European Insolvency Regulation applicable to public pre-insolvency plan procedure | news item

News item | 07-01-2022 | 4:00 pm

On January 9, 2022, the public pre-insolvency plan procedure will be added to Annex A to the European Insolvency Regulation. This prevents creditors from evading the plan procedure by going to a European court.

The public pre-insolvency plan procedure is a procedure that has been included in the Bankruptcy Act since 1 January 2021 and was introduced as part of the Private Agreement Homologation Act (Whoa). This procedure offers companies with financial difficulties the opportunity to avoid bankruptcy by offering a composition to their creditors and/or shareholders. If sufficient creditors and shareholders agree to the plan, the court can declare it binding. As a result, the plan also applies to creditors and shareholders who have not consented to this.

The European Insolvency Regulation is important in view of the cross-border aspects that may play a role in these proceedings. The decision of a Dutch court to declare an agreement binding is therefore automatically recognized in other European member states, with the exception of Denmark. This prevents creditors from being able to escape from the scope of the plan by requesting enforcement of their claim from a court of another EU member state.

In addition, as of 9 January 2022, the Dutch court will determine whether it has international jurisdiction on the basis of the rules of the European Insolvency Regulation. This is the case if the center of the main interests of the company offering a plan is located in the Netherlands.


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