1. Academic Forum Sponsors: www.edwincoe.com

2. Third Session: Reforming the European Insolvency Regulation III. Chair: Professor Christoph Paulus (Humboldt University Berlin)

3. The Reform of the EIR: Is there any Space for Private Autonomy? Matteo Winkler (Bocconi School of Law)

4. The Commission’s Proposal of 2012 Extension of the EIR’s scope Clarification of COMI Reform of the secondary proceedings Publicity of insolvency proceedings Ad hoc provisions of multinational enterprises

5. Private Autonomy and Insolvency Relevance of private autonomy in insolvency (hold-out problem) Role played in cross-border insolvency Significance in domestic context (pre-insolvency proceedings and debtor-in-possession proceedings) Practice of “insolvency protocols and agreements” – a very transnational contractual framework

6. Pre-Insolvency Proceedings Now included in the EIR’s scope under the new Art. 1 Components of an “insolvency proceedings”: – Divestment and a liquidator, or – Control or supervision by a court List in Annex A

7. Critical Issues The existing lack of EU-wide circulation of pre- insolvency arrangements – Which arrangements can circulate precisely? Which limits? (public policy; non-public or without-court-supervision arrangements)

8. Insolvency Protocols and Agreements Direct reference to “principles and guidelines … adopted by European and International associations …” (new Recital 20) But piecemeal references in the context of: – Communication and cooperation in general – Cooperation in groups of companies

9. Critical Issues Piecemeal structure: a bad drafting technique? Limits? – “to the extent that [insolvency protocols] are not incompatible with the rules applicable to each of the proceedings” – This limit operates only in court-to-liquidator cooperation, and not in court-to-court cooperation: why?

10. Conclusions Circulation of pre-insolvency arrangements (and restructuring plans) – A risk to a race to the bottom? Open reference to the contractual practice of insolvency protocols and agreements: maximum flexibility – Piecemeal legislation: uncertainty as to the transnational effects of insolvency protocols?

11. The Insolvency of Members of a Group of Companies in the Proposal for Amendment of the EIR Giulia Vallar (University of Milan)

12. The status quo No provisions on group insolvency Separate proceedings must be opened for each individual member of a group Liquidators and courts are under no duty to cooperate Cooperation is possible between liquidators. It is more difficult for judges Case-law has tried different ways to overcome such a lack of a discipline

13. Need for a revision Public consultation on the future of European Insolvency Law (2012): half of respondents felt the EIR does not work efficiently for multinational group insolvencies. One third felt it does The Commission agreed that the lack of a specific framework for group insolvency constitutes in certain cases an obstacle to the efficient administration of the insolvency of members of a group of companies The proposed Regulation contains provisions on group insolvency

14. Definition of “group of companies” New Article 2(i) “group of companies” means a number of companies consisting of parent and subsidiary companies

15. Definition of “group of companies” New Article 2(j) further specifies that "parent company" means a company which (i) has a majority of the shareholders' or members' voting rights in another company (a "subsidiary company"); or (ii) is a shareholder or member of the subsidiary company and has the right to (aa) appoint or remove a majority of the members of the administrative, management or supervisory body of that subsidiary; or (bb) exercise a dominant influence over the subsidiary company pursuant to a contract entered into with that subsidiary or to a provision in its articles of association.

16. Definition of “group of companies” Such a definition should be understood as being limited to the context of insolvency and should not have any influence on the company aspects regarding groups (recital 7)

17. Two options (New recitals 20a and 20b) 1.Several proceedings relating to two or more members of a group of companies opened before different courts in several member states (default option) 2.Several proceedings relating to two or more members of a group of companies opened before the same court (therefore in a single jurisdiction) (residual option)

18. Default option Several proceedings opened before different courts in several member states New detailed discipline

19. New provisions Chapter IVa “Insolvency of members of a group of companies” (Articles 42a – 42d)

20. New provisions Article 42a: Duty to cooperate and communicate information between liquidators Article 42b: Communication and cooperation between courts Article 42c: Cooperation and communication between liquidators and courts Article 42d: Powers of the liquidators and stay of proceedings

21. Duty to cooperate and communicate information between liquidators Liquidators shall cooperate to the extent that such cooperation: is appropriate to facilitate the effective administration of the proceedings is not incompatible with the rules applicable to such proceedings does not entail any conflict of interests Suggested means of cooperation: “agreements or protocols”

22. Duty to cooperate and communicate information between liquidators Liquidators shall: immediately communicate any relevant information (keeping in mind confidentiality) where the group can be restructured, negotiate a coordinated restructuring plan coordinate the administration and supervision of the affairs of the group members A specific liquidator can be granted additional powers subject to the agreement of all the liquidators

