Boon, J.M.G.J.

Kokorin, I.

Pool, J.M.W.

Leiden University Scholary Publications

NE WS &  EvENTS10 | Spr ing 2019Restructuring of corporate groups was discussed at two consecutiveconferences of the European LawInstitute (ELI), report Gert-Jan Boon, Ilya Kokorin and Jessie Pool.On 5 December 2018, a joint conference of theELI and the Business & Liability ResearchNetwork of Leiden University took place inLeiden (the Netherlands). During thisconference, developments at both the nationaland European levels were discussed. Thesecond conference, on 11 December 2018,was organised on the occasion of theUNCITRAL Working Group V meeting in Vienna(see opposite page). This conference focussedon matters of substantive consolidation. In Leiden, prof. em. Bob Wessels (LeidenUniversity) introduced the ELI Business RescueProject. This project – led by himself and prof.Stephan Madaus (Halle-Wittenberg University,Germany) – resulted in 115 recommendationson a legal framework enabling furtherdevelopment of coherent and functional rulesfor business rescue in Europe*. StephanMadaus introduced the recommendations,contained in Chapter 9 of the ELI BusinessRescue Instrument on the issue of corporategroups. He highlighted that differentapproaches can be distinguished, from no orlimited coordination up to substantiveconsolidation. Insolvent members of corporategroups in Europe are traditionally treated on anentity-by-entity basis. Domestic rules oncorporate groups remain rare in the EU. Thiswas also illustrated by prof. Joeri Vananroye(KU Leuven, Belgium), who elaborated on thepossibilities for corporate group restructuringsunder Belgian law. Prof. Reinout Vriesendorp(Leiden University) highlighted that furtherresearch needs to consider the role of directorsof insolvent corporate group members in theEuropean context.A joint presentation was given by Jessie Pool,Ilya Kokorin and Gert-Jan Boon (researchers atLeiden University), who discussed the existinglegal mechanisms to facilitate efficient resolutionof group distress. First, they considered theEuropean Insolvency Regulation (EIR 2015) andconcluded that, due to the voluntary nature ofgroup coordination proceedings and an easyopt-out from them, such innovation may havelimited effect. Different alternatives wereconsidered, including the appointment of thesame insolvency practitioner, establishing anenterprise COMI and using synthetic or“reversed” synthetic proceedings. But currentlythese options are either unavailable or facesignificant (practical) difficulties. Insolvencyprotocols were suggested as the most flexibletool. However, to make their adoption moreprevalent, training for judges and insolvencypractitioners is needed.The conference in Vienna continued the debateand focused on the issue of substantiveconsolidation within corporate groups, addingperspectives from Europe, UNCITRAL and theUSA. As Stephan Madaus stated, from the ELIBusiness Rescue Instrument it followed thatonly some EU Member States allow insolvencyconsolidation in case of intermingled assets orfraud. Florian Bruder (DLA Piper, Germany)showed the limitations under the EIR 2015,including a blanket prohibition of substantiveconsolidation in a cross-border context. Hediscussed alternative (out-of-court) approachesinstead. In addition, prof. Irit Mevorach(Nottingham University, UK) argued thatUNCITRAL in its Legislative Guide, Part Three(treatment of enterprise groups) struck a goodbalance between the principles of companyand insolvency law by allowing for substantialconsolidation, but only in the case ofintermingled assets or fraud. According to prof.Edward Janger (Brooklyn Law School, USA),the US experience shows that substantiveconsolidation in practice is pursued mostly inthe context of consensual (restructuring) plans.The conferences revealed that approaches torestructuring of corporate groups are still verymuch in development. To date, there are noexperiences yet with the group coordinationproceedings under the EIR 2015. Theapplication of other tools, such as insolvencyprotocols, has also remained limited. From thediscussion it follows that in a cross-bordersetting, but also domestically, improvingcoordination by means of cooperation andcommunication may be the most feasibledirection to pursue at the moment. To this end,judges and practitioners may rely onrecommendations and best practices, forinstance the ELI Business Rescue Instrument,but also those from other standard-settingorganisations, which should support therestructuring of corporate groups.* Bob Wessels & Stephan Madaus, Rescue of Business inInsolvency Law – an Instrument of the European Law Institute(September 6, 2017).restructuring of CorporateGroups in EuropeDATE ForYoUr DIArY22 May 2019INSOL Europe & INSOL International Joint One-Day Seminar, Stockholm (Sweden)Following the successful2018 seminar in Helsinki,INSOL International isdelighted to announcetheir first seminar to takeplace in the beautiful cityof Stockholm, organised inassociation with INSOLEurope and with thesupport of restructuringprofessionals from acrossthe Nordic region.As the largest city andCapital of Sweden,Stockholm is comprised of 14 islands and morethan 50 bridges across the Baltic Sea archipelago.Enjoy the cobblestonestreets of the old Town,waterways and parks ofthe city area, or its widerange of shopping centres,museums and restaurants;Stockholm has somethingto offer whatever yourtastes.The programme includessessions on theimplementation of the EU Directive; restructuringin the region, focusing onthe ongoing ComponentaGroup restructuring inFinland and Sweden; theimpact of Brexit; and boarddirectors’ liabilities. The seminar will culminatewith cocktails and dinnerat Villa Källhagen, withstunning views of theDjurgårdsbrunn canal and the Nordic Museum.For more details visitwww.insol.org/events/detail/118

Restructuring of Corporate Groups in Europe

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Restructuring of Corporate Groups in Europe

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