nvrii –naciil conference 31 may 2012 · • rubin v eurofinance (2010) • polymer vision (2011)...

NVRII – NACIIL CONFERENCE

31 May 2012

“Ten Years EU Insolvency Regulation”

Thanks to

Welcome by the Chair of the

Association

Prof. mr. B. (Bob) Wessels

Thanks to

Key developments in court cases

Chair mr. drs. R.J. (Rolef) de Weijs

Ten years of the European Insolvency Regulation (“EIR”)Key developments from English case law

Glen Flannery, Partner, Nabarro LLP31 May 2012

Introduction

• EIR in the English courts

• Stanford International Bank (2010)

• Polymer Vision v van Doreen (2011)

EIR in the English courtsKEY AREAS DECIDED BY THE ENGLISH COURTS

KEY AREAS

ISSUE SUB-ISSUE EXAMPLE CASES

Main insolvency proceedings and "COMI"

• Enron Directo (2002) • BRAC Rent-A-Car (2003) • Daiseytek ISA (2003) • Crisscross Telecommunications (2003) • Collins & Aikman (2006) • MG Rover (2006) • Stanford International Bank (2010)

Secondary proceedings and “establishment” • Shierson v Vlieland-Boddy (2005) • Energea Umwelttechnologie (2009)

Jurisdiction to open insolvency proceedings

When to determine who has jurisdiction • Geveran Trading Company (2003) • Shierson v Vlieland-Boddy (2005) (cf. Staubitz-Schriber 2006)

Priority of payments

• MG Rover Belux (2006) • Collins & Aikman (2006) • Alitalia (2011)

Costs and expenses • MG Rover Deutschland (2006)

Applicable law

Lawsuits pending exception • Mazur Media Limited (2004) • Syska v Vivendi (2008)

Jurisdiction over claims connected to insolvency

proceedings Interaction with the Judgements Regulation

• Byers v Yacht Bull (2010) • Rubin v Eurofinance (2010) • Polymer Vision (2011)

Among office holders • MG Rover Deutschland (2006) • Eurodis Distribution (2009)

Communication and co-operation

Among courts • Nortel Networks (2009)

KEY AREAS YET TO BE FULLY CONSIDERED BY THE ENGLISH COURTS (LOOK ELSEWHERE!)

Recognition of insolvency proceedings (Articles 16-26)

Director and shareholder liability

Information for creditors (Articles 39–42)

Applicability in time (Article 43)

Stanford International Bank (2010)

U.S. Department of Justice (Criminal Division)

US Receiver (appointed at the

request of the U.S. Securities &

Exchange Commission)

Assets of Stanford International Bank

Ltd held in the U.K.

The Antiguan Liquidators

Stanford International Bank Ltd (in

Antiguan liquidation)

Letter of Request to U.K. Authorities

for restraint of U.K. assets

Recognition claim

Recognition claim

Polymer Vision v van Doreen (2011)

Polymer Vision R & D Limited (an English

private limited company)

TempleCo 663 (Nominee) Limited (an

English private limited company )

Mr. Stewart Ford

Polymer Vision Limited

(an English private limited

company) (subject to Dutch

bankruptcy)

Mr. van Doreen (Holla Advocaten)

(Bankruptcy Trustee)

Settlement Agreement between (1) Mr. Stewart Ford, (2) Polymer Vision R & D Limited, (3) TempleCo 663 (Nominee) Limited and (4) Mr. van Doreen, governed by Dutch law.

Thank you for listening

Glen FlanneryPartnerBanking, Finance & Restructuring

T: +44 (0)20 7524 6867M: +44 (0)78 2542 0558F: +44 (0)20 7868 3867E: [email protected]

NACIIL AMSTERDAM

31 MAY 2012 CONFERENCE

KEY DEVELOPMENTS IN GERMAN

COURT CASES

Professor Dr. Andreas Piekenbrock, University of Heidelberg, Germany


Outline of topics

1. Loans replacing equity(a) Ranking of such claims (Art. 4(2)(i) IR) (b) Setting aside

(aa) Jurisdiction (Art. 3(1) IR)

(bb) Applicable Law (Artt. 4(2)(m), 13 IR)

2. Jurisdiction for main proceedings (art. 3(1) IR)

3. Powers of the insolvency administrator in territorial proceedings (Artt. 3(2)(4), 18, 32 IR)


1. Loans replacing equity(a) Ranking of claims:

Bundesgerichtshof

21.7.2011 - IX ZR 185/10,

NJW 2011, 3784


- co-founder and member PIN S.A. (Lux.) (respondent)

of PIN S.A. (Lux.) (claimant)

- holding majority of shares

loans granted to PIN S.A. (Lux.)

- Action on determination of claims on repayment of the loans


Section 30 Limited Companies Act (GmbHG)

as amended before 1.11.2008

Preservation of Share Capital

(1) Company assets required to preserve the share capital may not be distributed to the shareholders.

(2) Additional contributions may be paid back to shareholders to the extent that they are not necessary to cover a loss of share capital. […]


Section 31 Limited Companies Act (GmbHG)


Breach of Section 30

(1) Payments which are effected contrary to the provisions of s. 30 shall be reimbursed to the company.

(2) – (4) […]

(5) The claims of the company under subsection (1) are time barred within ten years. […]

(6) […]


Section 39 Insolvency Act (InsO)


Lower-ranking Creditors of the Insolvency Proceedings

(1) The following claims shall be satisfied after the other

claims of creditors of the insolvency proceedings in the order given

below, and according to the proportion of their amounts if ranking

with equal status:

1. – 4. […]

5. claims to the refund of loans borrowed from a member and replacing equity capital, or equivalent claims.

