:  so  far,  it  has  registered  299  570  legal  units  located  in  the  EU  Member 
States  (314  031  in  EU  and  EFTA  Member  States)  that  belong  to  the  6  350  largest 
multinational enterprise groups.  
Insolvencies within the EU 
According  to  the  Creditreform  ‘Insolvencies  in  Europe  2011/12’  report,  in  2011  164,895 
corporate  insolvencies  took  place  in  EU-15  countries76  and  39,423  in  EU-12  countries 
excluding  Cyprus  (i.e.,  (Bulgaria,  Croatia,  Czech  Republic,  Estonia,  Hungary,  Latvia, 
Lithuania,  Poland,  Romania,  Slovakia,  Slovenia)77  which  amounts  to  203,318  corporate 
insolvencies within the EU-27 (excluding Cyprus). 

Considering  that  there  are  20,839,226  enterprises  within  the  EU  it  can  be  estimated  that 
almost 1% of all companies went bankrupt in 2011  

Given that 25% of companies operate cross-border, one can infer that 25% of 
insolvencies that is 50000 companies are subject to proceedings falling within the scope 
of the EIR.  

75 

76 

77 

EN 

Around 7% of SMEs in the EU are involved in technological cooperation with a foreign partner, another 7% are 
subcontractors  to  a  foreign  partner  and  7%  more  have  foreign  subcontractors.  Some  2%  of  SMEs  are  active  in 
foreign direct investment. Most exports and imports by SMEs remain within Europe. See also ‘Internationalisation 
of European SMEs’, 2010: 
Creditreform 
https://www.uc.se/download/18.782617c713603ab70837ffd368/Europa_statistik_konkurser_2011.pdf, p. 3. 
Ibid, p. 31 

‘Insolvencies 

2011/12’, 

available 

Europe, 

in 

at 

56 

   EN 

 
                                                 
Table 2: Breakdown of Enterprises by category (SMEs/Large) and foreign connections and 
respective rate of insolvency 

SMEs  (1  –  249 
persons 
employed) 

Large  (250  + 
persons 
employed) 

Total 

of 

Number 
insolvencies 
(calculations 
are based on an 
insolvency  rate 
of 1%) 

Entreprises  

20,796,192 

43,034 

20,839,226 

208,392 

Enterprises 
transactions with 
consumers, 
creditors or 
business partners 
from other 
Member States 

Enterprises with 
foreign connections 
(subsidiaries, joint 
ventures) in the EU 
and third countries 

Enterprises with 
foreign 
establishments 
(branches) within 
the EU 

25% 

5,000,000 

50,000 

266,191 

8,564  

274,737 

3000 

64,052 

1,792 

65,844 

700 (note that 
every 
insolvency can 
create several 
secondary 
proceedings) 

Number of companies with foreign branches and number of groups 
(1) SME 
According to the report on the ‘Internationalisation of European SMEs’, 2% of SMEs in the 
EU-27  plus  Croatia,  Iceland,  Liechtenstein,  FYROM,  Norway  and  Turkey  are  active  in 
foreign  direct  investment.78The  incidence  for  the  non-EU  countries  under  examination  is 
somewhat higher, i.e., 3% of non-EU SMEs have invested abroad as opposed to 2% of EU-27 
SMEs. Based on this figure it can be estimated that approximately 415,923 SMEs in the EU-
27 have any type of foreign connections (subsidiaries, joint ventures, branches and other 
unidentified connections).79 
The  same  report  indicates  that  most  foreign  establishments  are  subsidiaries  (42%)  but 
considerable  numbers  are  joint  ventures  (22%)  and  branch  offices(i.e.,  not  separate  legal 

78 

79 

ibid , p. 15. Enterprises are considered to be active in foreign direct investment if they have foreign establishments 
(subsidiaries, branch offices, joint ventures). 
This estimation is based on data from the 2010/2011 Annual Report on EU Small and Medium sized Enterprises 
(20,796,192 SMEs in the EU-27 * 2%). 

EN 

57 

   EN 

 
 
 
 
                                                 
entities) (20%).Note that these figures have been estimated on the basis of data from all the 
countries  under  review  (i.e.,  EU-27  plus  Croatia,  Iceland,  Liechtenstein,  FYROM,  Norway 
and  Turkey.  However,  in  view  of  the  facts  that  the  difference  on  the  percentages  of  SMEs 
engaged  in  foreign  direct  investment  between  the  EU-27  and  the  non-EU  countries  under 
review  is  not  so  significant  it  can  be  assumed  that  the  percentages  concerning  the  SMEs 
having each type of establishment would be the same for the EU-27. Consequently, it can be 
estimated that 83,185 SMEs in the EU-27 have foreign branches [415,923 EU SMEs with 
foreign establishments multiplied by 20% of enterprises with foreign branches] and 266,191 
SMEs in the EU have foreign subsidiaries and joint ventures [(415,923 EU-27 SMEs with 
foreign connections multiplied  by 42% of enterprises with foreign subsidiaries) + [(415,923 
EU-27  SMEs  with  foreign  connections  multiplied  by  22%  of  enterprises  with  foreign  joint 
ventures)]. 
Most of the SMEs with foreign connections limit themselves to one country (71%).80 The size 
of the enterprise is directly related to the number of SMEs that invest abroad. In the period 
2006 – 2008, only 2% of micro enterprises invested abroad as compared to 6% of small and 
16%  of  medium-sized  enterprises.  On  average,  SMEs  active  in  foreign  direct  investments 
have  2.2  foreign  partner  countries  (2  countries  per  micro/small  enterprise  and  2.4  per 
medium-sized enterprise).81 Again, even though these figures refer to the EU-27 plus Croatia, 
Iceland, Liechtenstein, FYROM, Norway and Turkey it can be expected that they would not 
significantly differ for the EU-27. 
The ‘Internationalisation of European SMEs’ report however does not specify the destination 
of these foreign establishments and therefore alternative sources of information needed to be 
identified.  The 
(‘2007 
Eurobarometer’)  concluded  that77%  of  European  SMEs  have  foreign  subsidiaries  and  joint 
ventures  within  the  EU.82  A  combination  of  the  data  of  the  two  reports  leads  us  to  the 
conclusion that 204,967 EU-27 SMEs have foreign subsidiaries and joint ventures within 
the  EU  [(266,191  EU-27  SMEs  with  foreign  subsidiaries  and  joint  ventures  multiplied  by 
77% of European SMEs with foreign subsidiaries and joint ventures within the EU). 
The  2007  Eurobarometer  does  not  include  information  on  the  destination  of  foreign 
establishments  (branches)  of  EU-27  SMEs.  Arguably,  it  could  be  submitted  that  the 
percentage of EU SMEs which chooses the EU as its destination for its foreign subsidiaries 
and joint ventures is the same as that of EU SMEs which chooses the EU as its destination for 
its  foreign  branches,  i.e.,  77%.  Therefore,  it  is  estimated  that  64,052  EU-27  SMEs  have 
foreign establishments (branches) within the EU [83,185 SMEs in the EU-27 with foreign 
branches multiplied by 77% of European SMEs who choose as their business destination the 
EU]. 
(2) European Large Enterprises engaged in foreign direct investment 
The report ‘Internationalization of European SMEs’ does not contain any data on the number 
of  large  enterprises  engaged  in  foreign  direct  investment.  Therefore,  this  data  will  be 
estimated on the basis of the data contained in the 2007 Eurobarometer. Note that these two 
reports  were  prepared  by  different  companies  and  therefore  their  methodology,  and 
consequently their conclusions, may differ. 

-  Observatory  of  European  SMEs’ 

‘2007  Eurobarometer 

80 
81 
82 

Ibid, p. 21-22. 
Ibid, p. 38 
Eurobarometer – Observatory of European SMEs 2007, see footnote 5, p.58. 

