Diritto ed Economia dell'ImpresaISSN 2499-3158
G. Giappichelli Editore


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The territorial jurisdiction for the declaration of insolvency (di Federica A. Vincent)

Articoli Correlati: insolvenza


1. Introduction - 2. The national legislation: identification of the territorial jurisdiction - 3. The European Legislation - 4. The bankruptcy law of the main European Member States - 5. The territorial jurisdiction ruled by the UNCITRAL Model Law on cross-border insolvency - NOTE

1. Introduction

Nowadays we live in a highly dynamic environment which is increasingly evolving. What is considered relevant today it is likely not to be anymore tomorrow. Since law in general, but mainly bankruptcy law, is extremely subject to the economic and financial changes of the society we live in, it is paramount that it quickly adapts to the new contexts in which it operates. The rise of the international commerce has triggered a domino effect that caused worldwide reactions in both the economic and political-legislative environments of developed and developing countries. The growth of the international trade represents for many bold entrepreneurs all around the world a very good chance for conquering new unexploited sectors. Indeed, during the last decades, the market saturation of the western economies led to the inevitable search for new opportunities in terms of products and services to be traded in countries where commerce still was in the early stages. Consequently, the exponential increase of multinational enterprises was the tangible evidence of the entrepreneurs’ will of creating wealth for themselves and their stakeholders. In this international context, many multinational companies locates their assets in foreign countries and they have commercial relations with the States within which territory such companies conduct their affairs. Nevertheless, the ability to trade with foreign countries may sometimes be very challenging. Indeed, many hindrances may prevent the international expansion of multinational enterprises. These barriers can be of economic nature, such as the scarcity of funds available to companies in order to trade their products abroad, or technological, social and political-legislatives barriers. The political-legislative barriers, in particular, should not be underestimated. Such barriers may be represented by the bureaucracy that companies have to face while entering new markets or by the differences among national regulatory frameworks. Hence, it stands to reason assuming that in such a context it is likely that companies face financial troubles and that eventually some of them go bankrupt. Indeed, this situation is no more just a likelihood but a real circumstance that many national and multinational enterprises are going through. The differences among legal frameworks is particularly evident as far as cross-border insolvency is concerned. In fact, each State has its own insolvency regime and procedures which may [continua ..]

2. The national legislation: identification of the territorial jurisdiction

The Royal Decree of 16th March 1942 no. 267, known as Legge Fallimentare, has been governing the Italian insolvency regime for seventy-six years, even before the birth of the Italian Republic. Since then, however, the Decree has undergone a process of several reforms only in recent times [1]; such reforms have been of a widespread range in the fields dealt by the Italian Insolvency Law, with a specific focus on the requirements for failure laid down by art. Art. 1. Since 2006, therefore, the Italian Legislator has partly aligned the national insolvency regime to the European standards on insolvency through the reforms of the bankruptcy law. With that regard, Art. 9 of the Italian Legge Fallimentare – governing the territorial jurisdiction of the court seized of opening insolvency proceedings – is a provision which was subject to huge changes in order to adapt its content to the European standards on the reformed concept of Centre of Main Interests. The Article establishes which is the court seized of the commencement of bankruptcy proceedings and, therefore, subparagraph 1 of the Article states that the bankruptcy is declared by the court of the place where the entrepreneur located the head office of its business. First aspect that should be noticed is that the competence of declaring the bankruptcy of the debtor lays down in the court. This feature is also highlighted by the following Arts. 23 and 24 of the Italian Legge Fallimentare which establish, respectively, that the court seized of the declaration of bankruptcy is competent of handling the whole bankruptcy proceeding and of knowing all the actions that derive from the declaration of bankruptcy. The reason why the competent court shall be the one situated in the jurisdiction where the debtor located the head office of its business is – evidently – given by the fact that the majority of the debtor’s creditors are situated there as well as all the company’s most relevant assets. [2] Second element to notice is that the court Article 9, subparagraph 1, refers to shall be meant as the ordinary court: such a court may include both the court as a sole judge and the court as a collective body (composed of three judges, where one of them is the president of the court). To better clarify the cases in which it is required the court meant as a collective body, Art. 50-bisof the Italian Code of Civil [continua ..]