23. Communication and cooperation between courts Actors Courts before which a request to open proceedings concerning a member of the group is pending or which has opened such proceedings Conditions Such cooperation should be appropriate to facilitate the effective administration of the proceedings and should not be incompatible with the rules applicable to them How to These courts may either communicate and request information and assistance directly from each other or appoint a person or body for this purpose

24. Communication and cooperation between courts Suggested means of cooperation Communication of information by any appropriate means which should (i) be free of charge and (ii) respect procedural rights of the parties and confidentiality Coordination of the administration and supervision of the assets and affairs Coordination of the conduct of the hearings Coordination in the approval of protocols

25. Cooperation and communication between liquidators and courts Actors Any liquidator and any court involved in a proceedings concerning any member of the group Conditions Such cooperation should be appropriate to facilitate the effective administration of the proceedings and should not be incompatible with the rules applicable to them How to In particular, the liquidator may request information or assistance from the court

26. Powers of the liquidators … A liquidator shall have the right to be heard and to participate in any of the other proceedings opened to request a stay of the other proceedings to propose a rescue plan, a composition or a comparable measure for all or some members of the group for which insolvency proceedings have been opened and to introduce it into any of the proceedings opened in accordance with law applicable to those proceedings to request any additional procedural measures under the law applicable to the proceedings which may be necessary to promote rescue, including the conversion of proceedings

27. … and stay of proceedings A court requested to stay the proceedings shall act accordingly if it is proven that such a stay would be to the benefit of the creditors in that proceedings. In any case, the court can request to the liquidator any suitable measure to guarantee the interests of the creditors The proceedings can be stayed for up to three months and the stay can be continued or renewed for the same period

28. Residual option Several proceedings opened before the same court Just a hint in Recital 20(b)

29. Residual option Condition The COMI of all the companies of the group is deemed to be located in a single Member State Effects If appropriate, the court should appoint the same liquidator for all the proceedings

30. Comments to Articles 42a – 42d Even if they retain the entity by entity approach of the EIR, they take a step forward in providing a coordination of the proceedings The newly introduced system is built upon experience of coordination between liquidators of main and secondary proceedings The other envisaged solution was the one called “procedural consolidation” but it was considered less proportionate at the current stage

31. Comments to Articles 42a – 42d The three forms of cooperation and communication are explicitly made subject to compatibility with the relevant norms applicable to the proceedings Assuming these norms are the national procedural rules, such a condition involves the risk of spoiling the new provisions of their apparent benefits: is this limitation appropriate?

32. Present and Future of Judicial Cooperation in Insolvency Cases in Europe Professor Bob Wessels (University of Leiden)

33. Main topics: Present status Proposal JudgeCo project

34. 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. For the purposes of paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures, particularly when necessary for the proper functioning of the internal market, aimed at ensuring: (a) the mutual recognition and enforcement between Member States of judgments and of decisions in extrajudicial cases; (c) the compatibility of the rules applicable in the Member States concerning conflict of laws and of jurisdiction; (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

35. Model of coordination of proceedings Recital (12) …..To protect the diversity of interests, this Regulation permits secondary proceedings to be opened to run in parallel with the main proceedings. ….Mandatory rules of coordination with the main proceedings satisfy the need for unity in the Community. Recital (20) ….Main insolvency proceedings and secondary proceedings can, however, contribute to the effective realisation of the total assets only if all the concurrent proceedings pending are coordinated. The main condition here is that the various liquidators must cooperate closely, in particular by exchanging a sufficient amount of information. In order to ensure the dominant role of the main insolvency proceedings, the liquidator in such proceedings should be given several possibilities for intervening in secondary insolvency proceedings which are pending at the same time. For example, he should be able to propose a restructuring plan or composition or apply for realisation of the assets in the secondary insolvency proceedings to be suspended.

36. Model: COORDINATION RE PROCEEDINGS The liquidator in the main proceedings may: Request publication of opening judgment or registration of judgment in public registers kept in another MS (Art. 21, 22) Request opening of secondary proceedings in other MSs (art. 29) Participate in secondary proceedings (Art. 32(3)) Request stay of the process of liquidation of sec. proc. (Art. 33(1)) and may request measures ex Art. 34.1 (see Art. 34(3)) Request termination of this stay (Art. 33(2)) Propose a rescue plan, when allowed (Art. 34(1)) Dis-agree with finalizing liquidation in sec. proc. (Art. 34(1)) Claim the remaining assets (art. 35)

37. COORDINATION RE PROCEEDINGS (Cont’d) Key duties of liquidator in main and secondary proceedings: 1. To communicate information (Art. 31(1)) 2. To cooperate (Art. 31(2)) 3. To lodge all claims which have already been lodged in the main proceedings (Art. 32(2)) 4. To immediately inform all known creditors (Art. 40(1)) by individual notice (Art. 40(2))‏ Article 31 Duty to cooperate and communicate information: -Text does not provide clear guidance - Applies only to liquidators

38. www.insol-europe.org

39. European Communication and Cooperation Guidelines For Cross-border Insolvency (2007) CoCo Guidelines - www.insol-europe.orgwww.insol-europe.org My weblog 2007-09-doc1- text CoCo Guidelines (18 in number) 2007-10-doc2- endorsement by INSOL Europe Status – “Soft law” / best practices Promotes coordination, using ‘Protocols’ (includes “Checklist Protocol”) Examples: - Requirements for practitioners - Language

40. CoCo Guidelines - Guideline 4 4.2. A liquidator is required to act with the appropriate knowledge of the EC Insolvency Regulation and its application in practice.

