Irene Lynch Fannon and Jennifer L. L. Gant provide an update on INSOL Europe’s involvement in the new EU-funded project

Gant, Jennifer L. L.

Lynch Fannon, Irene

A short article introducing the Judicial Cooperation Supporting Economic Recovery in Europe (JCOERE)Project funded by the DG Justice of the European Commission Project No 800807

Gant, J.

Lynch Fannon, I.

UDORA - University of Derby Online Research Archive

 1  An Introduction to the Judicial Co-Operation in Economic Recovery (JCOERE) Project  Irene Lynch Fannon and Jennifer L. L. Gant  Issue 76 Summer Eurofenix 28  Dramatic changes to insolvency law throughout the EU in the last couple of decades have refocused on rehabilitation and rescue instead of liquidation.1 Rescue frameworks have often introduced conflicts with traditional insolvency law principles such as equality of treatment of creditors, transparency and predictability.2 This has become even more complicated due to the requirement for judicial cooperation in cross-border insolvency cases.3  Judicial cooperation has been the subject of several projects since the passage of the European Insolvency Regulation (EIR) in 2000. After the EU recommendation on A New Approach to Business Failure4 in 2014, the introduction of the Recast EIR in 2015, and the pending introduction of a preventive restructuring Directive,5 the topic has again found the spotlight.   An exciting new project has recently been launched to explore Judicial Co-Operation supporting Economic Recovery in Europe (JCOERE)6 to identify obstacles to judicial co-operation presented by the implementation of the proposed preventive restructuring directive. This project is funded by the European Union’s Justice Programme (2014-2020) and is based at University College Cork, IRELAND, which is particularly appropriate given the Irish experience with restructuring provided under the Examinership process which is modelled on Chapter 11 US Bankruptcy Code.7  JCOERE will focus on the strengthened co-operation obligations imposed on the judiciary in the Recast Regulation but will confine its enquiry to preventive restructuring processes. In addition to exploring challenges that procedural rules might present to co-operation, this project will focus on specific substantive problems that will likely become more acute in the restructuring context, such as the commencement of secondary proceedings to protect a creditor’s interests in the face of the ‘cram-down’ provisions as envisaged by the Directive. The question of whether it is reasonable for a court in the second state to decline jurisdiction becomes more immediate in such circumstances. Radical restructuring processes may make co-operation more difficult which may, in turn, inhibit restructuring in the EU.  The obstacles envisaged are illustrated in SIAC Ltd.,8 in which an Irish company embarked on an Irish Examinership procedure where a particular creditor, the Polish Roads Authority (PRA), was not brought into the restructuring at all. This creditor was effectively treated as an  1 Christoph Paulus et al., “Insolvency Law as a Main Pillar of Market Economy - A Critical Assessment of the Greek Insolvency Law” (2015) 24 International Insolvency Review 1; Jan Adriaanse, “The Uneasy Case for Bankruptcy Legislation and Business Rescue”, in Michael Veder and Paul Omar (eds), Teaching and Research in International Insolvency Law: Challenges and Opportunities (INSOL Europe 2015). 2 H Eidenmuller, “A New Framework for Business Restructuring in Europe: The EU Commission’s Proposals for a Reform of the EIR and Beyond” (2013) ECGI Working Paper Series in Law, Working Paper no. 199/2013. 3 Articles 42, 46, 57 and Recital 48 of the European Insolvency Regulation (Recast) (EIR Recast). 4 Commission Recommendation Com (2014) 1500 final. 5 COM (2016) 723 final 2016/0359 (COD) 22.11.2016. 6 EU Commission Grant JUST-JCOO-AG-2017 800807. 7 Irene Lynch Fannon and Gerard Murphy, Corporate Insolvency and Rescue (Bloomsbury Professional 2012), Chapters 1, 12, 13 and 14. 8 Re SIAC Construction Limited and Ors and the Companies (Amendment) Act 1990 (as amended) [2014] IESC 25; Irene Lynch Fannon, “Examinership: Approval of Schemes—Re SIAC Construction Ltd and in the Matter of the Companies (Amendment) Act 1990 (as amended)” Commercial Law Practitioner, January 2015.  2  ‘out of the money creditor’ due to outstanding litigation occurring between the debtor company and the creditor in Poland. The creditor lodged an objection at the last minute in the Irish court and although the court heard this argument the creditor did not prevail. If the PRA had commenced insolvency proceedings in Poland, how would the obligations have played out under the Recast EIR?  