CJEU guidance on establishment following Burgo v Illochroma

CJEU guidance on establishment following Burgo v Illochroma

Is having a registered office fatal to creating an establishment in that jurisdiction?

Original news

Burgo group SpA v Illochroma SA (in liquidation) C-327/13 [2014] All ER (D) 114 (Sep)

The Court of Justice of the European Union (CJEU) gave a preliminary ruling on the interpretation of the EC Regulation on insolvency proceedings 1346/2000, arts 3, 16 and 27 to 29 (the EC Regulation on Insolvency). The request was made in proceedings between Burgo Group SpA (Burgo) and Illochroma SA, in liquidation (Illochroma) and Maître Theetten (as liquidator of Illochroma) concerning the opening of secondary insolvency proceedings in Belgium relating to the assets of Illochroma.

How did the issue arise and what were the jurisdictional factors?

Italian company, Burgo, was owed money by Belgian company, Illochroma. Burgo (as creditor) requested the opening of secondary insolvency proceedings in Belgium, relating to the assets of Illochroma.

The relevant chronology is as follows:

  • 21 April 2008—all Illochroma group companies placed into French receivership proceedings
  • 25 November 2008—Illochroma placed into French liquidationproceedings
  • 15 Jan 2009—Italian creditor (Burgo) requests opening of secondary proceedings in Belgium

Illochroma is a company with two establishments in Belgium, where it is the owner of a building, buys and sells goods and employs staff.

Can an establishment exist in a member state where the registered office exists?

The CJEU confirmed that it is apparent from the very wording of the EC Regulation on Insolvency, art 3(1) (ie the place of the registered office is presumed to be the centre of its main interests (COMI), in the absence of proof to the contrary) that the COMI may, for the purposes of applying that regulation, be different from the place of its registered office.

The decision in Interedil v Fallimento Interedil Srl C-396/09 [2011] All ER (D) 195 (Oct) demonstrates that the fact that the definition links the pursuit of an economic activity to the presence of human

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.