the european insolvency regulation and the uncitral model

The European Insolvency Regulation and theUNCITRAL Model Law on Cross-Border

InsolvencyReinhard Bork* ,†

University of Hamburg, Hamburg, Germany

AbstractThis article compares the Recast European Insolvency Regulation of 2015 with theUNCITRALModel Law on Cross-Border Insolvency of 1997, focussed on their scopeof application, international jurisdiction and the coordination of main and secondaryproceedings. The scopes of both catalogues of norms and their rules on coordinationof main and secondary insolvency proceedings reflect one another. However, theRecast EIR makes a significantly greater contribution to the unification of law and isalso more fully differentiated and more precise, even if this comes at a price, namely,limited flexibility. The UNCITRAL Model Law made an important contribution tothe harmonisation of international insolvency law but requires now modernisation.Copyright © 2017 INSOL International and John Wiley & Sons, Ltd.

I. IntroductionOn25 June 2015, the recast European InsolvencyRegulation (‘Recast EIR’) came intoforce, in accordance with its own Article 92. According to Article 84, it applies to insol-vency proceedings that are opened after 25 June 2017.1 The adoption of this indisput-ably most modern of regulations within the realm of international insolvency lawcreates thewelcome opportunity to compare it with another body of laws that possessesinternational popularity, namely, the UNCITRAL Model Law on Cross-BorderInsolvency (‘Model Law’).2 This comparison should be pursued in five steps. First ofall, the two laws will be given an overview (Section II). Then, three specific aspectsof the laws will be scrutinised, namely, their scope of application (Section III), interna-tional jurisdiction (Section IV) and the coordination of main and secondary insolvencyproceedings (Section V), before making some concluding remarks (Section VI).

*E-mail: [email protected]†Professor of Civil Procedure and General Procedural Law

Int. Insolv. Rev. (2017)Published online in Wiley Online Library

(wileyonlinelibrary.com). DOI: 10.1002/iir.1282

II. General ComparisonStarting off by characterising the laws according to their significant features, thefollowing can be said.

A. Regulatory approaches

With regard to their regulatory approaches, the laws are markedly different to oneanother in many respects.

The Recast EIR is binding legislation for the member states of the EuropeanUnion. It currently applies to 27 member states, that is, all current member statesof the European Union, with the notable exception of Denmark.3 The Recast EIRtherefore has a unifying impact within its scope on the law applicable tocross-border insolvencies: the same norms apply in all EU member states, whereasmember states use their respective national international insolvency laws withregard to non-EU member states.

For example, this means that in Germany, recognition of Austrian insolvencyproceedings follows the rules of the Recast EIR (specifically Article 19 of theRecast EIR), whereas the recognition of US insolvency proceedings is governedby §§335 et seq. of the German Insolvenzordnung (specifically §343 of the GermanInsolvenzordnung). The UK has four simultaneous legal regimes for cross-borderinsolvency cases: with regard to other EU member states, the Recast EIR applies;with regard to Commonwealth states, section 426 of the Insolvency Act 1986 (‘IA1986’) applies; with regard to all other states, the provisions of the Cross-BorderInsolvency Regulation 2006 apply, which constitutes the incorporation of theModel Law into English insolvency law. Added to this are, above all, the dutiesof cooperation grounded in English common law.4

In contrast, the Model Law – as the name suggests – is only a template providedby the United Nations Commission on International Trade Law. It is recommendedthat states incorporate the Model Law into their own national insolvency laws, butwhether they actually do so is left completely optional. At present, 41 states havedone as suggested and incorporated the Model Law into their national laws,including the European states Poland, Romania, Serbia, Slovenia and the UK,as well as important non-European states such as Australia, Japan, Canada, NewZealand and, most crucially, the USA.5

The fact that the Model Law is only a nonbinding recommendation leads tosome states fundamentally incorporating the Model Law into their national lawsbut diverging from it on certain details, which is in accordance with the flexibleapproach taken by the Model Law.6 This is the case with the USA, for example.The USA incorporated the Model Law into their national law via Chapter 15 oftheir Bankruptcy Code, although they moved away from the template providedby the UNCITRAL on specific details.7 Before the introduction of Chapter 15Bankruptcy Code, the only source on international insolvency law to be found inUS law was §304 Bankruptcy Code, which above all demanded that the courtsobey the principle of ‘comit’ by way of a very broad and general formulation.8

International Insolvency Review

Int. Insolv. Rev. (2017)DOI: 10.1002/iir

With reference to this background, the incorporation of the Model Law intonational law was seen as a contribution to the harmonisation of internationalinsolvency law9 and was welcomed by the US courts10 as well as the academicliterature11 as a significant improvement and as an important step towards greaterlegal consistency. On the other hand, the USA only adopted the Model Law on thebasis of these modifications and built in some exceptions for itself, which endangersthe harmonisation of laws even among those states that have incorporated theModel Law into their national laws.

Examples of this include the difference between Article 4 of the Model Law(which recommends that national jurisdiction for the recognition of foreigninsolvency proceedings should be written into statute) and §1504 of the BankruptcyCode (which does not follow this suggestion; the jurisdiction rule is instead locatedin general civil procedure law, namely, 28 USC §1410)12 and between Article 5 ofthe Model Law (which recommends the automatic authorisation of nationalinsolvency practitioners to carry out duties abroad) and §1505 of the BankruptcyCode (which discusses authorisation through the national court but does notsuggest that it should occur automatically). US courts are probably well aware ofthe need to interpret and use Chapter 15 in light of the Model Law13 – some evenin light of the Recast EIR14 – in order to achieve a consistent and harmonisedapplication of international insolvency law, which is supported by §1508 of theBankruptcy Code, the counterpart of Article 8 of the Model Law.15 However, thereare also prominent examples of where these efforts to support harmonisation fail.16

On the whole, it can be stated that the Recast EIR has harmonised internationalinsolvency law with regard to the EU member states. The Model Law hascontributed significantly to harmonisation in this area of law, but its efforts haveonly been partially successful due to hesitance on a national level.17

B. Regulatory content

In comparing the regulatory content of both laws, not only commonalities in thefundamentals but also significant divergences in the details can be seen.

Regarding which principles of international insolvency law these laws havefounded themselves upon, both laws have the same basic convictions. This canbe illustrated by way of a few examples.18 The Recast EIR and the Model Lawboth follow a universal – though perhaps a modified universal – foundation, thisbeing that they are convinced that there should only be a single set of insolvencyproceedings for an insolvent debtor that has worldwide effect, and territorialistictendencies are to be rejected.19 Both operate on the basis of the principle of mutualtrust in the proportionality and sensibleness of foreign insolvency laws andproceedings, which somewhat suggests that the recognition of foreign insolvencyproceedings is not dependent on the guarantee of mutuality.20 Both acknowledgethe principle of cooperation and communication, the Recast EIR doing so, forexample, in Article 41 et seq. regarding the relationship between main and secondaryproceedings and in Article 56 et seq. regarding group insolvency proceedings, while

EU and UNCITRAL Cross-Border Insolvency


the Model Law already acknowledges it in its preamble, in which the encouragementof cooperation between the procedural entities of both affected states is listed as asignificant goal. Furthermore, Article 25 et seq. of the Model Law is centred oncooperation between courts and insolvency practitioners.

Recital 3 of the Recast EIR and the preamble to the Model Law are also inagreement in that they both base themselves on the procedural principle ofefficiency. Both also go to great lengths to abide by the principle of transparency,which is achieved in Article 24 et seq. of the Recast EIR through the establishmentof an insolvency register and which is recommended by the Model Law in Article14 through the dissemination of information to foreign creditors.Moreover, both lawsconcern themselves with legal certainty, with this being referred to in Recitals 28, 30and 67 of the Recast EIR and once again in the preamble to theModel Law. This alsoacknowledges the principle of procedural justice, which is read into the Recast EIR asan inherent part of EU law and is also revisited in Recital 83 of the Recast EIR.21

Both laws recognise the substantive principles of international insolvency law.Hence, the Recast EIR (according to Recital 63) is founded upon the principleof equal treatment of creditors, which is also the case with the Model Law, andis explicitly emphasised in its Guide to Enactment and Interpretation.22 Both lawspursue the principle of optimal realisation of the debtor’s assets in the interest ofthe best possible satisfaction of creditors, the Model Law again in its preambleand the Recast EIR in Recital 48. The principle of (proportionate) debtorprotection is acknowledged in the preamble and Article 22 of the Model Law,while it is recognised in the Recast EIR at Article 78 et seq. with regard to dataprotection, to give just one example. However, both laws prioritise the principleof protection of trust, with the Recast EIR referring to it in Recital 67 as well asArticle 8 et seq., which outlines exceptions to the lex fori concursus rule, and withthe Model Law referring to it in its preamble and in Article 22. Article 22 of theModel Law also offers the foundations for social protection (for example ofemployees). This issue is also addressed in the Recast EIR, specifically in Article 13.

