European Union: Group Insolvency Proceedings Under The Revised EU Insolvency Regulation

Restructuring an international group of companies in Europe continues to be challenging. While companies can transact business freely across European borders, coordination between the stakeholders involved in a cross-border restructuring has proved to be difficult. The cross-border restructuring of a corporate group is often complicated by a multitude of individual liquidation proceedings spread throughout the various countries in which the group is active. This is often the result of differing legislation enacted by various EU Member States in which debtors may be active; conflicting interests between debtors and/or court-appointed "insolvency practitioners" (generally, accountants licensed to render services in connection with, among other things, liquidations, company voluntary arrangements, administration, receiverships, and bankruptcies) in group insolvency proceedings; or a lack of communication among stakeholders.

The EU legislature has responded to these concerns with a revised version of the EU Insolvency Regulation (Regulation (EU) 2015/848 on insolvency proceedings; the "Revised IR"), which enters into force on June 26, 2017. After 15 years of service, the European Commission thought it time to retire the original EU Insolvency Regulation (Regulation (EC) 1346/2000 on insolvency proceedings; the "Original IR") and mark a new chapter in integrating its Member States' procedural insolvency frameworks. One of the main features of the Revised IR is new Chapter V on "Insolvency Proceedings of Members of a Group of Companies." This chapter contains new rules designed to promote cross-border cooperation and coordination between courts and insolvency practitioners in insolvency proceedings concerning group companies in Europe.

Below we summarize the provisions of Chapter V and briefly explain why we believe they will enhance the ability to restructure groups successfully.

Changes Regarding Corporate Groups Under the Revised IR

At the outset, it is important to recognize that—as was the case with the Original IR—the Revised IR: (i) regulates only intra-community matters; and (ii) does not impact the individual EU Member States' national (material) insolvency laws. Like the Original IR, the Revised IR governs the legal implications of insolvency proceedings only within the EU. This intra-community effect has two main consequences: (a) the Revised IR applies only if the debtor's center of main interests ("COMI") is located in a Member State; and (b) the Revised IR generally does not provide for the legal implications of insolvency proceedings regarding parties from non-EU Member States.

The Revised IR continues to provide rules governing jurisdiction, applicable law, recognition, and disclosure of information to creditors. As mentioned above, newly added Chapter V sets forth rules governing cooperation and coordination in group insolvency proceedings.

A fundamental principle underpinning the provisions of Chapter V is that cooperation and coordination should not run counter to the interests of creditors in each of the insolvency proceedings involved. Cooperation and coordination should be aimed at finding a solution that will leverage synergies across the group, to the benefit of all stakeholders.

The new provisions: (i) obligate insolvency practitioners of individual group companies, as well as courts presiding over group company insolvency proceedings, to cooperate and coordinate with each other; (ii) permit an insolvency practitioner, under certain circumstances, to request the stay of any act in furtherance of the realization of a group company's assets in an insolvency proceeding with respect to another group company; and (iii) provide for the commencement of group coordination proceedings, with the appointment of a group "coordinator." We briefly address these provisions below.

Cooperation and Coordination Between Insolvency Practitioners and Courts

Cooperation and coordination are mandatory not only between insolvency practitioners of group companies and between the courts that have opened the respective insolvency proceedings separately, but also collectively between insolvency practitioners and the courts. From June 26, 2017, onward, insolvency practitioners and courts must share information and try to agree on protocols regarding a coordinated approach to the insolvency proceedings. In addition, insolvency practitioners of group companies are obligated to consider whether it is possible to coordinate the administration and supervision of the group companies' affairs. If so, they must implement such coordination.

The Revised IR also imposes an obligation on insolvency practitioners to consider at the outset whether the group members (or the group members' debts) can be restructured and to coordinate the proposal and negotiation of a cross-border restructuring plan if possible. Insolvency practitioners may appear before foreign courts that have opened insolvency proceedings regarding group companies.