EN 

58 

   EN 

 
                                                 
foreign  establishments 

large  enterprises  have 

According  to  the  2007  Eurobarometer  19.9%  of  EU-27  large  enterprises  have  some  kind  of 
turnover from foreign partnerships, i.e., 8,564 large enterprises have any kind of turnover 
from  foreign  business  partnerships  [43,034  of  large  enterprises  in  the  EU  multiplied  by 
19.9%].  
Note that the definition of ‘foreign business partnerships’ under this report does not seem to 
include  branches.  Therefore,  in  view  of  the  lack  of  information  from  other  sources,  for  the 
time  being  it  could  be  assumed  that  the  percentage  of  large  enterprises  having  foreign 
branches  would  be  at  least  equal  to  the  percentage  of  SMEs  having  foreign  branches  as 
specified in the ‘Internationalisation of European SMEs’ report. This would mean that at least 
2,676 
the 
‘Internationalisation of European SMEs’ report 64% of EU-27 enterprises engaged in foreign 
direct  investments  have  foreign  subsidiaries  and  joint  ventures.  This  means  that  the  8,564 
large  enterprises  with  foreign  subsidiaries  and  joint  ventures  represent  the  64%  of  large 
enterprises engaged in any kind of foreign direct investment, i.e., 13,381 large enterprises are 
engaged in foreign direct investment. The percentage of enterprises having foreign branches 
under the ‘Internationalisation of European SMEs’ report is 20%; if the percentage is similar 
for large enterprises, it would mean that at least 2,676 large enterprises have foreign branches]  
Furthermore,  the  2007  Eurobarometer  provides  that  67%  of  EU-27  large  enterprises  with 
foreign  subsidiaries  and  joint  ventures  choose  as  their  destination  the  EU,  i.e.,  5,738  large 
enterprises have foreign subsidiaries and joint ventures within the EU. 
If  the  percentage  of  EU-27  large  enterprises  with  foreign  branches  which  chooses  as  their 
destination the EU is similar to that of EU-27 large enterprises with foreign subsidiaries and 
joint  ventures  which  chooses  as  their  destination  the  EU  it  would  mean  that  1,792  EU-27 
large  enterprises  have  at  least  one  establishment  (branch)  within  the  EU  [2,676  large 
enterprises have foreign branches multiplied by 67%]. 

(branches) 

[under 

EN 

59 

   EN 

 
ANNEX 4: INFORMATION ON PERSONAL INSOLVENCY PROCEEDINGS IN MEMBER STATES 

PERSONAL INSOLVENCIES IN CERTAIN MEMBER STATES 
Personal Insolvencies in certain Member States in 201183 

Member State 
Austria 
Czech Republic 
Finland 
France 
Germany 
Latvia 
Netherlands 
Spain  
Sweden 
United Kingdom 
Total Insolvencies 
Median Insolvencies 

Estimated total personal insolvencies in EU 

Number of Insolvencies in 2011 
10,861 
17,600 
3,531 
56,079 
129,800 
810 
14,344 
999 
8,051 
143,871 

Calculated as insolvencies half 
between the figure for Austria 
and Netherlands 
Based on 17 Member States 
having personal insolvencies 
schemes. The median rate of 
12603 is applied to 7 states 

385,946 
12603 

385,846 + 88,221 =  
474,067 

• 

• 

83 

EN 

In the UK, the number of consumer bankruptcy cases between 2003 and 2008 tripled from 35,604 to 106,544.  

In Germany, the new insolvency regulation, which entered into force in 1999, led to an increase in the number of consumer bankruptcy cases 
that were accepted at court from 1,634 in 1999 to 103,085 in 2007 and 95,730 in 2008.  

Credit Reform – Insolvencies in Europe 2011/12; https://www.uc.se/download/18.782617c713603ab70837ffd368/Europa_statistik_konkurser_2011.pdf 

60 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
• 

• 

• 

• 

• 

In  France,  159,967  applications  were  admitted  to  the  household  debt  commission  situated  at  the  French  Central  Bank  and  87,673  amicable 
settlement plans were negotiated in 2008. The number of amicable settlement plans used to be higher in 1998 – 2003 ranging between 63% and 
69%. This decrease is due to the fact that the number of personal reestablishment procedures, providing for the discharge of debt before a judge, 
has doubled from 16,321 in 2004, when the procedure was introduced, to 33,378 in 2008.  