Although there are broad areas of consensus regarding the basic principles ofinternational insolvency law, there are also sizeable areas of divergence pertainingto the details. Initial discussion will be restricted to going through the regulatorymaterials chapter by chapter.

The Recast EIR is split into seven chapters. The last chapter concerns adminis-trative and transitional issues, which can be disregarded for our current purposes.The foundations of the regulation are addressed in the first chapter, including,above all else, two very important aspects of international insolvency law: interna-tional jurisdiction in Article 3 et seq. and the applicable law in Article 7 et seq. Thesecond chapter (Article 19 et seq.) covers the recognition of foreign insolvencyproceedings and their effects, including the establishment of insolvency registersand their contents. The third chapter (starting at Article 34) provides extensiveelucidation on the topic of secondary insolvency proceedings, while Chapter 4(Article 53 et seq.) governs the rights of creditors, particularly regarding the processof lodging their claims. The new Chapter 5 (Article 56 et seq.) contains elaborate



rules on group insolvency. Finally, Chapter 6 (Article 78 et seq.) addresses dataprotection during insolvency proceedings. The Recast EIR thus attempts toaddress the legal problems that arise when insolvency cases have cross-borderelements in a comprehensive manner and tries to provide appropriate solutions.Whether this has succeeded in every respect can be questioned. In any case, it isa modern regulation that is sensitive to present-day issues and that provides athorough guide to international insolvency law.

This can hardly be said of the Model Law. Among the regulatory suggestionsmade by the UNCITRAL, there is nothing to be found on international jurisdic-tion, applicable law, group insolvency23 or data protection. Thus, three out ofsix of the chapters of the Recast EIR have no counterpart in the Model Law, whichis partly down to the fact that the Model Law was constructed in 1997, whenthemes such as group insolvency and data protection had not yet reached fullrelevance. However, it is largely due to the fact that wholesale rejection of thetemplate was anticipated if international jurisdiction and the applicable law wereincluded, so the Model Law restricted itself to what were perceived to be areasof consensus.24 Alongside Chapter 1, which contains the general principles (Article1 et seq.), there are provisions in Chapter 2 (Article 9 et seq.) about the rights offoreign representatives and creditors who are involved in domestic insolvencyproceedings, followed by Chapter 3 (Article 15 et seq.), which covers the recognitionof foreign insolvency proceedings. In Chapter 4 (Article 25 et seq.), there are normson cooperation, and Chapter 5 (Article 28 et seq.) is about competing proceedings.This goes in some respects further than comparable provisions in the Recast EIR,for example, by discussing the duty to cooperate and coordinate parallelprocedures in a general fashion and not with particular application to secondaryinsolvency proceedings or group insolvency proceedings only, as is the case withArticle 41 et seq. and Article 56 et seq. of the Recast EIR. However, on the whole,the regulatory scope of the Model Law is markedly narrower than that of theRecast EIR.

Hence, it can be said in general that the Recast EIR offers a significantly moremodern and more developed law than the Model Law, and this also applies tothose national laws that have incorporated the Model Law. This allows us to saywith a view to Brexit – pending sensible negotiation results – that English interna-tional insolvency law would be put back at least 20 years by leaving the EuropeanUnion. The English courts will thus have their hands full in terms of using theirjudicial powers to plug legislative gaps arising from Brexit.

C. Regulatory history

The developmental history of these two laws also sheds light on the disparitiesbetween the Recast EIR and the Model Law.

Work on the Model Law commenced in 1992.25 At the time, a UNCITRALconference on the theme of ‘Uniform Commercial Law in the Twenty-FirstCentury’ prompted work on the harmonisation of international insolvency law.



The UNCITRAL picked up this mantle and organised two colloquia on thetheme, which took place in 1994 and 1995, together with the internationalassociation of insolvency practitioners, INSOL International. This led to theappointment of a working group of the UNCITRAL in 1995, which published areport in 1997 containing regulatory suggestions. This was discussed by the bodiesof the UNCITRAL as well as publicly, with the result being that the UN GeneralAssembly endorsed the Model Law on 15 December 1997. Notably, the text hasnever been revised or amended, even though there is general agreement in thecommunity that the Model Law urgently needs to be revised.

At first glance, it appears as though the Recast EIR, which in its earlier versionwas first passed into law in 2000 (‘EIR’), imposed its influence considerably laterthan the Model Law.26 However, this assessment fails to consider that theEuropean Community had been working on the unification of international civilprocedure law since 1959, first including insolvency law, which was later allocatedits own working group in 1963. This working group put forward a draft for aninsolvency convention in 1970, which was revised several times but was ultimatelyunable to achieve a majority vote. It was not until 1989 that a further workinggroup was appointed on this topic, which submitted its suggestions in 1992. Thesecond attempt bore fruit through the signing of the European Convention onInsolvency Proceedings (‘EIC’).

The EIC never came into force due to clear resistance from the UK, but itconstituted the foundations of the draft version of the EIR, which was presentedon 27 May 1999. The norms of the draft EIR largely represented those of theConvention on Insolvency Proceedings – in fact, they were so similar that thereport of Miguel Virgós and Etienne Schmit on the EIC27 is the most significantsource of information on interpreting the EIR to this day. The EIR was adoptedon 29 May 2000 and came into force on 31 May 2002. The current edition is basedon revisions made in 2012 and, as explained in the introduction, came into force on25 June 2015, applying to proceedings which are opened after 26 June 2017.28

It can thus be said that both laws are children of the same era, namely, the1990s, when the codification of international insolvency law was an important goalworldwide. The EIC was known to those who drafted the Model Law and with theEIC, a wide-ranging and highly modern (in comparison with what was available atthe time) template for a catalogue of norms that became available. It is thereforecorrect to comment on the Model Law by saying that it owes a debt to the resultsof other international unification efforts,29 particularly the work on the EIRbecause the EIR had already been formulated and extensively justified (in theshape of the Convention on Insolvency Proceedings) by the time work wasunderway on the Model Law. However, it is also noteworthy that the UNCITRALModel Law was still many steps behind the EIR with regard to its regulatorycontent, largely due to concerns about ensuring it would be accepted.30



D. Interim result

In conclusion, the following can be said: Although both catalogues of normsoriginate from the same time period, there are considerable differences in theircontent and impact. The Recast EIR governs international insolvency law in abinding fashion, doing so comprehensively, while the UNCITRAL Model Lawprovides mere suggestions, and not everything is covered. The reason for the latteris, above all, the concerns of the UNCITRAL that too rigid an approach to thenorms that it puts forward could deter some states from accepting the ModelLaw. The Recast EIR is also completely up-to-date, while the Model Law hasnot been modernised since its creation in 1997.

III. Scope of ApplicationOn this note, our considerations can now turn to the three more concreteregulatory objectives that are outlined in the introduction, the first being the scopeof application.31 In doing so, distinctions should be made among geographical,substantive and personal areas of application.

A. Geographical scope

The geographical scope of the Model Law is easy to define: The norms apply tothose states that have incorporated the Model Law into their national laws, andthey apply in relation to all other states, although Article 3 of the Model Lawfashions an exception to this rule for prioritised international law duties of theincorporating states.