With the introduction of more sweeping restructuring procedures throughout the EU under the proposed Directive, situations like SAIC are likely to become more common. The JCOERE project therefore addresses the implementation of cooperation obligations imposed on EU domestic courts by the Recast EIR in anticipation of the introduction of new preventive restructuring procedures.   The Project Team  The JCOERE Project will operate under the leadership of Professor Irene Lynch Fannon based at the School of Law, University College Cork, Ireland. The project will be run in partnership with INSOL Europe, The Universitá degli Studi Firenze, and the University of Titu Maoirescu in Bucharest. The project team includes judges, practitioners, and scholars specialised in cross-border insolvency law. Many team members also have previous involvement in previous projects focussed on judicial cooperation in cross-border insolvency.9   Specific Issues to be Addressed  The project will address specific issues identified from existing research. The first relates to the nature of the obstacles which may arise due to the complex rescue regime envisaged by the Directive. In a departure from previous projects, rather than identifying specific rules, the issues will be identified thematically, such as those that alter existing insolvency principles or give wide discretion to courts.  The project will also identify procedural rules that present obstacles to effective cooperation, such as constitutional requirements for public hearings for the administration of justice, which would interfere with the informal communication expectation present in the Recast EIR.10   A third issue relates to the fact that the Recast EIR positively asserts the importance of ‘best practices for co-operation in cross-border insolvency case’ as a solution to the difficulties of efficient judicial co-operation. The project will explore the level of general awareness amongst the European judiciary of best practice principles and guidelines.  Fourthly, the full and effective implementation of communication and cooperation provisions in cross-border insolvency law requires more than mere knowledge of the letter of the law. For example, it has been observed that other levels of experience and skills are necessary to really complement communication and co-operation in practice.  Planned Activities and Outcomes   9 For example, the Leiden JudgeCo Project (2013-2015) which developed best practice guidelines for co-operation between judges and between practitioners in cross border insolvencies. In addition see the CODIRE Project website at: <www.codire.eu>. 10 Anna Bandina, “Judicial Cross Border Cooperation on Insolvency Matters Today and Tomorrow: Roundtable Report” in Omar and Veder (eds) (n 1) 64.  3  A number of funded activities will take place during the project period of two years starting in September 2018. A literature review and consultation exercise will be undertaken that describes legal frameworks in key member states and in the proposed Directive identifying doctrinal and procedural rules relevant to judicial co-operation obligations described in the Recast EIR. Key member states include Ireland, Romania, Italy and the UK (for comparative purposes), with additional states such as Germany, the Netherlands, and Spain to be added where interesting issues are presented.   Judicial utilisation and awareness of best practice guidelines on cooperation adopted by European and international organisations described in the Recast EIR will be benchmarked. This will take place through the Judicial Wing of INSOL Europe, which will give a broad geographical scope, while consultation with the Turnaround Wing will add a key practical dimension to the project.   There will also be ongoing dissemination of knowledge and information on co-operation through enhanced judicial and practitioner networks improving judicial co-operation in relation to business recovery in the EU.  Expected results include the better exchange of information on business rescue frameworks and best practise guidelines and increased support and capacity for real co-operation for judiciary and national authorities.  These outcomes will be achieved a comparative analytical report on restructuring rules, a benchmarking report on current best practice guidelines, and a website with curated data.  It is intended that this project will result in an easily accessible ongoing resource providing guidance for judges who engage in cross-border insolvency cases.   Irene Lynch Fannon Jennifer L. L. Gant 