41. 10.1. Liquidators shall determine the language in which Communications take place on the basis of convenience and the avoidance of costs. The court is advised to allow use of other languages in all or part of the proceedings if no prejudice to a party will result. 10.2. Courts are encouraged, to the maximum extent permissible under national law, to accept any documents related to those communications in language decided upon under Guideline 10.1, without the need for a translation into the language of proceedings before them. CoCo Guidelines - Guideline 10

42. CoCo – A Useful Medicine?

43. CoCo Guidelines in Literature? 1. Literature: how to “include” in formal law? – Annex to InsReg? – In a national “Kodex”? – Standard / yardstick to measure “national” duties? – A “European” standard for liquidators? (An non-binding “Opinion” ex Art. 288 TFEU?)

44. CoCo Guidelines in Practice? 1. Literature: how to “include” in formal law? 2. Practice: – BenQ Holding (NL court – German court; 2007) – Order of judicial decisions – Automold (German court – UK liquidator) – re scheduling creditors meeting in Germany – Restructuring Committee Landsbanki – ICESAVE? – Kauptingh – Norway? – Lehman Brothers Holdings Inc. (LBHI) – CoCo Guidelines referred to in draft-global protocol – PIN AG – German & Lux court share info re “main proceedings”

45. Application Report COM(2012) 743 final (p. 14:) “….The duties to cooperate and communicate information under Article 31 of the Regulation are rather vague. The Regulation does not provide for cooperation duties between courts or liquidators and courts. There are examples where courts or liquidators did not sufficiently act in a cooperative manner. These findings are confirmed by the results of the public consultation where 48% of the respondents were dissatisfied with the coordination between main and secondary proceedings.”

46. Bank Handlowy w Warszawie SA, PPHU ‘ADAX’/Ryszard Adamiak, V Christianapol sp. z o.o. (Case C-116/11) Case relates to the opening of insolvency proceedings, in Poland, further to an application made by Bank Handlowy and Adamiak in respect of Christianapol sp. z o.o., a company governed by Polish law, in respect of which rescue proceedings (procédure de sauvegarde) had previously been opened in France. Christianapol is a wholly-owned subsidiary of a German company, which in turn is 90% owned by a French company. By judgment of 1 October 2008, the Tribunal de commerce de Meaux (France) opened insolvency proceedings against Christianapol (COMI in France). The court opened sauvegarde proceedings on the ground that the debtor was not in a situation calling for the cessation of payments, but that it would be in that situation if financial restructuring was not undertaken quickly. On 21 April and 26 June 2009, Bank Handlowy, established in Warsaw (Poland), in its capacity as creditor of Christianapol, asked the referring court to open secondary insolvency proceedings against Christianapol under Article 27 of the Regulation. On 20 July 2009, the Tribunal de commerce de Meaux approved a rescue plan for Christianapol, under which debts would be paid off in instalments spread over 10 years and prohibiting the transfer of the undertaking of Christianopol, situated in Łowyń (Poland) and of certain defined assets belonging to the debtor. The French court maintained the appointment, made previously, of the persons responsible for representing the interests of creditors for the period up to the closure of the procedure for the verification of claims and the submission of a final report on the activities of those representatives. In its judgment it also appointed a person to oversee the implementation of the plan (commissaire à l’exécution du plan).

47. Bank Handlowy C-116/11 (cont’d) On 2 August 2009, another creditor, Adamiak, established in Łęczyca (Poland), also asked for winding-up proceedings to be opened under Polish law. Following the approval of the rescue plan by the French court, Christianapol contended that the secondary insolvency proceedings should be discontinued, since the main proceedings had been closed. It also contended that it was fulfilling its obligations under the plan approved by the French court, with the result that no pecuniary claims were outstanding against it under Polish law and there were therefore no grounds supporting a declaration of insolvency in respect of it. “The referring court asked the Tribunal de commerce de Meaux whether the insolvency proceedings in France, which were main proceedings for the purposes of the Regulation, were still pending. The answer given by the French court did not provide the necessary clarification. The referring court then consulted an expert.” The Sąd Rejonowy Poznań-Stare Miasto w Poznaniu decided to stay the proceedings and to refer questions to the Court of Justice of the EU for a preliminary ruling:

