The role of directors changes as national insolvency law evolve and encompass preventive and/or restructuring insolvency proceedings in national jurisdictions. Directors’ roles - their rights and obligations - arising after opening and until closing of preventive insolvency proceedings need to be understood in order to establish grounds of their liability. The project aims to focus on one important aspect of their roles that is to analyse what types of transactions could trigger director's liability and what are or could be the grounds of such liability. The collected information will also show to what extent the subject of director’s liability arising from acts performed during preventive or restructuring proceedings is already regulated by national laws, to what extent one needs to rely on general rules of liability of a given legal system and to what extent there is a need to establish principles which could serve as a basis for new laws to regulate director's liability arising during preventive/restructuring insolvency proceedings.
National insolvency laws in Europe typically contain rules on avoidance actions. Some of them are designed to provide sanctions against fraudulent behaviour or transactions at an undervalue, whereas others aim to enforce the principle of equal treatment of creditors by enabling the insolvency practitioner to challenge preferential treatment given to a creditor in a given period prior to the application for, or opening of, insolvency proceedings. The project aims at collecting information on transactions avoidance rules from various jurisdictions and examine them regarding their underlying policies and principles. Click here for the
Report on Transactions Avoidance laws (CERIL Report 2017/01): "Clash of Principles: Equal Treatment of Creditors vs. Protection of Trust"
Under the EU 2015/848 Insolvency Regulation (recast) of 20 May 2015 insolvency proceedings of members of a group of companies have their own set of rules, see Chapter V (Article 56 et seq.). Prior to these rules, the restructuring and insolvency of parents and subsidiaries was not regulated. Practitioners however have over the last couple of years developed efficient and pragmatic solutions, resulting in synthetic group restructuring and insolvency procedures to overcome the downsides of a strict legal entity approach: i.e. meaning every company is a single debtor and has its own insolvency proceeding, its own court and its own insolvency practitioner. Basically, that is still the underlying rationale in the Regulation. However, Articles 61 to77 Insolvency Regulation (Recast) provide for rules on coordination of proceedings of members of groups of companies by request to a court having jurisdiction over the insolvency proceedings of a member of a corporate group and also make provision for their conduct and closure.
This CERIL Working Party aims to issue recommendations to enhance the effectiveness and practical value of the group coordination system designed in the Insolvency Regulation (Recast). It also will provide guidance and best practice in unregulated areas to avoid delays, costs or litigation, whilst maximising the value of the group’s assets and operations for all stakeholders involved.