In  Spain,  consumer  bankruptcy  procedures  were  introduced  in  2004.  In  2005,  only  50  individuals  applied  for  bankruptcy  with  the  numbers 
rising to 96 in 2007 and 374 in 2008, representing an increase of 648% in the number of applications despite the fact that discharge of debt is 
not available under the Spanish legal system. 

In the Czech Republic, the number of private insolvencies rose dramatically – from around 10,600 in 2010 to 17,600 in 2011(an increase of 66 
%).  

In Latvia, the number of private insolvencies rose from 246 in 2010 to 810 in 2011 (an increase of 254%).  

Note that there are also countries where consumer bankruptcy cases are seldom due to the legislative framework; in Ireland, in 2007 only 5 
persons were declared bankrupt, 10 were discharged of their debt and these numbers have not significantly changed throughout the years. 

EN 

61 

EN 

 
  
ANNEX 5: HYBRID PROCEEDINGS IN MEMBER STATES AND THEIR INCLUSION IN ANNEX A OF THE INSOLVENCY REGULATION 

Pre-insolvency 

Annex 
A 

Hybrid 

Annex 
A 

Comments 

it  a  problem 
and 

Is 
that  pre-
hybrid 
insolvency 
proceedings do not fall within the 
Regulation’ scope? 

No (URG proceedings are rare) 

EU 
Member 
State 

Austria  

Belgium 

No 

under 
Proceedings 
the 
Business 
Reorganisation  Act 
(Untermehmensreor
ganisationasgesetz 
BGBI  I  1997/114  or 
URG) 

No 

Enquete Commercial 
(Commercial 
Investigation) 
(Article 12 LCE) 

d’un 

Designation 
mediateur 
d’enterprise  (Article 
13 LCE) 

No 

Accord 
(Article 15 LCE) 

amiable 

Designation 
mandataire 
de 
(Article 14 LCE) 

d’un 
justice 

No 

Yes 

d’un 
Designation 
administrateur  provisoire 
(Article 28 LCE)  

EN 

62 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
No 

No 

Reorganisations 
judiciaire  par  accord 
amiable  (Article  43 
LCE) 

No 

Bulgaria   None 

None 

No answer 

Croatia  

Cyprus  

Czech 
Republic 

Denmark  

Estonia  

Reorganisation 
the 
proceedings  where 
debtor 
in 
possession  of  his  estate 
under  the  supervision  of  a 
trustee  

remains 

Reorganisation 
(Estonian 
Proceedings 
Reorganisation  Act)  and 
adjustment 
debt 
proceedings 
for  natural 
(Debt 
persons 
Restructuring  and  Debt 

No 

No 

Yes;  this  problem  has  appeared  in 
case  No.  3-2-1—114-11  of  the 
Estonian  Supreme  Court 
(not 
possible  for  secondary  proceedings 
to be reorgasniation proceedings) 

EN 

63 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Finland  

France  

1) No 

Conciliation 
1) 
(Article  L.611-4  to 
611-15 of the French 
Commercial Code) 

2)  Mandate  ad  hoc 
(Article  L.  611-3  of 
the 
French 
Commercial Code) 

Germany   Schutzschirmverfahr
en  (Protective  shield 
proceedings,  Section 
the 
of 
270B 
Insolvency Act) 

2) No 

No 

Protection act).  

Eigenverwaltung  (Sections 
270  and  270a  of 
the 
Insolvency Act) 

Yes 

Yes 

No answer 

Eigenverwaltung: 
even  though  it  is  a 
debtor-in-possession 
proceeding 
included in Annex A 

is 

it 

Schutzschirmverfahr
en:  it  is  not  included 
it 
in  Annex  A  as 
applies  at 
the  pre-
insolvency  stage  and 
the 
is 
aimed 
of 
preparation 
insolvency 

at 

EN 

64 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greece  

(Article 
Reorganisation 
99  –  106ia  of  the  Greek 
Bankruptcy Code) 

