Cross-Border Restructurings and Creditor Protection in EU Law

Extract

[...] This is a subtle balance between the economic imperative reflected in these cross-border restructuring operations and the need not to "restructure" creditor law. This is the classic balance known, for example, in insolvency law, where the desire to save the company and its employees must be reconciled with the interests of creditors, whether they are banking, fiscal, or social. 8. At the hour of forum shopping, sanctioning creditors too harshly would harm the jurisdiction's attractiveness. These latter demand a certain protection of their rights, lest they deprive the place of an influx of capital and a certain mistrust towards it. [...]

[...] Some jurisdictions may refuse to recognize foreign decisions for reasons of national public order, which lengthens procedures and generates uncertainties for the companies concerned.Issued from the article : The transposition of the Cross-Border Mobility Directive in comparative law, Revue des sociétés 2023 p.782 Dalloz) 40. Transition ( [...]

[...] The relocation of assets, differences in applicable law or the fragmentation of legal guarantees create a prejudicial legal uncertainty. 22. In addition, the risk of 'forum shopping'to be defined) has led certain companies to choose the most favorable Member State, weakening the coherence of creditor protection across the EU. 23. Transition (2) 2. An insufficient creditor protection 24. Although the directive provides for certain safeguard measures - such as the right for creditors to file an opposition or to request additional guarantees - their scope remains unequal from one Member State to another. [...]

[...] After this thesis on cross-border restructuring and creditor protection, it has been demonstrated how delicate and ambiguous the balance can be. In fact, at a time when companies are circulating more freely than ever across the European Union, their creditors, on the other hand, often remain prisoners of legal uncertainties. 45. On this point, the 2019/2121 directive marks a major step forward in regulating cross-border restructurings. The directive establishes a balance between freedom of establishment and creditor protection. Creditors now have increased rights, although the effectiveness of these rights largely depends on the national transposition of European texts, as has been demonstrated. [...]

[...] The directive imposes a structured process that includes the development of a detailed project, submission of reports to various stakeholders, approval of the operation by the governing bodies of the company, but also a prior control exercised by the competent authority of the home member state. 18. This control by the competent authority aims to prevent abuses, in particular the maneuvers that consist in diverting the rights of creditors, or to evade certain tax and social obligations. 19. Example transition « Although this new freedom consecrated has received a procedural framework by the European legislator, the balance with the protection of the rights of creditors remains subtleB). » B. A freedom with important consequences on the rights of creditors 20. [...]