(2) – (3) […]


Article 4 IR

Law applicable

1. […]

2. The law of the State of the opening of proceedings shall determine […] in particular:

(a) – (h) […]

(i) […] the ranking of claims […];

(j) – (m) […]


The Ruling of the Court:

The legislature on the rank of loans replacing equity laid down in s. 39(1) n. 5 InsO applies to a limited company founded in another EU Member State if main insolvency proceedings have been opened in Germany.


1. Loans replacing equity(b) Setting aside

(aa) JurisdictionLandgericht Essen, OJ 2011 C 30, p. 13

=> ECJ, Pending case C-494/10 (Bähr)


parent B. V.

100 % 100 %

affiliate GmbH (debtor) affiliate B. V.

(insolvency administrator)

rental of real estate

Action on repayment of rent paid by debtor




Loans Replacing Equity

A transaction may be contested which, in consideration of a

member's claim to restitution of his loan replacing equity

or in consideration of an equivalent claim,

1. […];

2. provided satisfaction if such transaction was made during the last year prior to the request to open insolvency proceedings or subsequent to such request.


ECJ 12.2.2009 – C-339/07, E.C.R. I-767 (Seagon v Deko Marty):

Article 3(1) IR must be interpreted as meaning that the courts of the Member State within the territory of which insolvency proceedings have been opened have jurisdiction to decide an action to set a transaction aside by virtue of insolvency that is brought against a person whose registered office is in another Member State.


Article 1(2)(b) Brussels I Regulation

2. The Regulation shall not apply to:

(a) […];

(b) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings;


Questions referred to the ECJ1. Does the Court adhere in principle to its case-law in Seagon v Deko (Case C-

339/07 [2009] ECR I-00767) to the effect that the courts of the Member State within the territory of which insolvency proceedings have been opened have jurisdiction under Article 3(1) IR to decide an action to set a transaction aside by virtue of insolvency that is brought against a person whose registered office is in another Member State even where, in addition to a claim arising from the right to seek to have a transaction set aside by virtue of insolvency, the claims pursued are primarily claims arising from rules on the maintenance of capital laid down in national company law which, from an economic point of view, are directed at the same assets as, or assets additional to, those pursued by the claim arising from the right to seek to have a transaction set aside by virtue of insolvency and which are independent of the opening of insolvency proceedings?


Questions referred to the ECJ2. If question 1 is to be answered in the negative: Does an action to set a

transaction aside by virtue of insolvency the subject-matter of which is concurrently and primarily a claim independent of insolvency proceedings which is pursued by the liquidator on the basis of company law and which, from an economic point of view, is directed at the same or additional assets, fall within the scope of the exception ratione materiae provided for in Article 1(2)(b) of the Brussels I Regulation, or is international jurisdiction to decide such an action determined in accordance with the Brussels I Regulation, in derogation from the judgment of the Court in Seagon v Deko?

Professor Dr. Andreas Piekenbrock, University of Heidelberg , Germany

1. Loans replacing equity(b) Setting aside

(bb) Applicable lawOberlandesgericht Naumburg

6.10.2010 – 5 U 73/10, ZIP 2011, 677


R. GmbH (D)100% 100 %

administrator of B. GmbH (D)

(claimant)

- Administrator of A granted loans to B, but called them back one day later

- Claimant wants to set aside the repayment according to German law

administrator of A. Holding Ges. m. b. H. (A) (respondent)



as amended since 1.11.2008

Lower-ranking Creditors of the Insolvency Proceedings

(1) The following claims shall be satisfied after the other

claims of creditors of the insolvency proceedings in the order given

below, and according to the proportion of their amounts if ranking

with equal status:

1. – 4. […]

5. in accordance with subsections (4) and (5) claims to the refund of loans borrowed from a member or equivalent claims.

(2) – (5) […]



as amended since 1.11.2008

Loans of Members of Limited Companies

A transaction may be contested which, in consideration of a

member's claim to restitution of his loan within the meaning

of s. 39(1) n. 5 or in consideration of an equivalent claim,

1. […];

2. provided satisfaction if such transaction was made during the last year prior to the request to open insolvency proceedings or subsequent to such request.


Article 4 IR Law applicable

1. […]

2. The law of the State of the opening of proceedings shall determine […] in particular:

(a) – (l) […]

(m) the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors.


Article 13 IR Detrimental Acts

Article 4(2)(m) shall not apply where the person who

benefited from an act detrimental to all the creditors

provides proof that:

— the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and

— that law does not allow any means of challenging that act in the relevant case.



Loans borrowed from members of limited companies founded and resident in Germany are governed by German law.

Art. 13 IR does not apply.


2. Jurisdiction for the opening of main proceedings after Interedil

Bundesgerichtshof

1.12.2011 – IX ZB 232/10,

NJW 2012, 936


German GmbH with one German member resident in Germany,

pursuing all economic activities in Germany

Conversion by several intermediate steps into B. V.

and seizure of economic activities

Dutch B. V. with one German member remaining in Germany

B. V. never pursued any economic activties ascertainable by third parties

Request to open German main insolvency proceedings


ECJ 20.10.2011 – C-396/09 (Interedil):For the purposes of determining a debtor company’s main centre of interests, the second sentence of Article 3(1) IR must be interpreted as follows:

– a debtor company’s main centre of interests must be determined by attaching greater importance to the place of the company’s central administration, as may be established by objective factors which are ascertainable by third parties. […] Where a company’s central administration is not in the same place as its registered office, the presence of company assets and the existence of contracts for the financial exploitation of those assets in a Member State other than that in which the registered office is situated cannot be regarded as sufficient factors to rebut the presumption unless a comprehensive assessment of all the relevant factors makes it possible to establish, in a manner that is ascertainable by third parties, that the company’s actual centre of management and supervision and of the management of its interests is located in that other Member State;

– where a debtor company’s registered office is transferred before a request to open insolvency proceedings is lodged, the company’s centre of main activities is presumed to be the place of its new registered office.