No 

Hungary   No 

No 

Ireland  

Italy  

No 

di 

Piano 
risanamento 
attestato 
(Article 
67(3)(b)  of  Italian 
Insolvency 
Act): 
project 
workout 
certified  by  advisor 
but  not  binding  for 
other creditors 

Yes 

Concordato  preventivo 
(Article  161  –  182  Italian 
Insolvency  Act):  binding 
agreement 
workout 
approved  by 
creditors’ 
under 
majority 
strict court supervision and 
sanctioned by a court 

voting 

Accordo 

di 

Yes 

No 

Yes 

proceedings 
(elaboration 
of 
restructuring plan) 

a 

Reorganisation is not 
included  in  Annex  A 
despite  the  collective 
nature 
the 
procedure  

of 

Concordato 
is 
preventivo 
included  in  Annex  A 
even  though  it  does 
not  require  a  debtor’s 
insolvency  –  it  can  be 
implemented  in  case 
of  a  debtor’s  liquidity 
or financial distress. 

di 
Accordo 
ristrutturazione  dei 
debitti: this procedure 
does  not 
require  a 
debtor’s  insolvency,  it 
can be implemented in 

EN 

65 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Italian 

dei 
ristrutturazione 
debitti  (Article  182bis  of 
the 
Insolvency 
Act):  agreement  with  as 
creditors 
many 
representing  60%  of  the 
overall 
and 
sanctioned by a Court 

creditors 

Latvia  

Yes 

legal 

Out-of-court 
protection 
proceedings: 
[NB: 
to  be  asked  if  these 
pre-insolvency 
are 
proceedings]  

Lithuania   No 

No 

Luxembo
urg  

Gestion Controlee 

Yes 

Concordat preventif 

(NB:  to  obtain  more 
these 
on 
details 

EN 

No 

66 

case  of  a  debtor’s 
financial distress 

is 

Piano di risanamento 
attestato 
not 
included  in  Annex  A 
is  not  of  a 
as 
collective nature. 

it 

: 

legal 

Out-of-court 
protection 
proceedings 
these 
proceedings are a type 
legal  protection 
of 
proceedings which are 
included  in  Annex  A 
of the Regulation  

No, as out-of-court legal protection 
proceedings  are  considered  to  fall 
within the Regulation’s scope 

No 

No 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
to 
proceedings 
determine  whether 
they 
pre-
are 
insolvency  or  hybrid 
insolvency 
proceedings) 

Malta 

EN 

scheme 

of 
Statutory 
compromise/arrangemen
scheme  may  be 
t:  a 
implemented  within 
a 
liquidation proceeding and 
is 
its 
members  and  creditors  if 
appropriately sanctioned. 

binding 

upon 

after 

Company 
Recovery 
Procedure:  this  procedure 
is  modelled 
the 
administration  procedure 
the  UK.  When  a 
in 
company  is  unable  or  is 
likely to become unable to 
pay 
it  may 
request  the  Court  to  place 
the  company  under 
the 
recovery  procedure  and  to 
appoint a special controller 
to  take  over,  manage  and 

its  debts, 

No 

Yes 

No 

67 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
in 

Out-of-court 
workouts 
the 
Netherlands  require 
the  consent  of  all 
creditors and there is 
no  reference  to  such 
the 
proceedings 
Dutch  Bankruptcy 
Code 

in 

administer its business 

No 

No (for companies) 

in 

Rechtbank’s 

Yes: 
– 
Gravenhage10  June  2010,  LJN: 
BN9606, the Court did not issue an 
order  according  to  Article  287a  of 
the Dutch Bankruptcy Act (thereby 
blocking  a  successful  workout)  on 
the  basis  that  the  workout  would 
not be recognized in other Member 
States  

No 

Rehabilitation 
proceedings 
(postepowanie 
naprawcze,  Article 
492  –  521  of  the 
Bankruptcy 
and 
Rehabilitation  Law): 
this 
proceeding 
applies to companies 
still  solvent  but  in 
danger of insolvency 