For the Recast EIR, the general statement that ‘it applies only to Member Statesof the EU with regard to other Member States of the EU’ is partially correct atbest.32 Many articles of the Recast EIR explicitly require the involvement ofanother member state, such as Article 8, which concerns goods that are burdenedwith a right in rem and are based in a member state other than that in whichinsolvency proceedings were opened, or the entirety of Chapter 3 on secondaryinsolvency proceedings, which presupposes (according to Article 34) that both themain and secondary insolvency proceedings were opened in EU member states.33

On international jurisdiction for annexation proceedings, which is nowregulated in Article 6 of the Recast EIR, the Court of Justice of the EuropeanUnion (CJEU) determined in the not uncontroversial decision Schmid v Hertel thatit would suffice if the insolvency proceedings out of which the annex proceedingshad resulted were opened in a member state, whereas the debtor can be basedin a nonmember state (in this case, the nonmember state was Switzerland).34

The extent to which this approach is appropriate for general use must be decidedon an article-by-article basis. Where these articles make vague statements about arequired connection to another member state, or make no statement whatsoever,the use of the provisions with regard to nonmember states remains conceivable,



which of course poses the question as to whether these nonmember states willrecognise EU law.35

B. Substantive scope

The substantive area of application is a considerably more complicated issue. Theprinciple of legal certainty requires that all participants can clearly identify whichproceedings use which international insolvency law,36 but the legislature havemade life more difficult for themselves – in contrast with Germany37 – by notcompletely doing away with a definition for this substantive area of applicationand instead speaking in broad terms about ‘insolvency proceedings’.

The Model Law first expresses its position on this issue in Article 1, whichrestricts its area of application to supporting foreign procedural bodies domesti-cally and supporting national procedural bodies abroad, cooperation in bringingtogether proceedings with the same debtor at home and abroad, and ensuring thatthe procedural rights of foreign individuals, particularly foreign creditors, aresafeguarded during national proceedings. However, this comes closer to outliningthe regulatory objectives, rather than defining the substantive area of application.The preemptive question as to which proceedings are actually being addressedhere is first answered in Article 2(a) of the Model Law: It covers all kinds of collec-tive judicial or administrative proceedings,38 including interim proceedingspursuant to a law relating to insolvency in which the assets and affairs of the debtorare subject to control or supervision by a foreign court, for the purpose ofrestructuring or liquidation.39 This clarifies what the Model Law understands asconstituting insolvency proceedings40 and also states that not only liquidationproceedings but also reorganisation proceedings are included in this category.The Guide to Enactment and Interpretation also makes it clear that miscellaneouscollective debt settlement proceedings, including preinsolvency proceedings,should also belong to this category.41

The courts are evidently putting this definition to good use. In the USA, forexample, Article 2(a) of the Model Law is replicated by §101(23) of the BankruptcyCode, and it is important to the courts above all else that the proceedings consti-tute collective proceedings.42 The usual requirements are still dealt with appropri-ately.43 In the Irish Bank case, for example, the recognition of Irish proceedingsconcerning a corporation (Irish Bank Resolution Corporation) was requested. Thiscompany was established by statute in order to take over the business of a collapsedIrish bank and to ensure equal satisfaction of its creditors. The management ofIrish Bank Resolution Corporation had the authority to act as insolvencypractitioners according to their laws of establishment and was monitored by theIrish Ministry of Finance, which was itself supervised by the High Court ofIreland. The US courts recognised these proceedings as foreign insolvencyproceedings because they constituted collective proceedings that were carried outon an insolvency law basis under the supervision of a court and for the purposesof liquidation.44



The Recast EIR expends a big amount of effort on defining its substantive scopeof application.45 According to Article 1(1) of the Recast EIR, the regulation issubstantively applicable to

‘public collective proceedings, including interim proceedings, which are based on lawsrelating to insolvency and in which, for the purpose of rescue, adjustment of debt,reorganisation or liquidation: (a) a debtor is totally or partially divested of its assetsand an insolvency practitioner is appointed; (b) the assets and affairs of a debtor aresubject to control or supervision by a court; or (c) a temporary stay of individualenforcement proceedings is granted by a court or by operation of law, in order to allowfor negotiations between the debtor and its creditors, provided that the proceedings inwhich the stay is granted provide for suitable measures to protect the general body ofcreditors, and, where no agreement is reached, are preliminary to one of the proceedingsreferred to in point (a) or (b).’

It is also made clear that preinsolvency restructuring proceedings are included.Moreover, the term ‘collective proceedings’ is defined in Article 2 No 1 of theRecast EIR: What is meant by this is

‘proceedings which include all or a significant part of a debtor’s creditors, provided that,in the latter case, the proceedings do not affect the claims of creditors which are notinvolved in them.’

However, the European legislation gives up on the idea of being able to includeall relevant proceedings and determines in Article 1 Sentence 3 of the Recast EIR:‘The proceedings referred to in this paragraph are listed in Annex A.’ From this,and from the definition of the term ‘insolvency proceedings’ in Article 2(4) of theRecast EIR (‘the proceedings listed in Annex A’), as well as case law of the CJEU,46

it can generally be concluded that the Recast EIR is not applicable to proceduresthat are not listed in Annex A; vice versa, those that are listed in Annex A comewithin the substantive area of application of the Recast EIR, even when they donot meet the requirements of the cited provisions.

In comparison, it can be said that the substantive scopes of both laws are notconsiderably different from each another. The Model Law is somewhat vaguerand thus more flexible, while the Recast EIR is much more precise, although itis lacking in this flexibility (because of its strict adherence to the ‘Annex A’ listingapproach). However, both include not only the classic liquidation proceedingsbut also restructuring proceedings, independent of whether the restructuring isto be embarked upon before or after the onset of insolvency and regardless ofwhether the basis of the proceedings is classic insolvency law statute or their ownindividual restructuring rules.

C. Personal scope

With regard to the personal scope of the laws, there are barely any differencesbetween them.

The Recast EIR talks very generally about debtors. The term is not givenfurther definition, although Recital 9 makes it clear that the regulation is of equal



application to natural and legal persons, as well as to businesses and consumers.According to Article 1(2) of the Recast EIR, insurance companies, creditinstitutions, security firms and ‘collective investment undertakings’ (as defined byArticle 2 (2)) are excluded because special EU Directives exist for these debtors.

The same fundamentally applies to the Model Law. According to its preamble,which is reflected mainly in Article 22, the Model Law applies to ‘interestedpersons, including the debtor’, from which it follows that debtors can be naturalas well as legal persons, independent of whether they are acting as a consumeror as a business.47 The Guide to Enactment and Interpretation confirms that statesthat restrict the scope of their insolvency laws to businesses or to those acting in abusiness capacity can also apply such restrictions to their international insolvencylaw.48 Moreover, Article 1(2) of the Model Law enables the creation of specificexceptions, particularly for banks and insurers, which are often subject to independentinsolvency-related rules.

D. Interim result

It can thus be concluded that the area of application for both laws barely differfrom each other, aside from the differences in geographical application thatnecessarily arise due to their diverse regulatory natures.

IV. International JurisdictionPerhaps one of the most important disparities between both laws concerns theregulation of international jurisdiction. While the Recast EIR places a great dealof weight on this issue, and international jurisdiction is regulated extensively withregard to the opening of insolvency proceedings (Article 3 of the Recast EIR) aswell as with regard to the civil proceedings resulting from insolvency proceedings(Article 6 of the Recast EIR), the UNCITRAL Model Law remains completelysilent on the matter. Nevertheless, there are still interesting parallels and developmentsthat can be discussed on this issue.49

A. The Centre of Main Interests in the recast EIR

In its first version, which came into force in 2000, the EIR was already linkinginternational jurisdiction for the opening of insolvency proceedings to the focalpoint of the debtor’s core activity in Article 3(1), using the English term ‘centreof main interests’, or ‘COMI’ for short. The COMI concept was not a recentdiscovery of the European Commission. This phrase was already used withidentical wording in Article 4(1) of the Istanbul Convention of the EuropeanCouncil of 1990 and, jumping off from this, in Article 3(1) of the EIC. However,it first began to make its mark with its implementation in the EIR.