48. Article 4(2)(j) InsReg must be interpreted as meaning: that it is for the national law of the Member State in which insolvency proceedings have been opened to determine at which moment the closure of those proceedings occurs. Article 27 InsReg must be interpreted as meaning: that the court before which an application to have secondary insolvency proceedings has been opened cannot examine the insolvency of a debtor against which main proceedings have been opened in another Member State, even where the latter proceedings have a protective purpose. Article 27 InsReg must be interpreted as meaning: that it permits the opening of secondary insolvency proceedings in the Member State in which the debtor has an establishment, where the main proceedings have a protective purpose. It is for the court having jurisdiction to open secondary proceedings to have regard to the objectives of the main proceedings and to take account of the scheme of the Regulation, in keeping with the principle of sincere cooperation. Bank Handlowy C-116/11 (Cont’d)

49. Bank Handlowy C-116/11 - argumentation “59 …., the fact remains that the opening of secondary proceedings, which, …., must be winding-up proceedings, risks running counter to the purpose served by main proceedings, which are of a protective nature. 60 It should be noted that the Regulation provides for a certain number of mandatory rules of coordination intended to ensure, as expressed in recital 12 in the preamble thereto, the need for unity in the Community. In that system, the main proceedings have a dominant role in relation to the secondary proceedings, as stated in recital 20 in the preamble to the Regulation.

50. Bank Handlowy C-116/11 - argumentation 61 The liquidator in the main proceedings thus has certain prerogatives at his disposal which allow him to influence the secondary proceedings in such a way, that the protective purpose of the main proceedings is not jeopardised [follow examples; Wess.] 62 The principle of sincere cooperation laid down in Article 4(3) EU requires the court having jurisdiction to open secondary proceedings, in applying those provisions, to have regard to the objectives of the main proceedings and to take account of the scheme of the Regulation, which, ……, aims to ensure efficient and effective cross-border insolvency proceedings through mandatory coordination of the main and secondary proceedings guaranteeing the priority of the main proceedings.”

51. Cross-border Cooperation under 12-12-12 Proposal Renewed recital 20 Two new recitals (20a & 20b) Renewed Art. 31 CoCo between liquidators New Art. 31a CoCo between courts New Art. 31b CoCo between liquidators and courts

52. Pr(13) Recital 20 is replaced by the following: “(20) Main insolvency proceedings and secondary proceedings can only contribute to the effective realisation of the total assets if all the concurrent proceedings pending are coordinated. The main condition here is that the various liquidators and the courts involved must cooperate closely, in particular by exchanging a sufficient amount of information. In order to ensure the dominant role of the main proceedings, the liquidator in such proceedings should be given several possibilities for intervening in secondary insolvency proceedings which are pending at the same time. In particular, the liquidator should be able to propose a restructuring plan or composition or apply for a suspension of the realisation of the assets in the secondary insolvency proceedings. In their cooperation, liquidators and courts should take into account best practices for cooperation in cross-border insolvency cases as set out in principles and guidelines on communication and cooperation adopted by European and international associations active in the area of insolvency law.”

53. Pr(35) Article 31 is replaced by the following: Cooperation and communication between liquidators 1. The liquidator in the main proceedings and the liquidators in the secondary proceedings shall cooperate with each other to the extent such cooperation is not incompatible with the rules applicable to each of the proceedings. Such cooperation may take the form of agreements or protocols. 2. (………….)

54. Pr(36) Article 31a to be inserted: Cooperation and communication between courts 1. In order to facilitate the coordination of main and secondary insolvency proceedings concerning the same debtor, a court before which a request to open insolvency proceedings is pending or which has opened such proceedings shall cooperate with any other court before which insolvency proceedings are pending or which has opened such proceedings to the extent such cooperation is not incompatible with the rules applicable to each of the proceedings. For this purpose, the courts may, where appropriate, appoint a person or body acting on its instructions. 2. The courts referred to in paragraph 1 may communicate directly with, or to request information or assistance directly from each other provided that such communication is free of charge and respects the procedural rights of the parties to the proceedings and the confidentiality of information. 3. Cooperation may be implemented by any appropriate means, including (a) communication of information by any means considered appropriate by the court; (b) coordination of the administration and supervision of the debtor’s assets and affairs; (c) coordination of the conduct of hearings, (d) coordination in the approval of protocols.

55. Pr(36) Article 31b to be inserted: Cooperation and communication between liquidators and courts 1. In order to facilitate the coordination of main and secondary insolvency proceedings opened with respect to the same debtor, (a) a liquidator in main proceedings shall cooperate and communicate with any court before which a request to open secondary proceedings is pending or which has opened such proceedings and (b) a liquidator in secondary or territorial insolvency proceedings shall cooperate and communicate with the court before which a request to open main proceedings is pending or which has opened such proceedings, 2. The cooperation referred to in paragraph 1 shall be implemented by any appropriate means including the means set out in Article 31a (3) to the extent these are not incompatible with the rules applicable to each of the proceedings.

