Insolvency practitioners get EU-wide boost
Long-awaited regulation forcing European countries to recognise each others' court appointments are enabling insolvency practitioners to pursue cases across EU member states.
The regulation comes into force on 31 May and will oblige EU countries to recognise each other’s IP appointments, with immediate effect. Michael Prior, chairman of the international committee of R3, said: ‘This has been needed for many years.’
The move will give creditors in a multinational’s home country preference over its assets in the event of a failure, even if those assets are abroad and claimed by creditors in another country.
But to avoid costly mistakes, IPs must seek local assistance in the country they are operating to study local laws and basic court procedures. Steve Hill of insolvency firm Moon Beaver said: ‘I wouldn’t try handling an insolvency in another country without finding local legal advice, or you would be wasting money and making a mistake.’
According to experts, adjustments must be made to UK insolvency legislation to implement the regulation. The law has been widely acclaimed by the insolvency profession, who have been clamouring for better ways of co-operating with their international counterparts.