The question of how exactly the COMI of a debtor was to be determinedremained controversial for a long time, and to this day, it is claimed that theprocess of ascertaining the COMI lacks precision and that the contribution it



makes to legal certainty is insufficient.50 The English courts insisted early on thatthe COMI would essentially be the ‘mind of management’ of the debtor; that is,it would depend on where the management made its principal managerialdecisions.51 However, the CJEU rejected this view in the prominent cases ofEurofood,52 Interedil53 and Rastelli Davide,54 which all happened to be cases on groupsof companies, where the question at hand was whether the COMI of a subsidiarywas that of the parent or sister company.55 Using a formulation plucked fromRecital 13 of the original EIR, the CJEU stated in these cases that the COMIshould be regarded as the state in which the debtor usually pursues the manage-ment of its interests, as long as this is ascertainable by third parties on the basisof objective evidence. Evidence such as the actual administrative seat, the pursuingof marketing activities or the location of administrative buildings is therefore to betaken into account.56 With the new formulation of Article 3 of the Recast EIR in2015, the COMI criteria have been incorporated into the regulatory text itself,with the current requirements being found in Article 3(1)(2) of the Recast EIR:

‘The centre of main interests shall be the place where the debtor conducts the adminis-tration of its interests on a regular basis and which is ascertainable by third parties.’

A quick look at the overall structure of Article 3 of the Recast EIR willconclude this overview of the regulation of international insolvency in the RecastEIR. With regard to organisations, that is, corporations or legal persons, the firstport of call is for the COMI to be the state in which the registered office islocated. The Recast EIR establishes a presumption in Article 3(1)(3) that theCOMI is in this state, although this presumption can be rebutted. Relocationsof the COMI in the 3 months prior to filing for insolvency are, however,disregarded (according to Article 3(1)(4) of the Recast EIR), in order to avoidforum shopping.57 This also applies to independent business owners, only insteadof the COMI being identified in accordance with the state in which the registeredoffice is located, it is identified as the state in which the head office is located(Article 3(1)(5)–(6) of the Recast EIR). For natural persons, the presumptionapplies to their state of residence, and relocations during the 6 months prior toinsolvency are not considered (Article 3(1)(7)–(8)).

B. The COMI in the model law

Although the Model Law does not regulate international jurisdiction, it neverthe-less makes use of the term ‘COMI’. Chiefly, different legal consequences arisefrom many of its different norms, depending on whether the case at handconcerns foreign main or foreign secondary insolvency proceedings.58 For exam-ple, according to Article 21(3) of the Model Law, legal protection of foreignsecondary insolvency proceedings is only provided if assets located in the homestate are pertinent to these foreign secondary insolvency proceedings. Main andsecondary insolvency proceedings are thus defined in Article 2 through use ofthe COMI concept: Foreign main insolvency proceedings have been opened if



the debtor has its COMI in the state in which these proceedings were opened;otherwise, these proceedings constitute foreign ‘nonmain proceedings’ (Article2(b)-(c) of the Model Law) or, borrowing the terminology of the Recast EIR,secondary insolvency proceedings.

On the question of what a COMI is, the explanation in Article 2 of the ModelLaw not only refers expressly to Article 3 of the EIR but also refers to the Virgós-Schmit Report on the European Convention on Insolvency Proceedings.59 Thefollowing quote is relevant:

‘Because the formulation ‘Centre of Main Interests’ in the Recast EIR corresponds withthat of the Model Law, albeit for different purposes, legal sources on the interpretationof the Recast EIR can also be relevant to the interpretation of the Model Law.’60

Via this approach, the Model Law contributes considerably to the worldwideharmonisation of international insolvency law because it adopts not only a termbut also an idea, namely, the universalist idea that there should only be one singleset of insolvency proceedings with worldwide effect, which are opened by the statein which the debtor has its COMI, and that parallel foreign insolvency proceedingscan only be secondary proceedings, with their impact limited to the state in whichthey were opened.

Thankfully, the courts of those states which have incorporated the Model Lawinto their own national laws orientate themselves towards the Recast EIR andrelated case law of the CJEU when interpreting and using the term ‘COMI’.61

In the USA, for example, the United States Court of Appeals had to decide in2013 whether a debtor corporation that belonged to the empire of BernardMadoff had its COMI in the British Virgin Islands or in the USA.62 The court firstreferred to Recital 13 Recast EIR but then stressed that it can only latch onto theRecast EIR to a certain extent, nevertheless proceeding to cite the Eurofood decisionof the CJEU,63 and concludes from this basis that objective criteria that are ascer-tainable by third parties are decisive on this issue.64

The English High Court took a comparable approach in the Stanford InternationalBank case.65 In this case, the insolvency practitioners chosen by a court in the USAsought recognition and support from the English courts through aid in using theCross Border Insolvency Regulation 2006, which mirrors the Model Law. TheHigh Court analysed the COMI of the debtor corporation and was of the opinionthat the term was not to be interpreted in this regulation differently than the inter-pretation in Article 3 Recast EIR.

C. The COMI in other regulations

Interestingly, the COMI principle is also dominant in states that have not incorpo-rated the Model Law into their national laws. For example, the High Court inSingapore had to make a determination recently on the recognition of insolvencyproceedings opened in Japan, concerning a corporation that was established in theBritish Virgin Islands but was active in Japan.66 The courts recognised the



proceedings as main insolvency proceedings, reasoning that the corporation had itsCOMI not in the British Virgin Islands, but in Japan. It is noteworthy that theModel Law was not applicable to this case, so in the event of a lack of other stat-utory guidance, the judges themselves had to determine whether the foreign pro-ceedings could be recognised. On this point, the High Court emphasised theuniversalist tendencies in international insolvency law, thereby defending theimplementation of the COMI concept and coming to the conclusion, in agreementwith the Recast EIR and the Eurofood decision that – starting from the presumptionthat the COMI is located at the registered office – the COMI of the corporationwas in Japan. English courts also lean on the COMI concept in cases in whichrecognition is to be determined according to common law,67 even if the final worddoes not appear to have yet been spoken on this approach.68

D. Interim result

On the whole, it can be said that European insolvency law has paved the way withits regulation of international jurisdiction, and many states have voluntarilyfollowed its lead, even where international jurisdiction is not the subject of discus-sion but rather the recognition and supporting of foreign insolvency proceedings.Given the widespread international acceptance of using the COMI concept andwidespread consensus on its interpretation, it is high time that international juris-diction was also regulated in the UNCITRAL Model Law.

V. Coordination of Main and Secondary Insolvency ProceedingsFinally, those rules that concern the coordination69 of main and secondary insol-vency proceedings require scrutiny. The coordination of multiple insolvencyproceedings is a main aim of the Model Law, and it also plays a big role in theRecast EIR.70 By sorting through the relevant rules thematically, the followingpicture emerges.

A. Permissibility and effect of secondary insolvency proceedings

Both laws allow secondary insolvency proceedings to run parallel to main insol-vency proceedings,71 understanding by this a second set of insolvency proceedingsfor a debtor that has no COMI in the state in which these proceedings are opened,with the effect of these proceedings being restricted to the state in which they areopened.72 However, the Recast EIR requires in Articles 3(2) and 34 that the debtorat least has an establishment in this second state, while according to the ModelLaw, it suffices that assets are situated in this state (Article 28 of the Model Law).This is striking, because according to Article 2(c) and (f) of the Model Law, anestablishment in the opening state is very much required for foreign ‘nonmainproceedings’, which means that foreign secondary proceedings that are promptedon the basis of assets being located in that state, and without the presence of an



establishment in that state, cannot actually be recognised in accordance with theModel Law.73

Secondary insolvency proceedings are a thorn in the side of the principle ofuniversality and a questionable concession to practical needs and territorialist atti-tudes, which prompted the CJEU74 in the case Interedil to interpret the term ‘estab-lishment’ narrowly (which was influential on the English Supreme Court75 and UScourts76). In any case, both proceedings must also recognise one another,77 withthe consequence (among others) being that secondary proceedings that followalready-opened insolvency proceedings will presume the debtor’s insolvency – thisis irrebuttable under Article 34(2) of the Recast EIR and rebuttable under Article31 of the Model Law.