56. Pr(14) recital 20a to be inserted (20a) This Regulation should ensure the efficient administration of insolvency proceedings relating to different companies forming part of a group of companies. Where insolvency proceedings have been opened for several companies of the same group, these proceedings should be properly coordinated. The various liquidators and the courts involved should therefore be under the same obligation to cooperate and communicate with each other as those involved in main and secondary proceedings relating to the same debtor. In addition, a liquidator appointed in proceedings relating to a member of a group of companies should have standing to propose a rescue plan in the proceedings concerning another member of the same group to the extent such a tool is available under national insolvency law.

57. Shaping and Modeling “Cooperation”? Recital 20, new last line: “In their cooperation, liquidators and courts should take into account best practices for cooperation in cross-border insolvency cases as set out in principles and guidelines on communication and cooperation adopted by European and international associations active in the area of insolvency law.”

58. www.insol-europe.org

59. ALI-III project “Global Principles for Cooperation in International Insolvency Cases” Contents: – Worldwide acceptance of ALI NAFTA Principles – Refine ALI Guidelines Applicable to Court-to-Court Communication in Cross-Border cases – “Glossary” – Recommendations re “Applicable law” http://www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=85 or http://www.iiiglobal.org/component/jdownloads/finish/557/5932.htm or Weblog 2012-06-doc1 Final report Global Principles (2012)

60. www.bobwessels.nl

61. European Cross-border Insolvency: Promoting Judicial Cooperation Profs Bob Wessels and Jan Adriaanse Prof. Paul Omar

62. European Cross-border Insolvency: Promoting Judicial Cooperation Objective: to develop ‘guidelines’, ‘best practices’ and ‘standards’ for communication and cooperation in insolvency cases between courts in the European Union. The result should lead to a set of “EU Cross-Border Insolvency Court-to-Court Cooperation Guidelines”: (i) ensuring as far as possible that the EU Insolvency Regulation works in practice, to efficiently and effectively deal with a debtor’s estate; (ii) fitting the current environment where solutions have been developed based on models reflecting cooperation and communication; (iii) guaranteeing the organisation and conduct of a fair legal process and ensuring the fair representation of stakeholders concerned in insolvency processes.

63. Three Phases Workstream 1 (January 2013-September 2013) – Two surveys will be developed and sent out to a representative group of around 40 experts – insolvency judges, senior insolvency court representatives, insolvency lawyers/trustees/ practitioners, academics – chaired by prof. Fletcher UCL – Study of 5 Int’l and EU Codes on Independency / Integrity of Judges – Redrafting Global Principles and CoCo Guidelines in discussion with Review & Advisory Group Workstream 2 (September 2013-July 2014) – focuses on capacity building by inviting individual EU Insolvency Judges to participate in sidetracks of (already) planned conferences by the projects’ participating or invited partners [ERA Trier; III; Insol Europe; IBA IS?] Workstream 3 (July 2014-December 2014) – focuses on bringing together 60 EU Insolvency Judges for ‘Cooperation Trainings’ of 10-12 hours at three European universities (Leiden, Nottingham, and a city in the Eastern-European region?).

64. Where do we stand in 2016?

65. Future of Cross-border Cooperation Present status: model of coordination CoCo Guidelines (2007) Global Principles (2012) EU Cross-Border Insolvency Court-to- Court Cooperation Guidelines (JudgeCo project; 2014?) Prof & Ethical rules re IOH’s (Best Practices project INSOL Europe; 2014?)

66. www.bobwessels.nl

67. Coffee break

68. Fourth Session: Young Academics’ Network Chairs: Myriam Mailly (University of Kent) Emmanuelle Inacio (Université du Littoral Côte d’Opale)

69. YAN The Younger Academics Network on Comparative and International Insolvency Law and Finance

70. Who are we ? -Representation of younger academics or PhD fellows -Linked with the Academic Forum of INSOL Europe -33 participants from 13 different jurisdictions ( Estonia, Poland, Russia, France, England, Sweden, The Netherlands, South Africa, Germany, Czech Republic, Italy, Luxembourg & Croatia. )

71. What are we doing ? - A (virtual) network - Exchange and cooperation - Support between researchers

72. Where to find us ? - INSOL Europe website: http://www.insol-europe.org/academic- forum/younger-academics-network-website/http://www.insol-europe.org/academic- forum/younger-academics-network-website/

73. How to join us ? - How to join ? http://www.insol-europe.org/academic-forum/yan- how-to-join

74. The Integration of Pre-Insolvency Proceedings in the EIR: A Comparative Analysis of CVAs and the Procédure de Conciliation Marie Padellec (University of Aix-Marseille III)