Jurisdiction to open main insolvency proceedings over a company situated abroad, which has seized its economic activities and is not being wound up, is determined by the COMI at the time of the seizure of economic activities


3. Powers of the insolvency administrator in secondary proceedings as to the personal

liability of members of an insolvent unlimited companyKammergericht Berlin

21.7.2011 - 23 U 97/09, ZIP 2011, 1730 (Theme and variation)


Polish ltd.

- German territorial insolvency proceedings opened over the assets of German establishment of Polish ltd.

- No main proceedings in Poland (place of COMI)

- German insolvency administrator asserts claims due to personal liability of a member against the Polish company stating it to be a “quasi member“.



Personal Liability of Members and Partners

If insolvency proceedings have been opened for the assets owned by an unlimited company or partner-ship, only the insolvency administrator may claim a member’s or partner’s personal liability during the insolvency proceedings.


Article 32 IR Exercise of creditors’ rights

1. […]

2. The liquidators in the main and any secondary proceedings shall lodge in other proceedings claims which have already been lodged in the proceedings for which they were appointed, provided that the interests of creditors in the latter proceedings are served thereby, subject to the right of creditors to oppose that or to withdraw the lodgement of their claims where the law applicable so provides.

3. […]



The insolvency administrator in German territorial insolvency proceedings is not entitled to sue the debtor with COMI in another Member State in the name of the creditors who lodged their claims in the territorial proceedings, neither according to s. 93 InsO nor to Art. 32(2) IR.


Polish unlimited company

- German territorial insolvency proceedings opened over the assets of German establishment of Polish company

- German insolvency administrator asserts claims due to personal liability of a member of the Polish company

Professor Dr. Andreas Piekenbrock, University of Heidelberg , Germany

Article 18 IR

Powers of the liquidator

1. […]

2. The liquidator appointed by a court which has jurisdiction

pursuant to Article 3(2) may in any other Member State claim

through the courts or out of court that moveable property was

removed from the territory of the State of the opening of

proceedings to the territory of that other Member State after the

opening of the insolvency proceedings. He may also bring any

action to set aside which is in the interests of the creditors.

3. […]

Professor Dr. Andreas Piekenbrock, University, Germany of Heidelberg

Thank you for your attention!

Coffee Break


(continued)

Chair mr. I. (Ilan) Spinath

Key developments in Belgian court cases

May 31 2012, Amsterdam

NACIIL

Prof. M. Vanmeenen

General conclusion

• Limited number of (published) cases

• Distinction between commercial insolvency proceedings and “private” insolvency proceedings

• Majority of cases consider opening of main/secondary proceedings and consequences- COMI - presumption of registered office

- Evolution: from easily rebutted presumption to strict application of COMI= registered office –impact of Eurofood?

Overview

I. Court of Appeal Liège, 28 April 2011; Commercial Court Verviers, 10 November 2010:

- Insolvency proceeding?

- COMI?

II. Court of Appeal Gent, 19 January 2009:

- No establishment – no secondary proceedings

III. ECJ C-112/10 17 November 2011; Cass. 4 February 2010; Court of Appeal Antwerpen, 9 October 2008

- Initiation of (independent) territorial proceedings by the public prosecutor

IV. Commercial Court Charleroi, 14 September 2004

- Distinction between main and secondary proceedings and respective power of liquidators

I. Insolvency proceedings –COMI

• Basic facts: - Parent company DEurope with registered office in Belgium

- Subsidiary DFrance with registered office in France (Lille)

• Commercial Court Verviers, 10 November 2010 (TBH-RDC 2001/5, 501- summary)- opening of reorganisation procedure (“gerechtelijke reorganisatie door collectief akkoord”) for DFrance in Belgium

- COMI of DFrance = Belgium, because no activity in Lille


• Court of Appeal Liège, 28 April 2011 (TBH-RDC 2012/2, 165)

1. Belgian reorganisation procedure (“gerechtelijke reorganisatie door collectief akkoord”) = insolvency proceedings according to art. 1 and art. 2, a Regulation?

• See annex A of Regulation: OK, Belgian legislator decides autonomously

• But no partial or total divestment of debtor and no appointment of liquidator in Belgian reorganisation procedure- quid? “divestment” to be interpreted in large way – there is general supervision of reporting judge


2. COMI- DFrance has its registered office in Lille (France), but in fact letterbox company: no activities in Lille, no employees in Lille, mail is directed to Belgium

- Court of Appeal: Third parties communicate with address in Lille; bank account in Lille; general meetings of shareholders are held in Lille; majority of suppliers are French, so large activity in France; employees work in Luxembourg < no objective facts that COMI is situated in Belgium: third parties have no idea and can not know that decisions might be taken in Belgium by the parent company DEurope: Belgian court has no jurisdiction to open main proceedings for Dfrance in Belgium

- Extra: transfer of COMI as from moment of administration? No, because no sufficient publication

II. Establishment

• Basic facts:- Dutch company – main proceedings in the Netherlands (faillissement)

- Establishment in Belgium – commercial lease agreement continued by Dutch liquidator at first

- Termination of lease agreement and release of building

- Unpaid claim of lessor

- Opening of secondary proceedings in Belgium at request of lessor?

• Court of Appeal Gent, 19 January 2009 (www.juridat.be; TGR 2009, 17)- Secondary proceedings only if the debtor possesses an establishment at the time of the request

- No more establishment in Belgium, no secondary proceedings possible

II. Establishment

- Secondary proceedings are pointless, since there are no more goods in Belgium (establishment was liquidated)

- Art. 18, 2 Regulation cannot be invoked, the “secondary” liquidator can only claim moveable property to return, which was removed after the opening of the secondary proceedings

III. (Independent)territorial proceedings

• Basic facts:

- Dutch company Z (COMI in Amsterdam), with establishment in Belgium

- Belgian public prosecutor files for territorial insolvency of Z in Belgium – bankruptcy judgement in Feb 2008

- Opening of insolvency proceedings in the Netherlands in July 2008

• Court of Appeal Antwerpen, 9 October 2008 (Limburgs Rechtsleven 2009, 55)

- Independent territorial proceedings can only be opened if one the conditions of art. 3, 4 Regulation are met

- 1st condition not OK: Z could be and is declared bankrupt in the Netherlands


- 2nd condition not OK: public prosecutor is not a creditor

- Territorial proceedings are not possible

• Cass. 4 February 2010 (www.juridat.be);

- Request for preliminary ruling ECJ. 1. Does the term “the conditions laid down” in Art 3(4)(a)

also cover conditions relating to the capacity or the interest of a person – such as the public prosecutor – to request the opening of insolvency proceedings, or do those conditions relate only to the substantive conditions for being made subject to such proceedings?


2. Can the term “creditor” in Article 3(4)(b) be interpreted broadly to mean that a national authority which, under the law of the Member State to which it belongs, has power to request the opening of insolvency proceedings and acts in the public interest and as the representative of all the creditors, may also, in the present case, validly request the opening of territorial insolvency proceedings pursuant to Article 3(4)(b) of that regulation?

3. If the term “creditor” can also refer to a national authority with the power to request the opening of insolvency proceedings, does theapplication of Article 3(4)(b) require that national authority to demonstrate that it is acting in the interests of creditors who themselves have their domicile, habitual residence or registeredoffice in the country of that national authority?

III.(Independent)territorial proceedings

• ECJ C-112/10, 17 November 2011• 1. The expression ‘conditions laid down’ in Article 3(4)(a),

which refers to conditions, which, under the law of the Member State where the debtor has the centre of its main interests, prevent the opening of main insolvency proceedings in that State, must be interpreted as not referring to conditions excluding particular persons from the category of persons empowered to request the opening of such proceedings.

• 2. The term ‘creditor’ in Article 3(4)(b), which is used to designate the persons empowered to request the opening of territorial insolvency proceedings, must be interpreted as notincluding an authority of a Member State whose task under the national law of that State is to act in the public interest, butwhich does not intervene as a creditor, or in the name or on behalf of those creditors.

IV. Main vs. secondary proceedings

• Basic Facts:- French company BF, registered office in France

- Opening of main proceedings in France in March 2002

- Opening of secondary proceedings in Belgium in July 2002 (establishment in Belgium – cf. Commercial Court Charleroi 16 July 2002, TBH-RDC 2004/8, 811)

- Claim of Belgian liquidator against directors – detrimental acts

• Commercial Court Charleroi, 14 September 2004 (RRD 2004, 358)- Main proceedings and secondary proceedings should be considered as seperate proceedings

- The liquidator of the main proceedings has no power to act with respect of assets situated in the state of the secondary proceedings

IV. Main vs. secondary proceedings

- These claims lodged against the directors are situated in Belgium, since the directors have their COMI in Belgium (art.2, g)

- Belgian liquidator has exclusive powers to claim unenforceability of detrimental acts by directors

- These claims are exclusively governed by Belgian law on detrimental acts

Freshfields Bruckhaus Deringer LLP

10 years EU Insolvency Regulation: key developments in court cases (Netherlands)

Groet vs. Gold-Zack (Amsterdam Court of Appeal – LJN BL8405)

and

Olympic Airlines SA (Haarlem District Court – LJN BN9813)

NACIIL Conference Amsterdam

Presentation by Michael Broeders, 31 May 2012


Contents

• Court of Appeal Amsterdam 3 November 2009 (Gold-Zack AG)

• District Court Haarlem 7 September 2010 (Olympic Airlines)

• Conclusions


Gold-Zack AG vs. Groet – court of first instance

– Dispute:

– actio pauliana against a Dutch based defendant, Groet Houdstermaatschappij BV (Groet BV) commenced by German trustee (Mr. Conrads) in the insolvency ofGold-Zack AG

– Question:

– must jurisdiction be established on the basis of the Brussels I Regulation, the Insolvency Regulation or Dutch national law?

– Court of first instance:

“The Dutch courts have jurisdiction based on Dutch International Private Law.”

– Decision made before Seagon q.q. / Deko Marty (ECJ February 12, 2009 C-339/07)


Gold-Zack AG vs. Groet – Seagon q.q. / Deko Marty Belgium (ECJ)

– Mr. Seagon, the German trustee commenced an actio pauliana against the Belgium based entity Deko Marty NV in Germany in respect of payments made by Frick GmbH;

– Landgericht and appeals court ruled that German courts did not have jurisdiction as defendant was based in Belgium;

– BGH posed question regarding jurisdiction to ECJ;

– ECJ found that actio pauliana under German law met criteria of Gourdain/Nadler (ECJ, 22 February 1979, 133/78) for qualification of an action as insolvency law;

– As a result the action does not fall within the scope of the Brussels I Regulation;

– ECJ: article 3 (I) of the Insolvency Regulation entails that the court which has opened an insolvency procedure has jurisdiction in respect of insolvency related action rights such as the actio pauliana, even if the action is directed against a defendant based in a different Member State.


Gold-Zack AG vs. Groet – Amsterdam court of appeal (1)

– Procedure stayed pending ECJ decision in Seagon q.q. / Deko Marty Belgium.

– The Court of Appeal:

– Central question:

• “Does the jurisdiction of a court of a member state where primary proceedings have been opened have exclusive jurisdiction under the Insolvency Regulation?”

