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Mon 03 Jul 2017

EU Insolvency Regulation is recast

EU Insolvency Regulation is recast

Last week saw the Regulation 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings come into effect for insolvency proceedings that are opened on or after that date.

The Regulation replaces the EC Regulation (1346/2000) on insolvency proceedings and has a direct affect in the UK until such time as the UK leaves the EU in 2019. The amendments aim to change the focus away from liquidation and towards restructuring, as well as making cross-border insolvency proceedings, particularly of groups operating across multiple jurisdictions, more efficient.

The Recast Regulation is broader in scope than the original, now including interim proceedings which have the purpose of rescue, reorganisation and adjustment of debt as well as liquidation. A new “look back” period has been introduced for determining a debtor’s Centre of Main Interests (COMI); 3 months for a company or an individual carrying on business and 6 months for any other individual.

In addition to this, secondary proceedings are no longer restricted to liquidation and can be avoided by the insolvency practitioner giving an undertaking to distribute assets in the secondary jurisdiction to creditors in that member state in accordance with local rules.

Also coming into effect this week is The Insolvency Amendment (EU 2015/848) Regulations 2017. There are new standard forms for use in all member states which will be available on the European e-Justice Portal and in the UK, Companies House will also produce new forms in order to comply with the notice requirements too.

For more information and advice on insolvency, please contact Niten Chauhan.

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