B. The rights of the main insolvency practitioner

The main insolvency practitioner can apply for secondary insolvency proceedingsaccording to both laws78 and can take part in secondary insolvency proceedingsthat have been opened.79 According to Article 39 of the Recast EIR – andprobably also according to the Model Law, although it never explicitly states this80

– this includes the authority to lodge an appeal against the opening of secondaryinsolvency proceedings. Besides this, he can apply for a stay of the realisation ofthe debtor’s assets,81 put forward an insolvency plan82 and request that anyleftover capital from the disposal of the debtor’s assets be handed over.83

The attempt of the European legislature to give a special instrument to the maininsolvency practitioner for the avoidance of secondary insolvency proceedings(which has no counterpart in the Model Law) warrants special mention: accordingto Article 36 of the Recast EIR, the main insolvency practitioner can give a unilat-eral undertaking regarding assets that would otherwise be the focal point of sec-ondary insolvency proceedings that they will comply with the distribution andpriority rights under national law that creditors would have if secondary insolvencyproceedings were opened in that member state. This provision, which was firstincorporated into the Recast EIR in 2015, is extraordinarily long, totalling 11subsections; it is also extremely complicated, unbalanced in terms of its details,and its practicality is highly questionable.84 This endangers efficiency and legalcertainty, but regardless, this norm at least represents an attempt to spare the needfor coordination of main and secondary insolvency proceedings through ‘syntheticsecondary proceedings’.

C. Duties to cooperate

The Recast EIR provides extensive rules on cooperation and coordination ofprocedural bodies, that is, courts and insolvency practitioners, in Article 41 et

seq.85 The principle of cooperation,86 which is expressed here already, has its foun-dations in the European law principle of EU member states assisting one another,which can be found in Article 4(3) of the TEU,87 and aims significantly for optimalrealisation of the estate and equal satisfaction of creditors.88 More specifically, the



Recast EIR ensures the cooperation of participating insolvency practitionersthrough a mutual exchange of information as well as support for restructuringand realisation of assets (Article 41), the cooperation of the participating courtsthrough the mutual exchange of information, as well as coordination of theappointment of the insolvency practitioners, the supervision of proceedings, theorganisation of creditor assemblies, the approval of cooperation agreements ofthe insolvency practitioners (Article 42) and the cooperation between courts andinsolvency practitioners (Article 43). The issue of costs is also regulated (Article 44).

In accordance with its main goal, the Model Law also puts a lot of care intosetting out duties to cooperate.89 According to Article 29 of the Model Law, thecourt should strive for cooperation and coordination, with further details to befound in Articles 25–27 of the Model Law: Article 25 governs cooperation dutiesof the court, while Article 26 regulates those of the insolvency practitioners, eachwith regard to foreign courts and practitioners, with Article 27 naming coopera-tion examples which are comparable to those used in the Recast EIR. Thus, bothlaws expect comparable levels of cooperative behaviour from their subjects.

Interestingly, Recital 48 of the Recast EIR encourages the use of guidelinesapparently produced by the UNCITRAL on cooperation, which is somewhatstrange because the UNCITRAL has not published any guidelines on this topic;what could have been meant by this was the UNCITRAL Practice Guide onCross-Border Insolvency Cooperation90 from 2009.91 However, once again, it isevident that an effort is being made to avoid unnecessary differences betweenthe Recast EIR and the Model Law.

D. The rights of creditors

Finally, both catalogues of norms contemplate the position of foreign creditors.They must be informed of the opening of secondary insolvency proceedings,92 theycan participate in them,93 and they can file their claims.94 Insofar as their claimsare satisfied in the secondary insolvency proceedings, this is to be taken intoaccount during the dividing up of assets in the main insolvency proceedings,95 inthe interest of equal treatment of creditors.96

E. Interim result

On the whole, the differences between these two laws are not particularly big. Bothmake an effort to ensure efficient coordination of main and secondary insolvencyproceedings and are in agreement on their basic goal of achieving the best possiblerealisation of assets in the interest of optimal satisfaction of creditors, includingwhere secondary insolvency proceedings are unavoidable. If one takes into consid-eration that there are numerous recommendations at the soft law level regardingcoordination of proceedings originating from a range of different organisationsworldwide,97 and the fact that these are mostly similar, the remaining differencesbetween the Recast EIR and the Model Law can be regarded as having practicallyno impact.



VI. ConclusionIt can thus be concluded that in their efforts to shape the cross-border aspects ofinsolvency proceedings in an efficient and legally certain manner, the RecastEIR and the Model Law often identify solutions that are in agreement with oneanother. In particular, the scopes of both catalogues of norms, and their rules onthe coordination of main and secondary insolvency proceedings, reflect one an-other. Certainly, the Recast EIR makes a significantly greater contribution tothe unification of law, in one respect because of its binding nature and in anotherrespect because of the more comprehensive scope of its rules. In its details, theRecast EIR is also more fully differentiated and more precise, even if this comesat a price, namely, limited flexibility. The UNCITRAL made an important contri-bution to the harmonisation of international insolvency law with its Model Law,but the Model Law now requires modernisation. The time seems particularly ripefor it to contain rules on international jurisdiction, with reference being made tothe COMI concept in the Recast EIR as much as possible because this has beenmet with worldwide approval.

ENDNOTES

1. Article 84(1) addresses proceedings that are opened after 26 June 2017, whileArticle 84(2), as well as Article 92, governs its applicability from the 26 Juneonwards. The general consensus is that Article 84(1) is an editorial oversightand that the norm is to be construed in light of Article 92 so that it alsoconcerns proceedings that are opened on 26 June 2017; see Reinhard Borkand Kristin van Zwieten, Commentary on the European Insolvency Regulation (OxfordUniversity Press, 2016), paragraph 84.02; Peter Mankowski et al., EuropeanInsolvency Regulation 2015 (Beck, 2016), Article 84 No. 4; Gabriel Moss et al.,The EU Regulation on Insolvency Proceedings (3rd edn) (Oxford University Press,2016), paragraph 8.808. The wording has meanwhile been corrected by offi-cial corrigendum, see Official Journal of the European Union 2016 L 349, 6.

2. United Nations Commission on International Trade Law (‘UNCITRAL’)Model Law on Cross-Border Insolvency Law with Guide to Enactment andInterpretation (United Nations Publications, 2014) (‘Model Law’, ‘Guide toEnactment and Interpretation’). See, extensively on the Model Law, BobWessels, International Insolvency Law (Part I) (4th edn) (Wolters Kluwer, 2015),Chapter III; Ian Fletcher, Insolvency in Private International Law (2nd edn) (OxfordUniversity Press, 2005), Chapter 8.

3. See Recital 88, Recast EIR.4. On the history of this development, see Ian Fletcher, ‘Ancient and Modern:

Meditations on the Anglo-Dutch Dimension in the Evolution of Cross-borderInsolvency Law’, in Bernard Santen and Dirk van Offeren (eds), Perspectives onInternational Insolvency Law: A Tribute to Bob Wessels (Kluwer, 2014), 55 et seq.; onthe four sources of English international insolvency law, Morgan Bowen, ‘An



Introduction to the Fundamental Principles governing Cross-border Insolvencyin an English Law Context’ (2013) International Insolvency Law Review 121 et seq.;Gabriel Moss, ‘The English Contribution to Cross-Frontier Recognition andJudicial Assistance’, in Santen and van Offeren (eds) (n 4) 95 et seq.; StephenTaylor, ‘International Insolvency when the EU Regulation is not applicable:The Case of the United Kingdom’, in Georges Affaki (ed), Faillite internationaleet conflit de juridiction – Regards croisés transatlantique (FEC/Bruylant, 2007), 125 et

seq. For a criticism of this point, see Ian Williams and Adrian Walters, ‘TheModel Law: Is It Time for the U.K. to Change Tack?’ (2016) 35(1) AmericanBankruptcy Institute Law Journal 16 et seq.

5. A full list of states that have incorporated the Model Law into their nationallaw can be found at: <http://www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1997Model_status.html>. For details on those national laws thathave taken on board the Model Law, see the contributions in Look-ChanHo, Cross-Border Insolvency (3rd edn) (Globe Law and Business, 2012).

6. See the Guide to Enactment and Interpretation (n 2) paragraphs 20 and 22;Fletcher (n 2) paragraph 8.15; Wessels (n 2) paragraph 10185.

