Europe has struggled during the last several years to triage a long series of critical blows to the economies of the 28 countries that comprise the European Union, as well as the collective viability of eurozone economies. Here we provide a snapshot of some recent developments regarding insolvency, restructuring, and related issues in the EU.
The Netherlands—On February 6, 2015, the Dutch Supreme Court, in a marked departure from previous case law, held that the bankruptcy of a Dutch partnership does not automatically result in the bankruptcy of its partners. Even though a Dutch partnership does not have a separate "legal personality" (i.e., legal rights and obligations, such as the right to enter into contracts, to sue, and to be sued), it is still considered an independent and separate legal entity under Dutch law. In its ruling, the Supreme Court reasoned that, because the bankruptcy of a partnership does not inherently rule out the possibility that individual partners may satisfy the partnership's current obligations, individual partner bankruptcy automatically triggered by the bankruptcy of the partnership is incongruous with legal and economic reality. Instead, the Supreme Court explained, if a partnership is deemed bankrupt because it is insolvent (i.e., unable to pay its debts as such debts mature), insolvency proceedings with respect to individual partners should be commenced only if the individual partners are also insolvent. Explaining that Dutch insolvency legislation explicitly provides for a debt management proceeding (schuldsanering) for natural persons with commercial debts, the Supreme Court further concluded that automatic bankruptcy would unjustifiably deprive the partners of a bankrupt partnership of access to such proceedings. Finally, the Supreme Court ruled that preexisting Dutch case law on this issue is no longer compatible with the European Union's Council Regulation (EC) No. 1346/2000 on insolvency proceedings (31 May 2002), which provides that an EU court can assert international jurisdiction over a foreign EU citizen (an individual or entity) only after individually assessing such citizen's standing.
Other recent European developments can be tracked in Jones Day's EuroResource, available here.
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