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The unavoidable persistence of forum shopping in the Insolvency Regulation

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  • Federico M. Mucciarelli

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    Abstract

    One of the goals of the EU Insolvency Regulation, confirmed by recent reform proposals developed by the European Parliament and the Commission, is to limit forum shopping. The real world, however, looks quite different, as insolvency forum shopping is increasingly common in the EU. As is well known, pursuant to the Insolvency Regulation the Member State of a debtor’s centre of main interests (“COMI”) is competent to govern its main insolvency proceeding with universal effects; additionally, companies’ COMI is presumed to coincide with their registered office, unless the contrary is proven. Pursuant to ECJ case law, the reference date to assess the insolvency competence is the date of the filing, with the consequence that, if a company relocates its registered office abroad before filing for insolvency, the new jurisdiction becomes competent to govern its insolvency, unless creditors prove that the COMI is still in the original State. However, the presumption that the COMI coincides with the registered office can not be rebutted if a company actually relocates its headquarter alongside its registered office in a way ascertainable by third parties. Creditors’ protection against opportunistic forum shopping, therefore, relies only upon the criterion that a company’s COMI must be ascertainable by third parties. This criterion, however, as applied by Member States’ case law and the ECJ, does not take into account the viewpoint of pre-existing creditors: If a company relocates headquarter alongside its registered office and makes this transfer public and “ascertainable” for future potential creditors, no evidence whatsoever can be provided that its COMI is still in the State of origin. Forum shopping, therefore, has become an unavoidable component of EU insolvency law.

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    Bibliographic Info

    Paper provided by Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi" in its series Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) with number 1302.

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    Length: pages 16
    Date of creation: Apr 2013
    Date of revision:
    Handle: RePEc:mod:wcefin:1302

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    Web page: http://www.economia.unimore.it
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    Keywords: insolvency; insolvency regulation; COMI; transfer of registered office; forum shopping;

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