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We look at the requirement for Member States to establish national insolvency registers under the Recast Regulation on Insolvency, Regulation (EU) 848/2015 by 26 June 2018.
Although the Recast Regulation on Insolvency, Regulation (EU) 848/2015 entered force on 26 June 2015 and the majority of the provisions were effective from 26 June 2017 onwards (to allow Member States to familiarise themselves with the new provisions), the establishment and interconnection of national registers was carved out as a two-step process:
The following 'mandatory information' must as a minimum be made available (free of charge) in the national insolvency registers established by Member States from 26 June 2018 (see Article 24(2) of Regulation (EU) 848/2015) and covers main, secondary and territorial proceedings opened in that Member State:
The information must be published as soon as possible after the opening of proceedings (see Art 24(1) of Regulation (EU) 848/2015). Additional information may also be included in the national registers (eg directors' disqualifications). Although the mandatory information must be available free of charge, Member States may charge for any additional information or documents.
The e-Justice Portal provides links to various national insolvency registers across the Member States (where such registers are currently available).
The European Commission must agree the technical specifications for the interconnection of national registers by 26 June 2019. Creating a searchable database of insolvency proceedings across all Member States will be a big step forward. In theory, this should improve the ability for parties in any Member State to check the insolvency status of a company / individual undergoing an insolvency process in another Member State. It will help business leaders and entrepreneurs carry out the same checks as they would when investing in their home country and will also support creditors looking to follow insolvency cases taking place in another Member State, with information being available at one web address: the European e-Justice Portal. The aim is to improve the provision of information to relevant creditors and courts, and to prevent the opening of parallel insolvency proceedings
Art 25 of Regulation (EU) 848/2015 provides that the system shall provide a search service in all the official languages of the EU in order to make available the mandatory information and any other documents or in-formation included in the insolvency registers which the Member States choose to make available through the European e-Justice Portal. The standard form to be used for the electronic submission of individual requests for information via the European e-Justice Portal appears at annex IV of Regulation (EU) 2017/1105 (see form: Request for Access to Information).
On 7 July 2014, the European Commission launched a pilot project linking up databases from various Member States including: Germany, Estonia, Italy, Latvia, Netherlands, Austria, Romania and Slovenia, with more countries expected to join at a later stage.
By way of background, the e-Justice Portal was launched in 2010, with the aim of making cross-border justice more accessible to citizens, businesses, and legal practitioners and covers many areas other than insolvency.
In England, Companies House searches already provide a well-established way to check for the commencement of various formal insolvency processes of companies, but the additional mandatory information (listed above) which all Member States must provide online from 26 June 2018 will be a welcome addition for practitioners. The new national registries must include certain core information about the proceedings, including practical details to inform creditors and enable them to file claims.
The key benefits of having interconnected insolvency registers available through the European e-Justice Portal (after 26 June 2019) will include:
In practice, this will be helpful for various parties, including:
The Draft Withdrawal Agreement (March 2018), art 63(4)(c)) specifically refers to the Recast Regulation on Insolvency and provides that it will continue to be applicable to all insolvency proceedings main insolvency proceedings that were opened (in the UK and all Member States) before the end of the transition period (ie 31 December 2020). So it seems likely that on the current Brexit timetable, the UK will still be subject to the Recast Regulation on Insolvency by 26 June 2019 (the deadline by which the European Commission is required to establish specifications for a decentralised system for the interconnection of national registers).
Even after Brexit, it seems likely that anyone will still be able to search the European e-Justice Portal, even though the UK would by then be a non-Member State. However, on Brexit, the automatic recognition of insolvency proceedings commenced in England in other Members States (currently main proceedings are automatically recognised under the Recast Regulation on Insolvency: Recast Regulation—effect of cross-border recognition under the regulation) cannot be guaranteed and will depend on what post-Brexit provisions are agreed with the European Commission.
This analysis was first published on LexisPSL Restructuring and Insolvency.
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Recast Regulation—main, secondary and territorial proceedings
Recast Regulation—establishing the centre of main interests (COMI) for corporates
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