75. A different approach of the pre-insolvency proceedings by French Law and English Law to rescue the company A determinate process under English law – Creditor’s meeting – Shareholder’s meeting – A scheme who binds all creditors The liberty under French law A scheme open to usual co-contracting The absence of meetings The absence of binding procedure

76. A different approach of the pre-insolvency proceedings by French Law and English Law to rescue the company The choice of transparency under English law an asset: the faculty of the moratorium a weight: a big cost for the company + distrust for the creditors The choice under French Law: Secret or publicity The secret agreement ( absence of knowledge by the creditors of the financial situation of the company) – Minimum of costs – A company protect against his creditors by the “Délai de grâce” The public agreement – The “New Money”, a privilege who increase the creditors to find an agreement

77. The integration of pre-insolvency proceeding in the EIR under the purpose of the Commission 4 conditions to integrate pre-insolvency proceedings in the EIR suggest by the Commission – A proceeding based on a law relating to insolvency or adjustment of debt – The assets and affairs of the debtor are subject to control or supervision by a court – Proceedings which have for objective rescue, adjustment of debt, reorganization or liquidation – A collective judicial or administrative proceedings

78. The integration of pre-insolvency proceeding in the EIR under the purpose of the Commission The exclusion on principle of the Procédure de conciliation by the integration of the new definition of the Commission in the EIR – The absence of the condition of collective proceedings – The precision by the Commission of the Exclusion of confidential proceedings An alternative issue? – The absence of control of the meeting of the conditions required by the definition before the inscription of proceedings: possibility to insert in the Procédure de Conciliation in the REI The exclusion of the confidential proceedings “since they become public”

79. The Credit Institutions Directive and the Gap in the EU Legal Framework Addressing Subsidiaries of Financial Institutions Chindar Teo Victoria University, Melbourne, Australia.

80. DIRECTIVE 2001/24/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the reorganisation and winding up of credit institutions Effective coordination and cooperation between jurisdictions and respective authorities Operationally integrated subsidiaries complicate insolvencies through conflict Less than optimal regime to resolve cross-border banking groups

81. Conflict between home and host jurisdictions Article 3(1) states that the administrative or judicial authorities of the home Member State shall alone be empowered to decide on the implementation of one or more reorganisation measures in a credit institution, including branches established in other States. Systemically damaging implications to host country economy Legal separateness of subsidiary: To abandon or not abandon? Disparity in the treatment of subsidiaries across and among domestic regimes Many foreign banking authorities & conflicting measures National authority’s ability to resolve foreign subsidiary and limitations

83. National Territorial Sovereignty The Icelandic banking crisis The problem with universalism in SIFI resolution Recent banking crisis in Europe- when subsidiaries are not separated The chance of a local rescue: maximisation or minimisation?

84. Concluding remarks and future research Adequate mechanisms to deal effectively and efficiently with cross-border aspects The possibility of harmonized rules, powers and sanctions Addressing the distinctiveness of subsidiaries Future research inclusive of SIFIs and the extension of resolution powers Recent banking crisis in Cyprus: impact on the real economy

85. The Credit Institutions Directive and the Gap in the EU Legal Framework Addressing Subsidiaries of Financial Institutions Thank you for your attention! Email: chindarteo@yahoo.com

86. “Reorganization Plans as Alternatives to Pre - Insolvency Measures under the European Insolvency Regulation and Domestic Laws” Maria Kilteni (L.L.B. & PhdC Democritus University of Thrace, L.L.M. Tübingen, National &Kapodistrian Un. of Athens)

87. Structure of Presentation 1.What is a “Reorganization Plan”?-Where does it belong? 2.Why Corporate Rehabilitation Plans ? 3.Why not Private Restructuring Plans (“Workouts”)? 4.Why (not) a “Pre-Packaged” Plan? 5.European Regulation 1346/2000 & Proposal 6.Comparison-Similarities among Greek, American, German and French Insolvency Law.

88. What is a “Reorganization Plan”? Where does it belong?(1/3) Insolvency Proceedings Rescuing/Restructuring Proceedings Judicial Rehabilitation Proceedings Private Agreements/ “Workouts” Liquidation Proceedings

89. Judicial Rehabilitation Proceedings Voluntary Compositions Traditional Compositions and Moratoriums Corporate Rehabilitation Proceedings Reorganization Plan What is a “Reorganization Plan”? Where does it belong?(2/3)

90. Private Agreements/ “Workouts” 2. “Mild” Rehabilitation proceedings 3. “Tough” Rehabilitation Proceedings 1. Traditional Compositions What is a “Reorganization Plan”? Where does it belong?(3/3) Reorganization Plan

91. Why Corporate Rehabilitation Plans ? - Ease in entry -Full freedom to the debtor to commence proceedings -Freeze on execution of the creditors and on liquidation petitions -Permitted and lawful alterations on securities such as stay on enforcement Why not Private Restructuring Plans (“Workouts”)? -Necessity of unanimity, illegal transactions during the suspect period, no “erga omnes” binding force