– Judgement:

• the German court has exclusive jurisdiction over such matters; there is no room for an alternative jurisdiction under Dutch International Private Law.


Gold-Zack AG vs. Groet – Amsterdam court of appeal (2)

– Questions assessed by the Amsterdam court of appeal:

• Does the Dutch court have jurisdiction in respect of the actio pauliana bij the German trustee, Mr. Conrads against Groet B.V.?

• Does the jurisdiction of a court of a member state where insolvency proceedings have been opened have exclusive jurisdiction under the Insolvency Regulation?

– Decision:

• Pursuant to article 3 (I) of the EU Insolvency Regulation, considering Seagon / Deko Marty, the German court has jurisdiction in respect of the actio pauliana claim.

• The jurisdiction on the basis of article (3) I is exclusive; there is no room for alternative jurisdiction under Dutch International Private Law on the basis of the location of residency of the defendant.


Olympic Airlines – Haarlem District Court (1)

Facts:

- On 2 October 2009 the court in Athens ordered the application of the “procedure of special liquidation” to Olympic Airlines S.A.;

- this procedure is a liquidation procedure as referred to in Annex B to the EU Insolvency Regulation;

- Olympic Airlines had an establishment in the Netherlands with employees;

- secondary proceedings were opened in the Netherlands at the request of the Greek bankruptcy trustee and a Dutch bankruptcy trustee was appointed; and

- the Dutch trustee terminated the Dutch law governed employment contracts in accordance with the Dutch Bankruptcy Act.



The Complaint:

- The Dutch employees of Olympic Airlines opposed the opening of the secondary procedure because:

1. The establishment of Olympic Airlines had not ceased the payment of its debt (as is required under Article 1 of the Dutch Bankruptcy Act);

2. the Athens court ruling conflicted with ordre publique (Article 26 IR) since it did not allow for appeal; and

3. the Greek bankruptcy trustee abused its right to open secondary proceedings in order to avoid high severance payments to Dutch employees which were awarded to employees of Olympic Airways in Greece.



1. Complaint that the local insolvency test was not met

- the “special liquidation” is a procedure as set out in Annex B of the EU Insolvency Regulation;

- as a result the Dutch court could open secondary proceeding pursuant to article 27 of the EU Insolvency Regulation without having to test whether the Dutch Olympic Airways establishment was insolvent;

- as such, Article 1 of the Dutch Bankruptcy Act did not require consideration.



2. Conflict with ordre publique

- only applicable in extra-ordinary circumstances (ECJ EC 341/04 Eurofood and Virgós/Schmit Report); and

- only when fundamental principles or constitutional rights and liberties are breached (Article 26 of the EU Insolvency Regulation).



3. Abuse of rights argument:

- pursuant to Article 10 of the EU Insolvency Regulation, the law applicable to the employment contracts prevails;

- Article 40 of the Dutch Bankruptcy Code provides that employment contracts may be terminated by the bankruptcy trustee with a maximum notice period of 6 weeks;

- termination of an employment contract requires the approval of a supervisory judge (Art. 68 of the Dutch Bankruptcy Code);

- approval by the supervisory judge can only be obtained by opening secondary proceedings in the Netherlands, therefore the actions of the Greek bankruptcy trustee do not constitute abuse of rights;

- insufficient facts and circumstances proven that other employees were advantaged.


Conclusions

This material is for general information only and is not intended to provide legal advice.

©

NVRII – NACIIL CONFERENCE

31 May 2012

(Continued)“Ten Years EU Insolvency Regulation”

My experiences during the

drafting process

Prof. mr. B. (Bob) Wessels & M.

(Miguel) Virgós

My first large case under the EU

Insolvency Regulation

mr. J.R. (Jasper) Berkenbosch & dr.

M. (Martin) Prager

Ten Years EU Insolvency Regulation

NVRII – NACIIL, 31 May 2012

Dr. Martin Prager, Pluta

Jasper Berkenbosch, DLA Piper

BenQ Mobile

CEE GmbH

BenQ Denmark

ApS

BenQ Mobile

France SAS

BenQ Greece

E.P.E.

BenQ Mobile Italy

s.r.l.

BenQ Portugal

Unipessoal, Lda

BenQ Mobile

Benelux B.V.

BenQ Poland

Sp.z.o.o.

BenQ Norway

AS

BenQ Corporation

Taiwan

BenQ Mobile Holding BV

Amsterdam, NetherlandsBenQ Europe BV

BenQ Mobile

Brazil Ltda

BenQ Mobile

Chile S.A.

BenQ Columbia

Ltda

Ecuador

Guatemala

Peru

Venezuela

OOO BenQ

Russia LLC

BenQ Mobile

Spain s.r.l.

BenQ Mobile

Turkey L.S.

BenQ Mobile UK

Ltd.

BenQ Wireless

GmbH

Munich

BenQ Mobile

Management

GmbH

Munich

BenQ Mobile

GmbH & Co.

OHG

100%100%

99%

100%

100%

100%100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

99,5%

100%

0%

BenQ Mobile Group Structure

81 www.pluta.net

Operational Structure

Manufacturing Entities

Sales Entities

Central Functions

BenQ Mobile

GmbH & Co.

OHG

Headquarter

GermanyBrazil

TaiwanPRC

USAMexico

EuropeSouth AmericaRussiaWestern Europe

Asia

Sales & Marketing Germany

R & D Germany & Asia

Global Coordination Germany

82 www.pluta.net

Time Line

BenQ Mobile Holding B.V.

