1. Dr Marek Porzycki

2.  the debtor has some assets abroad  the debtor has creditors abroad  the debtor carries out his activities on a cross-border basis  the debtor is a multinational entity, with establishments in several countries  the debtor is a multinational entity, carrying out business in several countries under legal form of local subsidiaries and in other countries by establishments

3. UNIVERSALISM vs. TERRITORIALITY  Territoriality – traditional approach, based on state sovereignty  Universalism – modern approach, based on cross-border effects of bankruptcy proceedings

4.  state’s sovereignty  bankruptcy decisions issued by foreign authorities are neither effective nor enforceable within the state  decisions issued by the state’s authorities are neither effective nor enforceable abroad  insolvency proceedings are strictly limited to assets of the debtor situated within one jurisdiction Weak point: Isolated country-based efforts are not able to solve complex cross-border cases.

5.  insolvency proceedings opened in relation to a debtor affect his entire estate (including assets located abroad)  foreign insolvency proceedings are recognized and their effectiveness is guaranteed Advantage: possible coordination of liquidation or restructuring efforts in all relevant jurisdictions

6.  possibility of conflicts over jurisdiction between courts of various states  taking into account local interests in other jurisdictions, e.g. - employees in a debtor’s foreign establishment - creditors with collateral rights on the debtor’s assets situated abroad  highly divergent solutions adopted by substantive insolvency laws – are results of application of foreign insolvency law acceptable under the basic concepts of domestic law?

7. Limitations by measures to safeguard local interests, e.g.  requirement of a formal recognition of foreign insolvency proceedings by a local court (not applied in EU law)  additional territorial proceedings over the debtor’s local assets  modification to effects of foreign insolvency proceedings in order to take into account local interests

8. - 1 st draft Convention – 1970 - EU Convention on Insolvency Proceedings of 1995 – endorsed by the EU Council but blocked by non-signature by the UK explanatory report to the Convention by Miguel Virgos and Etienne Schmit (Virgos-Schmit Report) - unofficial explanatory memorandum to the European Insolvency Regulation - Council Regulation (EC) No. 1346/2000 of 29 May 2000 on insolvency proceedings (European Insolvency Regulation)

9.  12.12.2012 - initial proposal by the Commission for an amendment of the EIR (COM(2012) 744 final)  March 2015 – draft recast EIR: http://data.consilium.europa.eu/doc/docume nt/ST-16636-2014-REV-5/en/pdf http://data.consilium.europa.eu/doc/docume nt/ST-16636-2014-REV-5/en/pdf  Adoption by the Council and by the European Parliament expected in mid-2015  Entry into force in 24 months after adoption

10.  Articles 378-417 of the Law of 28.02.2003 0n Bankruptcy and Rehabilitation (Prawo upadłościowe i naprawcze)  To be substantially amended by Law on restructuring (Prawo restrukturyzacyjne), adopted by the Sejm on 9.4.2015  overriden by EU law  applies only outside the scope of application of the Regulation No. 1346/2000 (EIR)  mostly in non-EU cases  example  recognition and effects of U.S. bankruptcy proceedings in Poland

11.  coordination of the measures regarding insolvency – in the context of more cross- border activities in the Community  filling a gap left by the Brussels Convention, currently Regulation (EU) No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) ('Brussels Ia')‏  avoiding incentives for 'forum shopping‘  NOT AIMED – unification of substantive insolvency laws

12. EIR: Scope of application (a) insolvency proceedings (Article 1(1), Article 2(a) + Annex A)‏ (b) centre of main interests (COMI) of a debtor located in the EU, except Denmark (recitals 13 and 14 in connection with Article 3)‏

13. EIR: Centre of a debtor’s main interests (COMI)‏ The place where the debtor conducts the administration of his interests on a regular basis (recital 13)‏ (a) ascertainable by third parties (in particular by creditors)‏ (b) for companies and legal persons – presumption of COMI being in the place of its registered office, Article 3(1)‏ (c) for natural persons – habitual residence for non-professionals or professional domicile for professionals (Virgos-Schmit)‏

14. EIR: Jurisdiction to open insolvency proceedings (a) main proceedings – courts of the Member State within the territory of which the debtor’s COMI is situated, Article 3(1)‏ (b) territorial proceedings (secondary or independent territorial proceedings) – courts of the Member State within the territory of which the debtor possesses an establishment, Article 3(2)‏

15. EIR: Definition of an establishment Article 2(h)‏ place of carrying out an economic activity (a) of non-transitory character (b) with human means and goods

16. EIR: Main and territorial proceedings Main proceedings, Article 3(1)‏ - opened in the state, where the debtor’s COMI is situated - subject to automatic recognition and immediately effective in other Member States Territorial proceedings, Article 3(2)-(4), Articles 27 to 38 - opened in the state, where the debtor’s establishment is situated - their effects are generally limited to the Member State where they are opened - if running in parallel to main proceedings – secondary proceedings

17. EIR: Recognition and effectiveness of insolvency proceedings in other Member States - opening of insolvency proceedings by a court of a Member State which has jurisdiction pursuant to Article 3 is automatically recognized in other Member States (Article 16)‏ - main proceedings are automatically effective in other Member States (Article 17)‏ -decisions issued in course of the insolvency proceedings are subject to automatic recognition and enforcement according to the Regulation No 44/2001 (Brussels I), Article 25 -Exception: public policy clause (ordre public ) (Article 26)‏

18. EIR: Law applicable - rule: law of the State of the opening of proceedings (lex fori concursus, Article 4)‏ - exceptions (for protection of local interests): i.a. third parties’ rights in rem (Article 5), immovable property (Article 8), contracts of employment (Article 10) – various grades of taking into account the law of another Member State with a link to the particular situation