English

Judicial Cooperation in Economic Recovery (JCOERE)

Irish Universities

Judicial Co-Operation in Economic Recovery (JCOERE)

Cork Open Research Archive

UCC Library and UCC researchers have made this item openly available.Please let us know how this has helped you. Thanks!Title Judicial Co-Operation in Economic Recovery (JCOERE)Author(s) Lynch Fannon, Irene; Gant, Jennifer L. L.Publication date 2019-01Original citation Lynch Fannon, I. and Gant J. L .L. (2019) 'Judicial Co-Operation inEconomic Recovery (JCOERE)', Eurofenix, Winter 2018/19, pp. 28-29.Type of publication Article (peer-reviewed)Link to publisher'sversionhttps://www.ucc.ie/en/jcoere/publications/an-introduction-to-the-judicial-co-operation-in-economic-recovery-jcoere-project.htmlAccess to the full text of the published version may require asubscription.Rights © 2018 The Authors. Eurofenix published by INSOL Europe.Item downloadedfromhttp://hdl.handle.net/10468/10148Downloaded on 2021-11-27T13:59:24ZJUDIC IAL  Co-o PErAT IoNJudicial Co-operation ineconomic recovery (JCOERE)Irene Lynch Fannon and Jennifer L. L. Gant provide an update on INSOL Europe’s involvement in the new EU-funded project Dramatic changes to insolvency lawthroughout the EU in the last couple of decadeshave refocused onrehabilitation and rescueinstead of liquidation.1Rescue frameworks haveoften introduced conflicts withtraditional insolvency lawprinciples such as equality oftreatment of  creditors,transparency and predictability.2This has become even morecomplicated due to therequirement for judicialcooperation in cross-borderinsolvency cases.3Judicial co-operation has beenthe subject of  several projectssince the passage of  the EuropeanInsolvency Regulation (EIR) in2000. After the EUrecommendation on A NewApproach to Business Failure4 in2014, the introduction of  theRecast EIR in 2015, and thepending introduction of  apreventive restructuringDirective,5 the topic has againfound the spotlight. New projectAn exciting new project hasrecently been launched: Judicial Co-Operation supportingEconomic Recovery in Europe(JCOERE)6 in order to identifyobstacles to judicial co-operationin the context of  theimplementation of  the proposedpreventive restructuring directive.This project is funded by theEuropean Union’s JusticeProgramme (2014-2020)7 and isbased at University College Cork,IRELAND, which is particularlyappropriate given the Irishexperience with restructuringprovided under the Examinershipprocess which is modelled onChapter 11 US BankruptcyCode.8JCOERE will focus on thestrengthened co-operationobligations imposed on thejudiciary in the Recast Regulationbut will confine its enquiry topreventive restructuring processes.In addition to exploringchallenges that procedural rulesmight present to co-operation, thisproject will focus on specificsubstantive problems that willlikely become more acute in therestructuring context, such as thecommencement of  secondaryproceedings to protect a creditor’sinterests in the face of  the ‘cram-down’ provisions as envisaged bythe Directive. The question ofwhether it is reasonable for acourt in the second state to declinejurisdiction becomes moreimmediate in such circumstances.Radical restructuring processesmay make co-operation moredifficult which may, in turn,inhibit restructuring in the EU.The obstacles envisaged areillustrated in SIAC Ltd., in whichan Irish company embarked on anIrish Examinership procedurewhere a particular creditor, thePolish Roads Authority (PRA),was not brought into therestructuring at all. This creditorwas effectively treated as an ‘outof  the money creditor’ due tooutstanding litigation occurringbetween the debtor company and28 | Winter  2018/19IrENE LYNCH FANNoNSchool of Law, University College Cork, IrelandJENNIFEr L. L. gANTChair, YANILShare your views!the creditor in Poland. Thecreditor lodged an objection at thelast minute in the Irish court andalthough the court heard thisargument the creditor did notprevail. If  the PRA hadcommenced insolvencyproceedings in Poland, how wouldthe obligations have played outunder the Recast EIR?With the introduction ofmore sweeping restructuringprocedures throughout the EUunder the proposed Directive,situations like SIAC are likely tobecome more common. TheJCOERE project thereforeaddresses the implementation ofco-operation obligations imposedon EU domestic courts by theRecast EIR in anticipation of  theintroduction of  new preventiverestructuring procedures. The project teamThe JCOERE Project will operateunder the leadership of  ProfessorIrene Lynch Fannon based at theSchool of  Law, University CollegeCork, Ireland. The project will berun in partnership with INSOLEurope, The Universitá degliStudi Firenze, and the Universityof  Titu Maoirescu in Bucharest.The project team includes judges,practitioners, and scholarsspecialised in cross-borderinsolvency law. Many teammembers also have previousinvolvement in previous projectsfocussed on judicial co-operationin cross-border insolvency.10Specific issues to be addressedThe project will address specificissues identified from existingresearch. The first relates to thenature