27 December 2006:Suspension of payment granted by Amsterdam District Court

31 January 2007:Insolvency proceedings opened by Amsterdam District Court

28 February 2007:Appeal declined

29 December 2006:Preliminary insolvency proceedings ordered by Munich District Court

05 February 2007:Secondary proceedings opened by Munich District Court

83 www.pluta.net

Spain

Turkey

UK

RussiaGermanyBenQ Mobile

Management GmbH

GermanyBenQ Wireless

GmbH

Austria

France

Greece

Italy

Netherlands

Norway

Poland

Portugal

GermanyBenQ Mobile

GmbH & Co. OHG

BenQ Corp., Taiwan

BenQ Mobile Holding BV

I. Legal Entity Setup – Europe (simplified)

84 www.pluta.net

Spain

Turkey

UK

RussiaGermanyBenQ Mobile

Management GmbH


GmbH

Austria

France

Greece

Italy

Netherlands

Norway

Poland

Portugal

GermanyBenQ Mobile

GmbH & Co. OHG

BenQ Corp., Taiwan

BenQ Mobile Holding BV cash pool

I. Legal Entity Setup – Europe (simplified)

85 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG

Secondary Proceedings DEMain Proceedings NL

Qisda Corp.

Issues and Proceedings

86 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG


Qisda Corp. BenQ Asia Pacific


87 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



Wireless owns trade mark Qisda is interested in


88 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



Qisda files EUR 70 m with BV main and secondary proceedings

claim challenged in DE by administrator of secondary proceedings and OHG

Qisda files for declaratory judgement in DE


89 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



Qisda files EUR 95 m with OHG

Qisda affiliates file EUR 270 m with OHG

Disputed for subordination

Qisda seeks declaratory judgement in DE


90 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



NL administrators say they can claim damages from Qisda

USD 400 m based on press release

unpaid creditors based on mismanagement

third party directors based on mismanagement

not taken to courtnot extendable to BenQ Aisa Pacific


91 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



OHG claims from Qisda EUR 264 m based on tort (Munich District Court)

EUR 26 m based on avoidance(Munich District Court)

EUR 337 m based on avoidance (Munich District Court)

Claim extended to BenQ Asia Pacific


92 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



OHG claims in BV proceedings

EUR 89 m current account balance

EUR 250 m damages/deficit


93 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



Status

NL: cash exceeding „third party“ creditors

DE: cash exceeding „third party“ creditors


94 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



1) Qisda assigns all rights to OHG

a) Qisda‘s and affiliates‘ claims are subordinated in OHG proceedings

2) Payment by Qisda

3) BV (NL + DE) accept parts of OHG claims

4) Distribution of cash in main proceedings to „third parties“

Solution

95 www.pluta.net

GermanyBenQ Mobile

Management GmbH


GmbH

GermanyBenQ Mobile

GmbH & Co. OHG



5) Distribution in secondary proceedings

6) Transfer of rest to OHG in main proceedings

7) Settles all cash pool claims

8) Purchase of Wireless trademark by Qisda

9) No claims of BV and OHG against directors and D&O insurance

Solution

Thank you for your attention.

Dr. Martin Prager Jasper BerkenboschPLUTA Rechtsanwalts GmbH DLA Piper Nederland N.V.

Barthstraße 16 Amstelveenseweg 638

80339 München 1081 JJ Amsterdam

Tel.: +49 (0)89 8589633 Tel.: +31 (0)20 541 9330

[email protected] [email protected]

European insolvency: where do

we stand?

Evaluation of the EU Insolvency

Regulation

mr. R.J. (Robert) van Galen

Ten Years EU Insolvency Regulation

NVRII-NACIIL conferenceRobert van Galen

31 mei 2012

Revision of Insolvency Regulation

• Obligation under Article 46 IR to report and to propose amendments if needed

• Revision is now spearhead 2012• Research report of Vienna and

Heidelberg universities in June• Experts group• Member state representatives• Insol Europe draft

Main proposals Insol Europe Amendments to Article 1

• Definition of insolvency proceedings – delete the requirement of a total or partial

divestment of the assets and the appointment of a liquidator

– include requirement of supervision of the courts

• Investment undertakings


• COMI definition in Article 2• One year look back period unless

– no old creditors – old creditors agree to COMI shift

• Delete requirement that secondary proceedings are winding up proceedings

• Include territorial proceedings if COMI is outside EU

• Jurisdiction in Article 25 matters


• Rights in rem governed by the law of their location including insolvency law

Different kinds of groups of companies

• Common policy and control by parent company

• Integrated business- parallel activities in different countries- vertical integration- negotiating power- monopoly or oligopoly

• Integrated assets• Shared financial facilities

Regimes of insolvency of groups

• Coordination between the courts supervising the insolvency proceedings on a non hierarchical basis

• Coordination between the liquidators on a non hierarchical basis

• Liquidator of group main proceedings has powers of coordination

• Mutual liquidator• Opening of all main proceedings in group COMI• Substantive consolidation

Starting point group COMI

1. The redistributive effect of designation of the group COMI should be as limited as possible

2. The group COMI should be determined on the basis of a simple objective criterion

Main proposals INSOL EuropeGroups of companies

• Coordinating powers of liquidator of ultimate parent similar to coordinating powers of liquidator main proceedings vs secondary proceedings. E.g.– Power to ask for suspension of acts of

liquidation– Certain rights to intervene

Main proposals INSOL EuropeEuropean Rescue Plan

• Can be proposed by liquidator of ultimate parent with respect to two or more companies

• Structure similar to Ch. 11 plan• Community law• Information memorandum, class

schedule, plan


• Acceptance hearing– Court determines who can vote and classes

– Voting

• Confirmation hearing


• Cram down of rejecting class of creditors if– Rejection not in good faith and– Best interest test and– Absolute priority rule

• Objection to confirmation by creditor or shareholder– Plan unfairly favours one or more creditors or

shareholders– Best interest test– Feasibility


5% 5%

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5%

Main proposals INSOL Europe European Rescue Plan

5% 5%

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5%

Main proposals Insol Europe Third countries

• Adoption of UNCITRAL Model Law

Harmonisation of Insolvency Law?

