The application of EIR rules
concerning lodging, verification
and admission of claims in Italy.
Theory and Practice
Giorgio Corno
Relevant EIR Rules
a.
Conflict of laws rules:
save as otherwise provided in the Regulation,
lex concursus applies to:
a.
claims which are to be lodged against the debtor's estate and the
treatment of claims arising after the opening of insolvency
proceedings (Art. 4, par. g);
b.
the rules governing the lodging, verification and admission of
claims and h) EIR).
b. Uniform law rules
-
Exercise of creditors’ rights (artt. 32)
Right to lodge claims (art. 39 EIR)
Duty to inform creditors (art. 40)
Content of the lodgment of a claim (art. 41)
Languages (art. 42 EIR)
 Need for coordination
Guiding principles
a.
Equal treatment of creditors (recital 21):
•
•
•
b.
general principle of equality
collectivity (par est condicio creditorum omnium)
non discrimination, on the grounds of nationality
Proportionality (recital 6)  EIR deals with some aspects only
of EU cross border insolvency proceedings: jurisdiction;
judgments; their recognition, applicable law
Need for:
a. efficient and effective operation of cross border
insolvency (recital 8)
b. Proper functioning of the internal market (recital 2)
The risk of reverse discrimination
Favor for EU creditors, where rules set by lex concursus are
more severe than EIR rules
•
some examples under Italian regulations
–
–
opening of a secondary proceeding against non trade debtor
lodgment of claims
•
national need to be made uniform to EIR rules.
•
no present discussion under Italian legislator
The Italian practice in lodging
EU Creditors’ claims
Survey among Italian insolvency professionals (January –
March 2011):
• 300 questionnaires forwarded to Italian insolvency professionals
belonging to international insolvency associations (III, Insol Europe);
national insolvency associations; personal contacts in Milan, Bologna,
Rome and Monza;
•
38 replies:
–
–
–
–
63% office holders; 34% lawyers
76,32 % belong to Milan and Monza area
Majority aged between 36 and 55 years old; and practiced insolvency law for
more than 16 years
60,5% are aware of provisions of Regulation 1346 (“EIR”)
Exercise of creditors’ rights in
insolvency proceedings.
Right to lodge claims
(Artt. 32 and 39 EIR)
EIR and creditors’ rights
in insolvency proceedings?
a.
b.
c.
d.
Lodgment
Opposition to the allowance of the claim of another
creditor
Petition for revocation of a lodged claim
Attendance of creditors' meetings
Right to be heard (opportunity to make his point of view
known to the court / liquidator)
Follows on. Lodgement
a.
Right to achieve satisfaction on the proceeds and,
specifically, to:
•
•
b.
recover a credit or
demand assets by a third party
Any action taken in the creditor’s activity to:
•
•
establish its claim
have it admitted or aknowledged in an insolvency
proceeding, based on:
 The type of proceeding (winding up / restructuring)
 The applicable lex concursus. Italian regulations
Follows on. Multiple cross-filing
• artt. 32.1 and 32.2 EIR acknowledge simultaneous
lodgment in any insolvency proceedings (main or territorial)
opened, concerning the same debtor
• Benefits:
–
–
–
–
everyone is ensured right to participate;
reduction of incentives to parties’ strategic conducts;
reinforcement of liquidator’s powers;
coordination in proceeds’ distribution (hotch pot rule. Art. 20.2
EIR)
Which claims?
• Against insolvency proceedings (winding up / restructuring)
• When was the claim born:
– Prior to the opening
– During the insolvency proceeding (ie. Liquidators’ claims)
• Applicable law (art. 4 lett. g):
– lex concursus
– unless otherwise stated by the EIR
• Type: pre-preferential, secured, unsecured claims
• When several insolvency proceedings regarding the debtor
 claims recognized in a foreign proceeding concerning the same
debtor
– Judgments  recognition issues (art. 25 EIR)
– Authentications by liquidators
EU Tax and social security authorities’ claims
– “Revenue rule” does not apply to EU tax and social security
authorities’ (SSA) claims
–
–
Territorial nature may obstacle establishment of an internal market
Lodgment cannot be disallowed on the grounds that it is governed by the public law of
another Member State (Virgòs Schmit)

– Which claims?
–
–
–
direct or indirect tax, including VAT or local taxes
fines or financial penalties ? (doubts from Wessels and Van der Plas)
subrogated right after having paid certain amounts to employees
(Paulus)
– Lex concursus sets whether a tax or ssa claim is secured or
unsecured
– More interest expected, due to public finances state
Italian survey: tax claims (2,63% among respondents aware of EIR); SSA claims
(5,263% among respondents aware of EIR)
Subjects entitled to take advantage of EIR
when lodging their claims
a.
Creditors:
–
EU creditors, ie those who have their domicile, habitual residence or registered office
(Brussels I Regulation (44/2001)) in a Member State other than the opening (art. 39 and
32.1 EIR)  Included
–
National / non EU creditors  Excluded. Lex concursus applies
Italian survey: no problems, either in liquidation or winding up
proceedings
a.
Any creditor, inclusive of:
–
–
EU tax and social insurance institutions
liquidators in main and secondary proceedings
Follows on. Liquidators
• Which claims?