3. The European Legislation

3.1. The Institutional background for the adoption of the Proposal for a Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures In November 2016 the European Commission drew up the proposal for a Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30/EU and addressed it to the European Parliament for the approval. [14] The need for the drawing up of the proposal was led by the objective of creating a harmonized insolvency regulatory framework within the territory of the European Union. With this regards, before the drawing up of aforementioned proposal, the European Union already moved toward the direction of breaking the main barriers to a harmonized insolvency regime at the European level; indeed, in June 2015 the European Parliament and the Council published the insolvency Regulation 2015/848 with the goal of establishing common rules for the handling of cross-border insolvency proceedings. However, a few time after the enter into force of the Regulation, the European Institutions perceived that the objective of simply building up bridges among national insolvency proceedings was no more enough; it was necessary, indeed, to be more focused on the practical implementation of a new and more interconnected insolvency regime at the European level in order to more efficiently face the issue of business restructuring and second chance to entrepreneurs. The Proposal for a Directive on preventing restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30/EU was meant to pursue aforementioned objectives and, in the meanwhile, to have direct consequences on the market of the Union by creating a higher degree of legal certainty in the field of cross-border insolvency and business restructuring. Indeed, the European Institutions perceived that a higher degree of legal certainty was paramount in order increase the interest of foreign investors to make investments in Europe and in the European businesses. Toward that object, therefore, the Directive’s aim, therefore, was to reduce the time frame for insolvency and to simplify restructuring procedures in order to foster cross-border [continua ..]

4. The bankruptcy law of the main European Member States

After the issuance of EU Regulation 2015/848, the Working Group of the Conference on European Restructuring and Insolvency Law – the so-called CERIL – conducted, between October 2017 and March 2018, a survey addressed to the European Member States in order to understand how each national Legislator adapted the provisions included in the Recast Insolvency Regulation into their national insolvency regimes. For the herein purposes, we will focus on the national legislation of France, Germany and Italy with the aim of highlighting the main national provisions applying the rules of the Insolvency Regulation. In particular, we will focus on the following main aspects treated by EU Insolvency Regulation 2015/848: Art. 4 on the examination as to jurisdiction; Art. 5 the judicial review of the decision to open main insolvency proceedings; Art. 36(5) on the approval of an undertaking in order to avoid secondary insolvency proceedings; Art. 42(3) on cooperation and communication between courts. In France, [74] on 2nd November 2017, the Government adopted the Ordinance no. 2017‐1519 in compliance with Article 38 of the Constitution and under the authority of Art. 110 of Law no. 2016‐1547 of 18 November 2016. The purpose of such an Ordinance was to adapt the national insolvency regime to the provisions of EU Regulation 2015/848; therefore, aforementioned Ordinance inserted a new Title IX which amended many parts of Book VI – on insolvency – of the national Commercial Code. With regard to Art. 4 of the Recast Regulation – on examination as to jurisdiction – the French Government amended the Commercial Code by inserting new Art. L. 690-1, which establishes that a French court may open main insolvency proceedings or secondary insolvency proceedings, depending on where the debtor’s Centre of Main Interests is located: French Commercial Courts are entitled to open main insolvency proceedings over debtors exercising a commercial or craft activity whose Centre of Main Interests is located in the French territory and who has an establishment in another Member State. The same reasoning applies to the commencement of secondary insolvency proceeding: French Commercial Courts, indeed, are entitled to open secondary insolvency proceedings within their jurisdiction over the same debtor if a main insolvency proceeding has already been opened in another Member State. As far as Art. 5 is concerned, [continua ..]

5. The territorial jurisdiction ruled by the UNCITRAL Model Law on cross-border insolvency

As previously analysed, previous EC Regulation 1346/2000 and the Recast Regulation are the European Acts that rule the Centre of Main Interest and that are aimed at building up bridges among the national insolvency regimes all around Europe. However, in the international scenario, the EC Regulation 1346/2000 and the EU Regulation 2015/848 are not the only legal instruments in order to handle the cross-border insolvency. Indeed, the UNCITRAL Model Law on cross-border insolvency [85] is an additional Act aimed at providing to its users all around the world with a supranational tool that fosters the cooperation among States and the application of the same provisions on cross-border insolvency. To briefly recap the main features of the UNCITRAL Model Law, first of all it shall be noticed that the EU Regulation and the UNCITRAL Model Law are very similar in terms of objectives pursued: they both are aimed at providing a legal framework for cooperation among jurisdictions in the field of insolvency while, in the meantime, they respect the differences among national insolvency regimes. Indeed, the UNCITRAL has designed the Model Law with the purpose of encouraging enacting [86] States to use it by making useful additions and improvements to their national insolvency regimes, without imposing that the Model Law prevails on their national regulatory frameworks. [87] A further feature to notice is that the EU Regulation and the UNCITRAL Model Law have different territorial scopes of application: the EU Regulation, indeed, is applied within the boundaries of the European Union while the Model Law has no limits in so far as it may be applied by any States all around the world. [88] In order to provide practical assistance to courts all around the globe, the UNCITRAL also issued both a Guide to Enactment and Interpretation [89] and the UNCITRAL Model Law on Cross-Border Insolvency: the Judicial Perspective, the latter one addressed mainly to national judges in order to assist them during the practical application of the Model Law’s provisions. The need for the issuance of such additional documentation arises by the fact that the Model Law establishes general principles and objectives that national enacting States have to achieve with regard to cross-border insolvency but it does not specify how such principles have to be applied to practical cases. With regards to the objectives pursued by the Model Law, [continua ..]