92. Why a “Pre-Packaged” Plan? All the advantages of the “Judicial Rehabilitation & Proceedings” and of the “Workouts”: -Time-saving: the negotiations for the plan, the distribution of the disclosure statements, the procedure of voting take place before the bankruptcy case is filled -The maximization of returns -The saving of jobs Why not a “Pre-Packaged” Plan? : “Panacea”? -Time-saving can be proved to be a “labyrinth” -Probability of impairment for some creditors

93. Possible Applicable law for the plan: “lex fori concursus”, art. 4 par. 2 (j) “the conditions for and the effects of closure of insolvency proceedings, in particular by composition” such as the rescue plan : the law of the State of opening European Regulation 1346/2000 (1/8)

94. The Regulation accepts : a)The possibility of “Secondary Ins. Proceedings” ending in a Composition, a Plan or an Equivalent Measure b)The possibility of “Independent Territorial Ins. Proceedings” also ending in a Reorganization Plan c)The “Main Insolvency Proceedings” can share the same end? European Regulation 1346/2000 (2/8)

95. The coexistence and the equalization of all possibilities come to art. 34 of R.: a)The liquidator of the “Main Insolvency Proceedings” has the power to decide on the closure of the “Secondary Insolvency Proceedings” with a plan b)His consent can be ignored, if the financial interests of the creditors of the “Main Ins. Proceedings” are not impaired by the plan c)If there is restriction of creditors’ rights by a plan concerning the “Secondary Ins. Proceedings”, it has no effect to other States, unless all the creditors consent European Regulation 1346/2000 (3/8)

96. Proposal of E.C. (12.12.2012) A “second chance” to the debtor -a more complete definition of COMI (art. 3 par. 1 &3) -the secondary proceedings are not only winding-up proceedings, but also restructuring procedures (the word liquidation disappears!) (art. 3 par. 2) -a full recognition of the scheme of “debtor in possession” [art. 2b (ii), d (ii)] - ̔ synthetic secondary proceedings ̕ protection of the local creditors (art. 18 par. 1& 29a par. 2 and 3) -upgrading of the cooperation among liquidators of main and secondary ins. Proceedings (art. 31 par. 2b, even to the extent of a group of companies, art. 42a par. 2b, art. 42d par. 1c & par. 2, suspension or rescue plan) European Regulation 1346/2000 (4/8)

97. -Neither special rule nor exception to the “lex fori concursus” It is generally accepted : -for issues on the functioning and the internal structure of the company, the managers’ and the members’ respective rights “lex societatis” -for the issues on the functioning and the formation of the rights related to the objectives of the insolvency proceedings (such us the sale to the creditors) “lex fori concursus” European Regulation 1346/2000 (5/8)

98. European Regulation 1346/2000 (6/8) Emerging Financial Problems Worsening Problems: Private Workout Cessation of Payments Insolvency With Possible Viable Reorganization Insolvency With Impossible Reorganization Without the reform Lex Societatis Lex Contractus No Regulation Lex Fori Concursus Lex Fori Concursus With the reform The Law of the Most Significant Creditors

99. How is this translated in terms of international private and insolvency law? (Proposals) Introduction of the “lex magnum creditorum”=law of the State where the Most Significant Creditors are located. This law will determine in the scheme of a “Reorganization Plan” or of a “Workout”: Jurisdiction Applicable Law Potential Creditors’/Participants’ Objections Recognition to other States European Regulation 1346/2000 (7/8)

100. State of the Most Significant Creditors Competent Court European Regulation 1346/2000 (8/8) Courts of Domicile of Creditors A,B,C…. European Committee of Insolvency & European Register of Insolvency C1 C2 C3

101. “Reorganizations Plans” in domestic laws Comparison (1/6) Similarities -Regarding the Face of the Debtor (!) -Concerning the Role of the Insolvency Practitioner ( a “typical lawyer”!) He always knows everything!

102. -A clear reference to the Rescue of the Company among the targets of the plan: Greek (art. 107), American (§1123), German (§ 217), French (art. L. 626 – 1) -A clear reference to the Possibility of the “Debtor – In – Possession” and to the “Transfer” of all or of a part of the enterprise: American (§1107), German (§ 270-285, 217 and 220), Greek (art. 18, 78, 109 par. 1b and 106h), French (only for transfer, art. R. 642-1- R. 642-22) -The person that legitimatizes actively to file the plan: 1)Debtor, Trustee: German (§ 218), Greek (art. 108), French (art. L. 626-2, instead of the trustee, the “administrateur”), 2)Debtor, Trustee, Creditor: American (§ 1121) Comparison (2/6)