– already lodged in their proceedings, inclusive of the claims related to their activity
– not contested by the liquidator
• Where? in main or territorial proceedings
• Is it a duty? Yes, when
– usefulness for creditors or creditors’ classes
– No creditors’ opposition or withdrawal from their claims
• Scope: overcome restrictions provided by the lex fori secundarii,
because of nationality, lex causae, others
• Legal grounds
•
•
liquidator’s powers: art. 18.1 EIR
Compliance with lex concursus: art. 18.3 EIR
• Effects
 liquidator considered as any creditor
Lex concursus
• Sets, with respect to lodgment, admission and verification
of claims:
• time limits; penalties for exceeding those time limits
• admissibility and foundation of the lodgment and relative
claims verification costs
• ways in which a claim must be lodged, and burden of proof to
be satisfied
• eligibility of an appeal against the decision concerning the
lodging
• capacity of a creditor to contest lodgments of others
• Specific issues dealt with by EIR (artt. 40 – 42)
Information to creditors
(Artt. 40 and 42.1 EIR)
Information regarding insolvency proceedings
• Need to:
– attest starting the proceedings in the interest of creditors;
– facilitate foreign creditors as well as liquidator’s activity;
– make the insolvency opening decision enforceable against third
parties;
– warn third parties of the decision of the opening of the proceeding
• Which information?
– Opening of the proceeding (art. 21)
– Notice to creditors regarding lodgment (art. 40)
• Absence of a community register of insolvency proceedings
Follows. Notice to the creditors (art. 40 EIR)
• Duty to inform known foreign creditors lies on liquidator or
the courts
• Beneficiaries: creditors
– listed in accounting records or other documents
– EU Creditors, not Non EU or National creditors
• Content
– Minimum: art. 40 EIR
– Further contents: lex concursus (i.e. see information in art. 92
legge fallimentare)
Italian survey: information content different from the one of information to
national creditors (60,53% of respondents aware of EIR); better
description of the proceeding as well as creditors’ rights
Information notice service
• Service mode:
– EC Regulation 1393/2007, by:
 postal services;
 registered letter with acknowledgement of receipt;
 equivalent;
– Other modes provided by lex fori concursus (i.e. public
complaints)
• If not fulfilled  see lex concursus
Italian survey:
a. registered letter (57,14% of respondents)
b. aimed at describing better the content of the proceeding as well as creditors’
rights
Information language
• Art. 42.1 EIR
– official language of the State of the opening of the proceeding;
or
– one of the official languages of the UE State
• Heading “invitation to lodge a claim. Time limits to be
observed”
– Aim:
• facilitate the liquidators/courts’ activities
• Make creditors’ aware of their rights
– translated in the recipient official language
Italian survey: use of English (60,53% of respondents aware of EIR)
EC information form
• European Commission form, which bears the heading
“Invitation to lodge a claim” (translated in the official
language of the recipient)
• Aim: facilitate creditors’ activities
Italian survey: limited use (7,8% of respondents aware of EIR)
Lodgment of claim. General rules and
application form for EU creditors’
claims
(Artt. 32, 41 and 42.2 EIR)
Application form and content (art. 41)
• Form
– written form
– other forms? Ie electronic transmission that allows permanent
recording (e-mails)  allowed (Wessels)
• Minimum content required. Duty to:
– demonstrate habitual residence, domicile and registered office
in a member state other than the State of the opening of the
proceeding;
– Indicate specific claims’ elements (nature, date, amount,
preference);
– state the residual amount of the claim, if creditor partially
satisfied in other proceedings
• Other contents: lex concursus
Follows on.
Specific issues (according to lex concursus ):
• Evidence
– In general:
– copies of supporting documents, to be sent to the court / liquidator
– Risk of discrimination with national / non EU creditors
– liquidator’s application?
- Based on claims lodged by creditors
- Evidence
- Schedule of claim of the proceedings he is responsible of
- Together with copy of supporting documents.
• Other:
– Request for a stay in the liquidation of the demanded assets (art. 93
IBL)
Language (art. 42)
• Claim may be lodged in the language of the State in which
the creditor has his residence, domicile or registered office;
• Heading “invitation to lodge a claim” must be written in the
original language of the State of the opening of the
proceeding;
• Sanctions in case of unfulfilment?
Italian survey: usually Italian language, sometimes English
EC lodgement of claim form
• European Commission form
• Aim: facilitate creditors’ activities
Italian survey: limited use (2,63% of respondents aware of EIR)
Conclusions
Italian insolvency regulations work with respect of lodgment of
claims from EU and non EU creditors, notwithstanding the
limited sensibility to EIR and its role for EU creditors’
claims.
Useful to:
• improve EIR rules knowledge and application among Italian
courts and practitioners
• make legislator, as well as insolvency courts and office
holders, more sensible to cross border issues, and, among
them, with specific respect to EIR
Thank you!
Giorgio Corno
Avvocato – Solicitor
(admitted, England and Wales)
Studio Corno Avvocati
Tel. 039 2456792 – fax: 039 2458018
www.studiocorno.it – [email protected]