7. See, extensively on this point, Gerry McCormack, ‘US Exceptionalism andUK Localism? Cross-border Insolvency Law in Comparative Perspective’(2016) 36 Legal Studies 136 et seq. This contribution also depicts the differ-ences between the modifications made to the Model Law through imple-mentation in the USA and in the UK. See also Jay Westbrook, ‘Chapter15 at last’ (2005) 79 American Bankruptcy Law Journal 713, 720: ‘Chapter 15so closely follows the Model Law’.

8. See, extensively, Reinhard Bork, Principles of Cross-Border Insolvency Law

(Intersentia, 2017), paragraph 2.39.9. Re Condor Insurance Co Ltd., 601 F 3d 319, 322 (5th Cir. 2010).

10. In Re British American Insurance Co. Ltd., 488 B.R. 205, 213 (Bankr. S.D.Fla.2013); Lavie v. Ran, 406 B.R. 277, 282 (S.D.Tex. 2009); In Re Ran, 607 F.3d1017, 1026 (5th Cir.2010).

11. See, among others, Harold Burman, ‘Harmonisation of International BankruptcyLaw: A United States Perspective’ (1996) 64 Fordham Law Review 2543, 2552; PeterGilhuly et al., ‘Bankruptcy Without Borders: A Comprehensive Guide to the FirstDecade of Chapter 15’ (2016) 24 American Bankruptcy Institute Law Journal, 47, 48.

12. See Gilhuly et al. (n 11) 58 et seq.13. A comprehensive overview of the case law on Chapter 15 Bankruptcy Code can

be found in Gilhuly et al. (n 11) 47 et seq. Moreover, see Paul Silverman, ‘ForeignRepresentative’s Use of US Bankruptcy Courts’, in Michael Dahl et al. (eds),Festschrift für Klaus-Hubert Görg zum 70. Geburtstag (Beck, 2010), 455 et seq.

14. On the interpretation and use of the term ‘centre of main interests’, see sectionIV below.

15. In Re Betcorp Ltd, 400 B.R. 266, 283 fn. 23 (Bankr. D.Nev. 2009); In Re BritishAmerican Insurance Co. Ltd., 488 B.R. 205, 212 (Bankr. S.D.Fla. 2013); In Re

JSC BTA Bank, 434 B.R. 334, 340 (Bankr. S.D.N.Y. 2010); In Re Lee, 472 B.



http://www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1997Model_status.html

http://www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1997Model_status.html

R. 156, 180 (Bankr. D.Mass. 2012); In Re Ran, 607 F.3d 1017, 1020 (5thCir.2010); In Re SPhinX Ltd., 351 B.R. 103, 118 (Bankr. S.D.N.Y. 2006); InRe Toft, 453 B.R. 186, 196 fn. 10 (Bankr. S.D.N.Y. 2011).

16. See in particular the decisions In Re Barnet, 737 F.3d 238, 246 et seq. (2nd Cir.2013); Jaffé v. Samsung Electronics Co. Ltd., 737 F.3d 14 (4th Cir. 2013). See,extensively, Bork (n 8) paragraphs 2.70, 4.54.

17. The insufficient harmonising effects of nonbinding recommendations arecriticised by (among others) Katharina Pistor, ‘The Standardisation of Lawand Its Effects on Developing Economies’ (2002) 50 American Journal of Compar-

ative Law 97 et seq.; opposing this assessment is Wessels (n 2) paragraph 10196.18. An extensive analysis of the principles of international insolvency law can be

found in Bork (n 8), discussing in detail the principles briefly touched upon here.19. See Recital 23, Recast EIR and, on the Model Law, In Re ABC Learning Centres

Ltd, 728F.3d 301, 307 (3d Cir. 2013); Roy Goode, Principles of Corporate InsolvencyLaw (4th edn) (Sweet & Maxwell, 2011), paragraphs 16–07, 16–08; PaulOmar, ‘Cross-Border Insolvency and Principles of Judicial Assistance: RecentThemes and Developments’, in Santen and van Offeren (n 4) 103, 105; alsothe UNCITRAL Legislative Guide on Insolvency Law, Parts 1 and 2 (UnitedNations Publications, 2005), 79 (paragraph 14).

20. For the member states of the EU, the principle of mutual trust is alreadypresent in the foundations of European law; see also Recital 65, RecastEIR; moreover, the CJEU has reinforced this in the cases of C-341/04 -Eurofood ECLI:EU:C:2006:281, paragraph 39; C-444/07 MG Probud Gdynia

sp. z o.o. ECLI:EU:C:2010:24, paragraph 27 et seq. During consultations onthe Model Law, a guarantee of mutuality was contemplated but ultimatelynot included: see Burton Lifland, ‘Chapter 15 of the United StatesBankruptcy Code: An Annotated Section-By-Section Analysis’, in Affaki(ed) (n 4) 31, 54 (paragraph 67).

21. See also CJEU case C-341/04 - Eurofood ECLI:EU:C:2006:281, paragraph65 et seq.

22. Guide to Enactment and Interpretation (n 2) paragraph 240.23. See criticism by Samuel Bufford, ‘Improving the Revision of the European Union

Regulation on Insolvency’, in Santen and van Offeren (eds) (n 4) 15, 16: ‘more isneeded to deal adequately with the transnational problems that arise in such cases’.

24. See the Guide to Enactment and Interpretation (n 2) paragraph 24; also KlausWimmer, ‘Die UNCITRAL-Modellbestimmungen über grenzüberschreitendeInsolvenzverfahren’ (1997) Zeitschrift für Wirtschaftsrecht (ZIP) 2220 et seq.;Fletcher (n 2) paragraph 8.16 refers to it as ‘the art of the possible’.

25. On how it came about, see the Guide to Enactment and Interpretation (n 2)paragraph 12 et seq.; Fletcher (n 2) paragraph 8.07 et seq.; Wessels (n 2) paragraph10191 et seq.

26. See, extensively, on the genesis of themodern-day Recast EIR: Reinhard Bork andRenato Mangano, European Cross-Border Insolvency Law (Oxford University Press,2016), paragraph 1.30 et seq.; Bork and van Zwieten (n 1) paragraph 0.14 et seq.



27. Miguel Virgós and Etienne Schmit, Report on the Convention on InsolvencyProceedings, EC Council Document 6500/96 of 3 May 1996, availableat: <http://globalinsolvency.com/sites/all/files/insolvency_report.pdf>.

28. Above n 1.29. Guide to Enactment and Interpretation (n 2) paragraph 10.30. See section II in the preceding texts.31. See, extensively, Bork and Mangano (n 26) paragraph 2.01 et seq.32. See, extensively, on the geographical scope of application: Mankowski et al. (n

1) Article 1 No. 51 et seq.33. Adoption of the Model Law in this respect is recommended by Bufford (n 23)

15, 25; see also Wessels (n 2) paragraph 10193. Opposing this recommendation,however, is Michael Veder, ‘Bob’s “Unvollendete”?’, in Santen and vanOfferen (eds) (n 4) 139, 143 et seq.

34. CJEU case C-328/12 Schmid v. Hertel ECLI:EU:C:2014:6.35. Also on this point CJEU case C-328/12 Schmid v. Hertel ECLI:EU:C:2014:6,

paragraph 36 et seq.36. See, extensively, Bork (n 8) paragraph 3.35 et seq.37. For comparison, see §§ 335, 343, Insolvenzordnung.38. The administration of insolvency proceedings by public administrative

authorities is relatively rare. For details on this practice regarding Englandand Wales, see section 124A, Insolvency Act 1986; for Ireland, see the US caseIn Re Irish Bank Resolution Corp. Ltd., 538 B.R. 692, 697 et seq. (D.Del. 2015).

39. Wessels (n 2) paragraphs 10200, 10 213, 10 225, 10 230.40. For a general discussion of this topic, see Horst Eidenmüller, ‘Was ist ein

Insolvenzverfahren?’ (2016) Zeitschrift für Wirtschaftsrecht (ZIP) 145 et seq.41. Guide to Enactment and Interpretation (n 2) paragraph 65 et seq.; see also Essar

Steel Algoma Inc., Case No. 15–12 271 (Bankr D.Del. 2015); Bruce Leonard, ‘ACreative Application of Chapter 15’ (2014) 33(12) American Bankruptcy Institute

Law Journal 48 et seq.42. Examples: In Re ABC Learning Centres Ltd., 728F.3d 301, 308/310 (2013); In Re

Ashapura Minechem Ltd., 480 B.R. 129, 136 et seq. (S.D.N.Y. 2012); In Re BetcorpLtd., 400 B.R. 266, 275, 281 (Bankr. D.Nev. 2009); In Re Irish Bank ResolutionCorp. Ltd., 538 B.R. 692, 698 (D.Del. 2015).