of  the obstacles which mayarise due to the complex rescueregime envisaged by the Directive.In a departure from previousprojects, rather than identifyingspecific rules, the issues will beidentified thematically, such asthose that alter existing insolvencyprinciples or give wide discretionto courts.The project will also identifyprocedural rules that presentobstacles to effective co-operation,such as constitutionalrequirements for public hearingsfor the administration of  justice,which would interfere with theinformal communicationexpectation present in the RecastEIR.11A third issue relates to the factthat the Recast EIR positivelyasserts the importance of  ‘bestpractices for co-operation in cross-border insolvency cases’ as asolution to the difficulties ofefficient judicial co-operation.The project will explore the levelof  general awareness amongst theEuropean judiciary of  the bestpractice principles and guidelines.Fourthly, the full and effectiveimplementation ofcommunication and co-operationprovisions in cross-borderinsolvency law requires more thana mere knowledge of  the letter ofthe law. For example, it has beenobserved that other levels ofexperience and skills are necessaryto really complementcommunication and co-operationin practice.Planned activities and outcomesA number of  funded activities willtake place during the projectperiod of  two years starting inSeptember 2018. A literaturereview and a consultation exercisewill be undertaken. They willdescribe the legal frameworks inkey Member States and in theproposed Directive, identifyingdoctrinal and procedural rulesrelevant to judicial co-operationobligations described in the RecastEIR. Key Member States includeIreland, Romania, Italy and theUK (for comparative purposes),with additional states such asGermany, the Netherlands, andSpain to be added whereinteresting issues are presented. Judicial utilisation andawareness of  best practiceguidelines on co-operationadopted by European andinternational organisationsdescribed in the Recast EIR willbe benchmarked. This will takeplace through the Judicial Wingof  INSOL Europe, which will giveit a broad geographical scope,while consultation with theTurnaround Wing will add a keypractical dimension to the project. There will also be ongoingdissemination of  knowledge andinformation on co-operationthrough enhanced judicial andpractitioner networks aiming toimprove judicial co-operation inrelation to business recovery in the EU.Expected results include thebetter exchange of  information onbusiness rescue frameworks andbest practise guidelines andincreased support and capacity forreal co-operation for judiciary andnational authorities.These outcomes will beachieved by a comparativeanalytical report on restructuringrules, a benchmarking report oncurrent best practice guidelines,and a website with curated data. Itis intended that this project willresult in an easily accessibleongoing resource providingguidance for judges who engage incross-border insolvency cases.  Footnotes:1 Christoph Paulus et al., “Insolvency Law as aMain Pillar of  Market Economy - A CriticalAssessment of  the Greek Insolvency Law”(2015) 24 International Insolvency Review 1; JanAdriaanse, “The Uneasy Case for BankruptcyLegislation and Business Rescue”, in MichaelVeder and Paul Omar (eds), Teaching andResearch in International Insolvency Law: Challengesand Opportunities (INSOL Europe 2015). ;Vanessa Finch: The Recasting of  InsolvencyLaw (2005) 68 Modern Law Review 713.2 H Eidenmuller, “A New Framework forBusiness Restructuring in Europe: The EUCommission’s Proposals for a Reform of  theEIR and Beyond” (2013) ECGI Working PaperSeries in Law, Working Paper no. 199/2013.3 Articles 42, 46, 57 and Recital 48 of  theEuropean Insolvency Regulation (Recast) (EIRRecast).4 Commission Recommendation Com (2014)1500 final.5 COM (2016) 723 final 2016/0359 (COD)22.11.2016.6 EU Commission Grant JUST-JCOO-AG-2017800807.7 JCOERE Project 800807 DG JUST-JCOO-AG-20178 Irene Lynch Fannon and Gerard Murphy,Corporate Insolvency and Rescue (BloomsburyProfessional 2012), Chapters 1, 12, 13 and 14.9 Re SIAC Construction Limited and Ors andthe Companies (Amendment) Act 1990 (asamended) [2014] IESC 25; Irene LynchFannon, “Examinership: Approval of  Schemes—ReSIAC Construction Ltd and in the Matter of  theCompanies (Amendment) Act 1990 (as amended)”Commercial Law Practitioner, January 2015.10 For example, the Leiden JudgeCo Project(2013-2015) which developed best practiceguidelines for co-operation between judges andbetween practitioners in cross-borderinsolvencies. In addition, see the CODIREProject website at: <www.codire.eu>.11 Anna Bandina, “Judicial Cross-Border Co-operation on Insolvency Matters Todayand Tomorrow: Roundtable Report” in Omarand Veder (eds) (n 1) 64.JUDIC IAL  Co-oPE rAT IoNWinter  2018/19 | 29THE PROJECTWILL BE RUN INPARTNERSHIPWITH INSOLEUROPE, THEUNIVERSITÁDEGLI STUDIFIRENZE, ANDTHE UNIVERSITYOF TITUMAOIRESCU INBUCHAREST“”

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Judicial Co-Operation in Economic Recovery (JCOERE)

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