Clifford Chance

EUIR: On the road to Luxembourg

1 September 2005

The European Council Regulation on insolvency proceedings (the “EUIR”) has been in effect for almost two and a half years. Its primary purpose being to facilitate the proper functioning of the internal market of the EU by ensuring that cross border insolvency proceedings operate effectively. During this time local Member State’s courts have been grappling with some of the ambiguities of the EUIR as it is tested by some of the most significant international group insolvencies. It is perhaps not unsurprising that the collapse of the Parmalat group of companies is now at the forefront of the debate on what is perhaps the most vexed issue raised by the EUIR: What is meant by a debtor’s centre of main interests? (“COMI”). The first significant reference has now been made to the European Court of Justice (“ECJ”) in respect of the Irish incorporated subsidiary of the Parmalat group, Eurofoods IFSC. The ECJ will hopefully provide some guidance for local
Member State courts in their approach to a debtor’s COMI.

There have been a number of cases in different European jurisdictions on the subject. The purpose of this briefing is to consider whether we can draw any guidance from the cases, so as to make the risk analysis for parties entering into a transaction more ascertainable from the outset.

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