103. -Organization of the creditors into groups and subgroups: German (§ 222), Greek (art.111), American (§ 1122), French (art. L. 626-29- L.626-35, R. 626-52- R. 626-63) -The Necessary Majorities for the acceptance of the plan: a) Greek: at least 60% of all the claims and 40% of the claims that belong to the secured creditors (art. 121 par. 1) b) American: (for the class of claims) holders of more than 50% in number of the allowed claims and at least holders of 2/3 of the dollar amount of the allowed claims and (for the class of interests) holders of at least 2/3 in the amount of the allowed interests Comparison (3/6)

104. c) German: a totally different formulation, in every group of creditors: 1) the majority of the creditors must have consented to the Plan and 2) the claims of the consented creditors must be more than 50% of the amount of creditors that have voted for the plan (§ 244) d) French: holders of 2/3 claims that have voted for the Plan (art. L. 626 – 30 – 2) -“Creditors that are not impaired by the plan, do not have the right to vote” : German (§ 237 par. 2 InsO), Greek (art. 116 par. 3 ), French (Art. L. 626 – 30 – 2 ) Comparison (4/6)

105. Content – Form: a)“skeleton”/minimum content: Greek (art. 109), German (§ 219, 220 and 221), American (§1123) b)a general description: French (art L. 626-1 and 626-2) – The “filter” of a better satisfaction by liquidation, none: (American and French) ≠ Greek (art. 108 par. 2, 109 par. 1a, 124 par. 1 d), German (§217 and 231) – The principle of “Relative”/ “Economic” Equality: American [§ 1122 (a)], Greek (art. 113 B.C), German (§ 226), French (art. L. 626 – 30 – 2) – “Erga omnes validity”: American (§1142), German (§ 254, 257), Greek (art. 125 and 126), French (art. L. 626 – 11) Comparison (5/6)

106. -A special reference to the “Secured Creditors” and the distinction among those that are influenced by the plan and the others that remain intact: German (§ 223, 228), Greek (art. 112), American [§1129 16 (b) (2) (A)], French (art. L. 626 -22) -A special reference to the Possibility of transformation of the creditors’ claims into shares by the plan: German (§ 225a), Greek. (art. 109), French (art. L. 626 – 18) -“Cram Down”: American (§ 1129), German (§ 245), Greek [art. 120par. 3(b)] Comparison (6/6)

107. Thank you very much for your attention !

108. When is a Company unable to pay its Debts? An Assessment of the Tests for Corporate Insolvency Vincenzo Volpe (University College London)

109. Defining “Insolvency” Is it only necessary to determine access to proceedings? OR Does it have legal significance per se?

110. A European definition of insolvency? -Article 3 EC Regulation on Insolvency Proceedings 2000. The UK definition: “inability to pay debts” - Section 123 Insolvency Act 1986.

111. The cash flow test S. 123(1)(e) IA 1986 A company “is unable to pay its debts as they fall due”. The balance sheet test S. 123(2) IA 1986 A company is also deemed unable to pay its debts “when the value of its assets is less than the amount of its liabilities, taking into account prospective and contingent liabilities”.

112. Cash flow: Present vs Future debts Highberry Limited v Colt Telecom Group Plc - Jacob J. “no shaky, tentative and speculative peering into the middle-distance” when applying the liquidity test. Re Cheyne Finance Plc - Brigg J. : “the words as they become due look to the future”. - Reliance on Australian jurisprudence.

113. Issues with Cheyne A short-sighted version of the balance sheet test? How far do we look into the future? The need to valuate prospective liquidity.

114. Balance sheet: BNY Corporate Trustee Services Ltd v Eurosail-UK The rationale The debt/liability distinction The troubled relationship of law and accounting Legal title and commercial substance

115. VALUATION of LIABILITIES Contingent liabilities -Untied to existing obligations -Arising from past events? (FRS 12) Prospective liabilities - Current transaction or obligation

116. THE METHOD No mechanistic adding up at face value. Value is a factual enquiry involving judicial discretion. Face value discounted for futurity?

117. VALUATION OF ASSETS Only present assets to be taken into account. Strategic and structural sources of uncertainty. Economic distress and break-up value. Financial distress and going concern surplus.

118. Valuation in Cross-Border Insolvencies Informational asymmetries Intangible assets Facilitating valuation through substantive consolidation.

119. Lunch

120. Academic Forum Sponsors: www.edwincoe.com

121. Edwin Coe Prize Winners (Travel Grants/Book Prizes)

122. Introduction of Guest Speaker Marc Udink (INSOL Europe Honorary Chairman)

123. Edwin Coe Lecture: “Spreading the Gospel: The Mission of Insolvency Law, and the Insolvency Practitioner, in the early Twenty-First Century” Professor Ian Fletcher (University College London)

124. Closing Address and Handover Professor Stefania Bariatti (University of Milan)

125. Academic Forum Sponsors: www.edwincoe.com