Prof. mr. B. (Bob) Wessels

10th Birthday EU Insolvency Regulation

NVRII – NACIIL

Harmonisation of Insolvency Law in Europe

The first steps

Amsterdam, 31 May 2012

Prof. Dr. Bob WesselsUniversity of Leiden, The Netherlands

Harmonisation of Insolvency Law in Europe

• Present status• European Parliament’s

motion 15 Nov. 2011• Does EU have legislative

power?• Some common features• Harmonisation by EU

Insolvency Regulation (1346/2000)

• Where do we stand in 2015?

Present status

• Recital 12 EU InsReg:‘….. the fact that as a result of widely differing substantive laws it is not practical to introduce insolvency proceedings with universal scope in the entire Community. The application without exception of the law of the State of opening of proceedings would, against this background, frequently lead to difficulties. This applies, for example, to the widely differing laws on security interests to be found in the Community. Furthermore, the preferential rights enjoyed by some creditors in the insolvency proceedings are, in some cases, completely different.’

Present status

• Fletcher, 2nd ed. (2005):

‘….. National attitudes towards the phenomenon of insolvency are extremely variable, as are the social and legal consequences for the debtors concerned’

European Parliament 15 Nov 2011

• March 2010 INSOL Europe study [2011-04-doc9]• April 2011 www.europarl.europa.eu/committees/eng/juri/events.html?id=workshops.

• Resolution 15-11-2011 [2012-01-doc4] 31 recitals!! Matters related to:

• 1. harmonisation of national insolvency law (recitals A – D);• 2. the improvement of the EU Insolvency Regulation (recitals E – G);

especially re (cross-border) groups of companies (recitals P and Q);• 3. the introduction of “corporate rescue as an alternative to liquidation”,

whereas “insolvency law should be a tool for the rescue of companies at Union level” (recitals H – O);

• 4. the creation of a “generally accessible and comprehensive EU database of insolvency proceedings” (recital R);

• 5. measures regarding (cross-border groups of) financial institutions, such as credit institutions and insurance undertakings (recitals S – X)

• 6. to employment (recitals Y, Z and AA – AF).

European parliament 15 Nov 2012

Requests the Commission to submit, on the basis of Articles 50, 81(2) and 114 TFEU: “…one or more proposals relating to an EU corporate insolvency framework, following the detailed recommendations set out in the Annex hereto, in order to ensure a level playing field, based on a profound analysis of all viable alternatives;”

Authority of the European Commission?

Basis in TFEU (replaced TEC as of 1 December 2009– O.J. C 115/171 (9.5.2008))

Title V (“Area of Freedom, Security and Justice”)

Art. 67 TFEU (ex Art. 61 TEC):1. The Union shall constitute an area of freedom, security and justice with respect for fundamental rights and the different legal systems and traditions of the Member States.2. (…….)3. (…….)4. The Union shall facilitate access to justice, in particular through the principle of mutual recognition of judicial and extrajudicial decisions in civil matters.

Chapter 3 “Judicial Cooperation in Civil Matters”

Art. 81 TFEU (ex Art. 65 TEC):1. 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.2. …………..

Art. 81(2) TFEU

For the purposes of para. 1 the EP and the Council,…,shall adopt measures, particularly when necessary for the properfunctioning of the internal market, aimed at ensuring:(a) the mutual recognition and enforcement between Member States of

judgments and of decisions in extrajudicial cases;(b) the cross-border service of judicial and extrajudicial documents;(c) the compatibility of the rules applicable in the Member States

concerning conflict of laws and of jurisdiction;(d) cooperation in the taking of evidence;(e) effective access to justice;(f) the elimination of obstacles to the proper functioning of civil

proceedings, if necessary by promoting the compatibility of the rules on civil procedure applicable in the Member States;

(g) the development of alternative methods of dispute settlement;(h) support for the training of the judiciary and judicial staff.

Arts. 50 / 114 TFEUTitle IV “Free Movement of Persons, Services and Capital”;Art. 50 TFEU (ex Art. 44 TEC) “Right of Establishment”

Title VII “Common Rules on Competition, Taxation and Approximation of Laws” - Chapter 3 “Approximation of Laws”Article 114 (ex Art. 95 TEC)1. Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26 [internal market: an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured] “The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting theEconomic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.”

Common features?

Some common features

• Prominent principles– Collectivity– Common pool

– Equal treatment of creditors– Respect for pre-insolvency rights

• Flexible legislation– Many countries included forms of reorgs.

Some common features

• Cross-border matters (ex EU InsReg)– UNCITRAL Model Law

• UK, Poland, Romania, Greece• “inspired” by Model Law: Spain, Netherlands (draft)

• Common characteristics in corporate and commercial law, e.g.– Rules re accounting and reporting– Good governance systems– Combatting late payments

Harmonisation via EU InsReg

• Substantive, therefore accepted throughout Europe as unified rules, see Articles:

• 7(2) (reservation of title), • 20 (return and imputation), • 29 (right to request the opening of secondary proceedings), • 30 (advance payments of costs and expenses), • 31 (duty to cooperate and to communicate), • 32 (exercising creditors’ rights), • 33 (stay of the process of liquidation in secondary proceedings), • 34 (measures ending secondary proceedings), • 35 (assets remaining in the secondary proceedings), • 39 (right to lodge claims) and • 40 (duty to inform creditors).