Requesting a Stay Regarding Assets of Another Group Company

An insolvency practitioner of a group company may request the stay of any act to realize assets in an insolvency proceeding of another group company if the insolvency practitioners of the group companies have collectively proposed a cross-border restructuring plan for the benefit of the group's creditors and if a stay is required to ensure the implementation of the plan.

Group Coordination Proceedings

The Revised IR also provides for the commencement of "group coordination proceedings" in which a coordinator is appointed for group insolvency proceedings. The coordinator cannot be one of the insolvency practitioners of the group companies, since he or she represents the interests of the group as a whole. The coordinator's mandate is to coordinate the insolvency proceedings of the group companies and to propose an integrated approach to the resolution of the group members' insolvencies (e.g., a plan regarding the sale of the entire group). The coordinator may participate in the insolvency proceedings of the group companies by, for example, attending creditors' meetings. The coordinator may also request a stay of insolvency proceedings commenced for any of the group companies, provided that he or she has proposed a group coordination plan and that a stay is required to ensure its implementation.

A group coordination proceeding is a voluntary proceeding commenced upon the request of an insolvency practitioner of one of the group companies. Insolvency practitioners of other group companies may opt out. Moreover, even if they agree to group coordination proceedings, insolvency practitioners may refuse to follow, in full or in part, any recommendation made by the group coordinator or in the group coordination plan.

Other Procedures Designed to Simplify Group Restructurings

Other procedures promoting effective group insolvency proceedings have also been developed in cross-border restructuring practice. For instance, in some countries, the courts allow substantive consolidation of companies within a group, allowing one insolvency practitioner and/or the debtor to liquidate or restructure all of the group's assets and liabilities as though only one entity existed. Moreover, some courts have sanctioned a "group COMI"—a single jurisdiction designated by the court for all of the group companies' insolvency proceedings—even when some of the group companies are established in another country. The EU legislature has stated that stakeholders can still utilize such procedures in cross-border restructurings if permitted in any particular case.

Benefits of the Revised IR

We anticipate that stakeholders in cross-border restructurings of EU groups will benefit from the provisions of new Chapter V in several ways.

First, in preparing for cross-border restructuring proceedings, the courts' obligation to cooperate can assist the debtor in coordinating the commencement of insolvency or pre-insolvency proceedings. This could prove useful, for instance, in a cross-border prepackaged sale of the group's assets, where timing is crucial. Because the insolvency practitioners of group companies are obligated to examine a coordinated restructuring at group level and to implement the restructuring if possible, having a restructuring plan prepared when insolvency or pre-insolvency proceedings are commenced should expedite the insolvency practitioners' consideration of a group level restructuring.

Second, if one of the group members' insolvency practitioners is unwilling to cooperate on a group level and/or on a going concern sale of the assets, the stakeholders now have several options. These include: (i) commencing group coordination proceedings, although a recalcitrant insolvency practitioner cannot be forced to take part in such proceedings; or (ii) requesting the stay of a sale of group company assets located in one or more jurisdictions. Stakeholders may also petition a foreign court to instruct a foreign insolvency practitioner to act in the group's interest, provided that the laws of the Member State in question permit this remedy and that it is in the interest of local creditors.

Third, the courts' obligation to cooperate and coordinate may streamline creditor voting, voting procedures, and other procedural issues across all jurisdictions concerned, allowing, for example, group companies to harmonize, and may coordinate the timing of key events in a groupwide debt restructuring by means of a creditors' composition.

A Step Forward

We anticipate that new Chapter V will have a positive impact on the success rate of EU cross-border restructurings. Whenever possible, insolvency practitioners and courts will be obligated to coordinate group insolvency proceedings and focus on group restructurings, rather than on fragmented local liquidations. If insolvency practitioners are reluctant to cooperate in a group restructuring, their foreign counterparts have the ability to intervene in the interests of the group's creditors. The ability of insolvency practitioners to appear before the courts of other EU Member States in which group insolvency proceedings have been commenced will likely encourage insolvency practitioners to be more engaging with their foreign counterparts than was previously the practice under the Original IR regime.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Jones Day
Jones Day
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Jones Day
Jones Day
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions