Energising courts to continue breaking new ground in insolvency and restructuring cases

DOIhttp://doi.org/10.1002/iir.1393
Date01 December 2020
Published date01 December 2020
AuthorBob Wessels
RESEARCH ARTICLE
Energising courts to continue breaking new
ground in insolvency and restructuring cases
Bob Wessels
International Insolvency Law, Leiden University, Leiden, the Netherlands
Correspondence
Bob Wessels, Emeritus professor,
International Insolvency Law, Leiden
University, Leiden, the Netherlands.
Email: info@bobwessels.nl
Abstract
The role of judges in restructuring and insolvency pro-
ceedings has been of particular interest to the EU legis-
lator in recent years. It is in matters of insolvency and
restructuring that a court and its judges have to fulfil a
set of five criteria: (a) a general understanding of busi-
ness management (so as not to assume managerial
tasks), (b) understanding what is needed to effectively
enforce the rights of both secured and unsecured credi-
tors outside of insolvency proceedings (as, for instance,
a stay may influence pre-insolvency enforcement
rights), (c), preferably, be a specialist in commercial
matters, (d) be impartial and independent, and
(e) where practical, have specialised insolvency exper-
tise. Where businesses are operating across borders, the
latter criterion includes cross-border knowhow.
During the 20th century, several steps have been devel-
oped with the aim of improving the environment
within which these criteria can be met. Courts them-
selves may wish to improve their level of quality and
effectiveness. In this contribution, several examples are
discussed that have been put in place or will emerge
soon that can enhance the court's professional standing
The author should disclose that he has advised the European Commission on the European Insolvency Regulation
(recast) project as well as the creation of the EU Preventive Restructuring Directive. The author would also like to thank
Gert-Jan Boon, PhD-researcher, Leiden University, for his input during a discussion of an earlier draft.
Received: 6 December 2019 Revised: 1 May 2020 Accepted: 10 July 2020
DOI: 10.1002/iir.1393
© 2020 INSOL International and John Wiley & Sons Ltd
Int Insolv Rev. 2020;29:393417. wileyonlinelibrary.com/journal/iir 393
and its performance, in (international) insolvency and
restructuring, as a goodjudge. These developments
may assist Member States in improving their judicial
frameworks, as well as (associations of) members of
courts or judicial and administrative authorities dealing
with procedures concerning insolvency and res-
tructuring in developing the necessary expertise for
their responsibilities as formulated in the EU Preven-
tive Restructuring Directive. Moreover, the duty of
cross-border cooperation between courts in EU law
underpins the discussion and the importance of cooper-
ation as is underscored by the adoption of this
Directive.
1|CROSS-BORDER CASES: THE 2017 INTRODUCTION OF
DUTIES FOR COURT-TO-COURT COOPERATION
The requirements for acting as a judge in restructuring and insolvency matters have been clearly
set out under European Union (EU) law related to cross-border cases. Since June 26, 2017, the
European Insolvency Regulation (recast) (EIR 2015) has been in force.
1
One of its novelties is the
explicit introduction of the duty for courts to cooperate and to communicate (Article 42 of the EIR
2015). To facilitate coordination between two or more insolvency proceedings pending in different
EU Member States courts shall in principle cooperate across borders. These courts can implement
forms of cooperation in several ways, further indicated in the provision.
I will first make some comments on this legislative innovation.
Chapter III (Secondary Insolvency Proceedings) of the EIR 2015 contains four articles
related to cross-border cooperation and communication where, within the EU, multiple insol-
vency proceedings are pending or have been commenced relating to a single debtor. Articles
4144 of the EIR 2015 impose duties of cooperation and communication between courts
(Article 42 of the EIR 2015), between insolvency practitioners (IPs) and the courts (Article 43 of
the EIR 2015), as well as between insolvency practitioners (Article 41 of the EIR 2015, the suc-
cessor to Article 31 of the predecessor text: the EIR 2000). Compared to the 2000 version of the
EIR, the provisions in the EIR 2015 not only extend the number of parties subject to duties of
cooperation and communication, but also provide more detail as to the content of these duties,
and (in the case of Articles 42 and 43 of the EIR 2015) provide a rule to regulate the costs of
such cooperation and communication by the courts (Article 44 of the EIR 2015).
2
The Statement of the Council's reasons for the adoption of this larger body of rules on coop-
eration and communication is near to absent.
3
In the section on secondary proceedings, it is
stated that, in order not to hamper the efficient administration of the insolvency estate, the EIR
2015 should empower a court seized with a request to open secondary proceedings (at the
request of the insolvency practitioner in main proceedings) to refuse or to postpone the opening
of such proceedings by:
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