43. An illustrative overview can be found in Gilhuly et al. (n 11) 91 et seq. inconjunction with footnote 228 thereof.

44. In Re Irish Bank Resolution Corp. Ltd., Case No. 13–12159 (Bankr. D.Del. 2014),paragraph 50 et seq., confirmed in In Re Irish Bank Resolution Corp. Ltd., 538 B.R.692, 697 et seq. (D.Del. 2015).

45. Cf. Katja Lenzing, ‘La nouvelle définition des procédures d’insolvabilitéouvertes par le champ d’application du règlement “Insolvabilité”’ (2015)Actualités des procédures collectives n° 1 dossier 3.

46. Case C-116/11 Bank Handlowy w Warszawie SA and PPHU «ADAX»/Ryszard

Adamiak v. Christianapol sp. z o.o. ECLI:EU:C:2012:739, paragraph 31 et seq.;case C-461/11 Ulf Kazimierz Radziejewski v. Kronofogdemyndigheten i Stockholm



http://globalinsolvency.com/sites/all/files/insolvency_report.pdf

ECLI:EU:C:2012:704, paragraph 24. For more on this issue, see Bork and vanZwieten (n 1) paragraphs 1.8 et seq., 2.11.

47. Wessels (n 2) paragraph 10200.48. Guide to Enactment and Interpretation (n 2) paragraph 61.49. See, extensively, Bork (n 8) paragraph 3.40 et seq.50. In agreement Luca Enriques and Martin Gelter, ‘Regulatory Competition

in European Company Law and Creditor Protection’ (2006) 7 European

Business Organisation Law Review 417, 438 et seq.; Lynn LoPucki, ‘Cooperationin International Bankruptcy: A Post-Universalist Approach’ (1999) 84 Cornell

Law Review 696, 713 et seq.; Gerry McCormack, ‘Jurisdictional Competitionand Forum Shopping in Insolvency Proceedings’ (2009) 68 Cambridge Law

Journal 169, 185 et seq., 196; Frederic Tung, ‘Is International BankruptcyPossible?’ (2001) 23 Michigan Journal of International Law 31, 70 et seq.; butsee also Francisco Garcimartín, ‘The EU Insolvency Regulation Recast:Scope, Jurisdiction and Applicable Law’ (2015) Zeitschrift für Europäisches

Privatrecht 694, 704 et seq.; John Pottow, ‘Procedural Incrementalism: AModel for International Bankruptcy’ (2005) 45 Virginia Journal of International

Law 935, 1001 et seq.51. An informative overview of the case law can be found in Klaus Pannen,

European Insolvency Regulation (de Gruyter, 2007), Article 3 paragraph 35 et seq.;moreover, see on England and Wales, Burkhard Hess et al., European InsolvencyLaw (Beck/Hart/Nomos, 2014), paragraph 379 et seq.

52. CJEU case C-341/04 Eurofood IFSC Ltd. ECLI:EU:C:2006:281.53. CJEU case C-396/09 Interedil ECLI:EU:C:2011:67.54. CJEU case C-191/10 Rastelli Davide e C. Snc v. Jean-Charles Hidoux ECLI:EU:

C:2011:838.55. See also the case law overview by Irit Mevorach, ‘Jurisdiction in Insolvency: A

Study of European Courts’ Decisions’ (2010) 6 Journal of Private International Law327 et seq.

56. See Adrian Cohen and Avril Forbes, ‘Eurofood for thought: AdditionalGuidance for COMI’ (2012) 27 Butterworths Journal of International Banking

and Financial Law 52 et seq.; see also, the, in part quite critical, objectivelyascertainable list of criteria provided by Mankowski et al. (n 1) Article 3No. 84 et seq.; Christoph Thole, in Hans-Peter Kirchhof et al. (eds), Münchener

Kommentar zur Insolvenzordnung (Vol. 4) (3rd edn) (Beck, 2016), Article 3paragraph 33 et seq.

57. Details by Peter Mankowski, ‘The European World of Insolvency Tourism:Renewed But Still Brave?’ (2017) 64 Netherlands International Law Review 95 et

seq.; Paul Omar, ‘The Inevitability of “Insolvency Tourism”’ (2015) 62Netherlands International Law Review 429 et seq. Criticism with regard to theefficiency of this rule can be found in, among others, Bork and van Zwieten(n 1) paragraph 3.85 et seq.; Garcimartín (n 50) 708 et seq.

58. For the relevance of the distinction between main and nonmain proceedings,see Louise Adler, Managing the Chapter 15 Cross-Border Insolvency Case (2nd edn)



(Federal Judicial Center, 2014), 15 et seq.; Leif Clark, Ancillary and Other Cross-Border Insolvency Cases Under Chapter 15 of the Bankruptcy Code (LexisNexis MatthewBender, 2008), 42 et seq.; Wessels (n 2) paragraph 10232 et seq.

59. Guide to Enactment and Interpretation (n 2) paragraph 81 et seq.; see alsoFletcher (n 2) paragraph 8.23.

60. Guide to Enactment and Interpretation (n 2) paragraph 82 (translated bythis author).

61. Cf. Moss (n 4) 95, 98 et seq.62. Morning Mist Holdings Ltd. v. Krys, 714 F.3d 127, 136 et seq. (2d Cir. 2013), also

relevant to the following text. On this case, see Philip Abelson and MajaZerjal, ‘Fairfield Sentry: In the Last Chapter of the Saga, the ControversialSale is Disapproved’ (2016) 13 International Corporate Rescue 196 et seq.; JeffreyLiesemer, ‘Fairfield Sentry and the Limits of Comity in Chapter 15 Cases’(2015) International Insolvency Law Review 219 et seq.; Karen Park, ‘COMI ornot COMI: Timing is the question (in re Fairfield Sentry)’ (2014) InternationalInsolvency Law Review 416 et seq. An overview is given by Clark (n 58) 42 et

seq.; Gilhuly et al. (n 11) 117 et seq.; Sally Henry, The New Bankruptcy Code –Cases, Developments, and Practice Insights since BAPCPA (American Bar Associa-tion, 2007), 358 et seq.; Craig Martin and Cullen Speckhart, Chapter 15 for

Foreign Debtors (American Bankruptcy Institute, 2015), 29 et seq. For statistics,see Jay Westbrook, ‘An Empirical Study of the Implementation in theUnited States of the Model Law on Cross Border Insolvency’ (2013) 87American Bankruptcy Law Journal 247, 261 et seq.

63. Above n 52.64. Similarly, among others, In Re Betcorp Ltd., 400 B.R. 266, 291 (Bankr. D.Nev.

2009); In Re Ran, 607 F.3d 1017, 1025 (5th Cir. 2010); In Re SPhinX, Ltd, 371B.R. 10, 19 (S.D.N.Y. 2007); see also In Re Bear Stearns High-Grade Structured

Credit, 389 B.R. 325, 336 (S.D.N.Y. 2008).65. Re Stanford International Bank Ltd [2009] EWHC 1441 (Ch), paragraph 43 et seq.;

see also McCormack (n 7) 143 et seq.66. Re Opti-Medix Ltd (in liquidation) [2016] SGHC 108, paragraph 17 et seq.67. Significantly Lord Hoffmann in Re HIH Casualty and General Insurance Ltd [2008]

UKHL 21, paragraph 31.68. See, on this point, Rubin v Eurofinance SA [2012] UKSC 46.69. Extensively and generally on cooperation Stephan Kolmann, Kooperationsmodelle

im internationalen Insolvenzrecht (Gieseking, 2001); Bob Wessels et al., InternationalCooperation in Bankruptcy and Insolvency Matters (Oxford University Press, 2009).From a practitioner’s point of view, see Felicity Toube and Steve Akers, ‘FromDiscord to Harmony: The Future of Cross-border Insolvency’ (2015) 8Corporate Rescue and Insolvency 198, 199 et seq.; on the advantages of cooperation,cf. also Jay Westbrook, ‘The Duty to Seek Cooperation in Multinational Insol-vency Cases’, in Henry Peter et al. (eds), The Challenges of Insolvency Law Reform in

the 21st Century (Schulthess, 2006), 365 et seq.70. Omar (n 19) 103, 104 et seq.