European Parliament 15 Nov 2011

• 4 Parts with recommendations:

– 1. Harmonisation of certain aspects of insolvency and company law

– 2. re revision EU InsReg– 3. re insolvency of groups of companies– 4. re the creation of an EU insolvency register

Part 1. Harmonisation of certain aspects of insolvency and company law

• 1.1. Certain aspects of opening of insolvency proceedings

• 1.2. Certain aspects of filing claims• 1.3. of avoidance actions• 1.4. General aspects of the requirements for

the qualification and work by liquidators• 1.5. of aspects of restructuring plans

6 sub-recommendations

• - the liquidator must be approved by a competent authority of a MS or appointed by a court of competent jurisdiction of a MS, must be of good repute and must have the educational background needed for the performance of his/her duties;

• – the liquidator must be competent and qualified to assess the situation of the debtor’s entity and to take over management duties for the company;

• – when main insolvency proceedings are opened, the liquidator should be empowered for a period of six months to decide on the protection of assets with retroactive effect in cases where companies have moved capital;

6 sub-recommendations

• – the liquidator must be empowered to use appropriate priority procedures to recover monies owing to companies, in advance of settlement with creditors and as an alternative to transfers of claims;

• – the liquidator must be independent of the creditors and other stakeholders in the insolvency proceedings;

• – in the event of a conflict of interest, the liquidator must resign from his/her office.

Where do we stand in 2015?

Explanatory Statement

“….. a four-fold structure of future legislative initiatives: (1) harmonisation where possible, (2) revision of the Insolvency Regulation where it will remain- in addition to harmonisation - relevant and where thepractice has proven that improvement can be made, (3) improvement of the cooperation of liquidators and cooperation in general on administrative level in cases where enterprises that are part of a group of companies become insolvent and (4) creation of an EU Registry for insolvency cases.”

www.bobwessels.nl

Thank you for your attention!Bob [email protected]++31629577403

These are presentation slides only. The information within these slides does not constitutedefinitive advice and should not be used as the basis forgiving definitive advice without checking the primary sources.

Short Break

Defining “Collective

Proceedings”: hybrid

proceedings, including Schemes

of Arrangement

mr. L.P. (Lucas) Kortmann

NVRII – NACIILTen Years EU Insolvency Regulation

Defining ‘Collective Proceedings’:

Hybrid Proceedings

Lucas KortmannRESOR N.V.31 May 2012

Introduction - Hybrids

• What are hybrid proceedings?• Out-of-court restructurings vs. formal insolvency

proceedings• Use of Chapter 11 and more recently schemes because

of lack of tools across the continent• But: importance of recognition (e.g. Equitable life)

Introduction

• Outline:1) Schemes under English Law- Jurisdiction- Recognition2) Hybrid procedures in an international context3) Solutions under the EU Regulations

The Scheme - outline

• Companies Act tool: ‘Arrangements and Reconstructions’

• Solvent and insolvent arrangements: (de)mergers, take-over, restructuring

• Useful cram down mechanism (also outside insolvency)

Scheme phases:• Court to decide as to whether to convene creditors’

meeting: deals with questions such as jurisdiction• Creditors’ meeting to vote on the scheme• Court to sanction the scheme (including fairness test)

The Scheme (2)

• Can apply to certain classes of creditors only• Thresholds:

- majority in number,- representing 75% in value of the creditors voting at the meeting

- For voting purposes, creditors must be grouped into classes

Jurisdiction & recognition: in UK context

• ‘liable to be wound up under the Insolvency Act’;• Section 221 IA: companies that are not registered in

England to be wound up as ‘unregistered companies’• ‘sufficient connection’ with the English jurisdiction• COMI or Establishment not required • Recognition by foreign courts considered as relevant for

jurisdiction

Jurisdiction & recognition: EU legislation

• European Insolvency Regulation (jurisdiction and recognition of insolvency proceedings)

• Rome I Regulation (contractual obligations)

• Brussels I Regulation (jurisdiction and recognition and enforcement of judgments)

Jurisdiction & recognition: EU legislation (2)

European Insolvency Regulation

•Article 1(1): ‘collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator’•Scheme of arrangement not listed in Annexes


Rome I Regulation (contractual obligations)Argument:•Scheme amends (or waives) the contractual obligations between the parties, i.e. it is not a jurisdictional issue. Against:•Companies Act tool, being a collective proceedings over classes of creditors: not an issue of contract•Court sanction required •Dissenting creditors are bound – without the sanctioning court order being recognised, can such amended contract be enforced?


Brussels I Regulation (judgments)Argument:•Commercial or civil matter•The court order is a judgment •Not excluded by art 1(2) – which excludes insolvency proceedings and the like – since there should be no gap between EIR and Brussels I


Brussels I Regulation (judgments)Doubts:•Is scheme contentious or adversary proceeding? •Jurisdiction primarily with court of location of defendant –who is defendant? Should scheme only work if UK creditors?


Brussels I Regulation (judgments)Court order: a judgment within scope of Brussels I?

•The scheme is sanctioned by the court, which is not merely a rubber stamp – weighed judgment•Binds dissenting creditors – conclusive judgment with constitutive effect

Recognition under national principles

If no recognition under EIR or Brussels, national rules of international private law may lead to recognition

Netherlands (like many European countries):•Internationally acceptable grounds•Procedure in accordance with general principles of fair trial•Not against public policy (ordre public)

Conclusion on schemes

• UK rules for jurisdiction questionable (from international perspective)

• No Regulation seems to fit well (overall)

• Include it as hybrid proceedings in EIR?

Hybrid proceedings under the EU InsReg

• French, German, Spanish etc solutions to avoid exodus to UK

• Which EU Reg should govern the hybrid?

• If InsReg: revision neededA) Small revision (adequate?)B) Large revision (achievable?)

Questions

[email protected]

EU Insolvency Law: its future

Chair S.H.(Sijmen) de Ranitz

Forum Discussion

End of meeting/Drinks

Thanks to

nvrii –naciil conference 31 may 2012 · • rubin v eurofinance (2010) • polymer vision (2011)...

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