No 

enforcement 
Forms 
of 
proceedings 
by 
administration  or  sale  of 
the  entire  enterprise  of  the 
debtor  (Article  10641  – 
106413 
Article 
and 
106414  –  Artucke  106423 
the  Code  of  Civil 
of 
Procedure): 
these 
proceedings  are  not  linked 
to  insolvency  but  they  are 
of a collective nature  

No:  Rehabilitation  proceedings  are 
barely  used  in  practice  but  if  they 
were used and were successful they 
could raise problems. 

the 
Netherla
nds  

Poland  

Portugal  

Romania   Mandat  ad  hoc  is  a 

confidential 
the 
procedure 
renegotiation  of  the 

for 

No (to 
be 
confir
med) 

Preventive 
agreement 
which  is  a  reorganization 
proceeding,  supervised  by 
the 
The 
Court. 
reorganization  plan  must 

No  

No 

However,  concerning  preventive 

EN 

68 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
debtors’ debt 

be accepted by at least 2/3 
of the creditors. 

agreements  problems  may  arise  if 
creditors  in  other  Member  States 
can initiate liquidation proceedings  

Slovakia  

Slovenia   NB:  not  clear  from 
the  national  report 
which  are  the  pre-
insolvency 
and 
hybrid  proceedings 
in Slovenia 

Spain  

Sweden  

UK  

Pre-insolvency schemes of 
arrangement  

No 

Skuldsanering  (debt  relief, 
available  only  for  private 
individuals) 

No 

Skuldsanering  is  not 
included  in  Annex  1 
as  it  does  not  entail 
total 
the  partial  or 
divestment 
the 
of 
debtor. 

No 

Yes 

No 

with 

regard 

However, 
to 
skuldsanering proceedings, it could 
be  positive  if  they  were  included 
within the scope of the Regulation  

Schemes  of  arrangement 
(part  26  of  the  Companies 
Act 2006) 

No 

No 

EN 

69 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 6: INFORMATION ON INSOLVENCY REGISTERS IN THE MEMBER STATES 

Member State 

Separate 
register 

insolvency 

Electronic 
and 
publicly available 

Free of charge 

Other electronic database containing information on insolvency 

Belgium 

Bulgaria 

No 

Yes 

Czech Republic  Yes 

Yes 

No 

-  

No  

Yes 

Yes 

-  

but 

Yes, 
limited 
personal bankruptcies 

to 

No 

Yes 

Yes 

No 

Yes 

No  

No 

Yes 

-  

No 

-  

Germany 

Estonia 

Ireland 

Greece 

Spain 

France 

Italy 

Cyprus 

EN 

-  

-  

Yes 

Yes 

-  

-  

-  

Yes 

-  

- 

-  

the Belgian Official Gazette  

register on liquidators and register of sales and auctions 

the Estonian Commercial Register 

records of the Company Registration Office 

Database of registrars of the commercial courts (infogreffe) 

-  

70 

EN 

 
  
 
 
 
 
 
 
Register of legal entities 

The Business Register  

The Business register and the Company Gazette 

Latvia 

Yes 

Yes 

Yes 

Lithuania 

Luxemburg 

Hungary 

Malta 

No 

No 

No 

No 

The Netherlands  Yes 

Austria 

Poland 

Portugal 

Romania 

Slovenia  

Slovakia 

Finland 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

-  

-  

-  

-  

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

-  

-  

-  

-  

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

No,  an  extract  costs 
€10 

Electronic  but  not 
publicly available; 
information has to 
be  requested  via 
the Legal Register 
Centre 

EN 

71 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
Sweden 

(various 

registers 
Yes 
accessible through a single 
website) 

Yes 

Yes 

United Kingdom 

England 
Wales 

and 

Yes 

Northern Ireland  No  

Scotland 

Yes 

It follows from the table that there are 

Yes 

-  

Yes 

Yes 

-  

Subject to a fee 

Department of Enterprise, Trade and Industry (Online DETI) 

• 

• 

• 

14 Member States which have electronic insolvency registers 

9 Member States which have information on insolvency of companies or individuals available in another electronic database which is publicly 
available 

4 Member States which have neither. 

EN 

72 

EN