71. See Articles 3(2), 19(2), 34, Recast EIR; Article 28, Model Law.72. On the latter, see Article 34(2), Recast EIR; Articles 21(3), 28, Model Law; see

also In Re SPhinX, Ltd., 351 B.R. 103 fn. 17 (Bankr. S.D.N.Y. 2006).73. Fletcher (n 2) paragraph 8.24; Wessels (n 2) paragraph 10336. For an example,

see In Re Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master

Fund, Ltd., 374 B.R. 122, 126 et seq. (S.D.N.Y. 2007).74. CJEU case C-396/09 Interedil ECLI:EU:C:2011:67, paragraph 60 et seq.75. The Trustees of the Olympic Airlines SA Pension and Life Assurance Scheme v. Olympic Air-

lines SA [2015] UKSC 27, paragraph 13 et seq.; see more on this case inMatthewAbraham, ‘Re Pan Ocean [2014] EWHC 2124’ (2015) 12 International Corporate

Rescue 404 et seq.; L. Colgate and M. Okine, ‘Establishment for the Purpose ofthe European Regulation on Insolvency Proceedings’ (2015) 28 Insolvency Intelli-gence 107 et seq.; Marcus Haywood, ‘Prepare to land: Supreme Court rules onthe Meaning of an “Establishment” in Olympic Airlines’ (2015) 8 Corporate Rescue

and Insolvency 153 et seq.; David Pollard, ‘PPF Entry – Problems for PensionTrustees After Olympic Airlines’ (2016) 29 Insolvency Intelligence 58 et seq.

76. In Re Ran, 607 F.3d 1017, 1027 (5th Cir. 2010); see also In Re Bear Stearns High-

Grade Structured Credit, 389 B.R. 325, 338 et seq. (S.D.N.Y. 2008).77. See Article 20(2), Recast EIR; Articles 15, 17(2), Model Law.78. See Article 37(1)(a), Recast EIR; Article 11, Model Law; on the latter, see

Wessels (n 2) paragraph 10262.79. Article 45(3), Recast EIR; Article 12, Model Law; cf. Wessels (n 2) paragraph

10263.80. The term ‘participate’ in Article 12, Model Law is usually construed very

narrowly; see Fletcher (n 2) paragraph 8.50; Wessels (n 2) paragraph 10264.81. Article 46, Recast EIR; Article 21(1), Model Law; more by Wessels (n 2)

paragraph 10309 et seq.82. Article 47, Recast EIR. Regarding the Model Law, reference should be made

to the general right to participate in Article 12; see also UNCITRAL Practice

Guide on Cross-Border Insolvency Cooperation (United Nations Publications, 2010),paragraph 113 et seq.

83. On the latter, see Article 49, Recast EIR. This is also not expressly stated in theModel Law but can probably be inferred from Article 21(2), Model Law. Seealso Bork (n 8) paragraph 4.14.

84. For criticism of this, see Bork (n 8) paragraph 6.134; Garcimartín (n 50) 727;Mankowski et al. (n 1), Article 36 paragraphs 5, 10 et seq.; Moss et al. (n 1) par-agraph 8.669.

85. Instructively on this issue, see Bob Wessels, ‘Cooperation and Sharing of Infor-mation between Courts and Insolvency Practitioners in Cross-border Insol-vency Cases’, in Festschrift f. H. Vallender (RWS, 2015), 775 et seq.

86. See, extensively, on this issue, Bork (n 8) paragraph 2.39 et seq. See also thereferences in the preceding texts (n 69).

87. CJEU case C-116/11 Bank Handlowy w Warszawie SA and PPHU «ADAX»/

Ryszard Adamiak v. Christianapol sp. z o.o. ECLI:EU:C:2012:739, paragraph 62.



88. See Bork (n 8) paragraph 5.4.89. See, extensively, Fletcher (n 2) paragraphs 8.61 et seq., 8.65 et seq.; Wessels (n 2)

paragraph 10324 et seq.90. See preceding texts (n 82).91. Applicable here: Wessels (n 85) 784 et seq.92. This is addressed extensively by Article 24, Recast EIR; see Bork (n 8) para-

graph 3.20 et seq. In contrast, Article 14, Model Law does not presupposeany particular duty to inform but rather provides a duty to inform in accor-dance with the relevant national insolvency law and states that foreign credi-tors are to be informed in the same way as nonforeign creditors; for details,see Wessels (n 2) paragraph 10269 et seq. This can be compared with §1514,Bankruptcy Code; see Gilhuly et al. (n 11) 86 et seq.

93. Article 13, Model Law; cf. Wessels (n 2) paragraph 10266 et seq. The right toparticipate is established in the Recast EIR in Article 45, particularly insubsection 3.

94. Articles 45(1), 53, Recast EIR; in the Model Law, this can be derivedindirectly from Article 13 – cf. Wessels (n 2) paragraph 10267 – but itcan also be the goal of cooperation agreements: see for comparison thePractice Guide (n 82) paragraph 131. General remarks on so-called ‘proto-cols’ from Adler (n 58) 33 et seq.; Joseph Bellissimo and Power Johnston,‘Cross Border Insolvency Protocols: Developing an International Standard’,in Norton Annual Review of International Insolvency 2010, 37 et seq.; cf. also Clark(n 58) 98 et seq.; Leonard (n 41) 48 et seq.; James Peck, ‘Cross-borderObservations derived from my Lehman Judicial Experience’ (2015) 30Butterworths Journal of International Banking and Financial Law 131 et seq.;Wessels et al. (n 69) 176 et seq.; Paul Zumbro, ‘Cross-Border Insolvenciesand International Protocols – An Imperfect But Effective Tool’ (2010) 11Business Law International 157 et seq.

95. Article 23(2), Recast EIR; Article 32, UNCITRAL Model Law; see, exten-sively, Bork (n 8) paragraphs 2.65, 4.9 et seq., 4.13. Under common law, thereis a similar rule, this being the so-called ‘hotchpot rule’: Cleaver v. Delta AmericanReinsurance [2001] UKPC 6, paragraph 18 et seq. Cf. also Re HIH Casualty &

General Insurance Ltd [2008] UKHL 21, paragraph 50 (per Lord Scott); Re Bankof Credit and Commerce International SA (In Liquidation) (No.11) [1997] Ch. 213, 246;Kathy Stones, ‘Hotchpot (or the Equality Rule’ (2015) 8 Corporate Rescue and In-solvency 25 et seq. More generally, see Jose Garrido, ‘Oversecured andUndersecured Creditors in Cross-Border Insolvencies’ (2014) International Insol-vency Law Review 375, 386 et seq.

96. In more detail, see Bork (n 8) paragraph 4.13.97. See the overview provided in Bork (n 8) paragraph 1.19. See, for the genesis of

the ‘Principles of Cooperation in Transnational Insolvency Cases among theNAFTA Countries’, Jay Westbrook, ‘Creating International Insolvency Law’(1998) 70 American Bankruptcy Law Journal 563, 564 et seq.; extensively on the‘EU Cross-Border Insolvency Court to Court Cooperation Principles and



Communications Guidelines’, see Bob Wessels, ‘A Glimpse into the Future:Cross-border Judicial Cooperation in Insolvency Cases in the EuropeanUnion’ (2015) 24 International Insolvency Review 96 et seq.; Bob Wessels, ‘TowardsA Next Step in Cross-border Judicial Cooperation’ (2014) 27 Insolvency Intelli-

gence 100 et seq.; Bob Wessels, ‘EU Courts Can Rely on Soft Law Principlesfor Cooperation in International Insolvency Cases’ (2015) International InsolvencyLaw Review 145 et seq.



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the european insolvency regulation and the uncitral model

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