CARLO VELLANIAssistant of the University of Modena and Reggio Emilia

Relationships between main proceeding and secondary proceedings in Reg. CE 1346/2000 (*)

SUMMARY: 1. The establishment of the “limited universality” principle in the European context. - 2. The “limited universality” principle in the legislation of some Countries. – 3. UNCITRAL model law on cross-border insolvency. – 4. The problem of “veil” of the legal status. – 5. Main proceeding and secondary proceedings within the EC Regulation on insolvency proceedings n. 1346 del 2000. – 6. Next: development of the issues come out with regard to secondary proceedings. – 7. Discipline of the relationships among proceedings, in particular the proofs of debt system.

1. – In the last century, international bankruptcy was essentially dealt on the basis of two opposite ideas: the jurisprudence of the universality or uniqueness of bankruptcy, to which the theory of territoriality or plurality of bankruptcies was opposed (1).

The theory of universality maintained that the rights of the creditors could be fulfilled only in one place, the domicile of the debtor. Once stated this, it was necessary to assess how to face the problem of the possible presence of properties outside the cognizance of that specific court or even in another Country. The solution came from the recognition of a personal procedure in the bankruptcy, a formulation which made it impossible to assume a plurality of procedures: the same person who goes bankrupt at the same time more than once, in the end the declarative bankruptcy judgment had to produce its effects everywhere according to the universality system and properties, wherever they were located, had to be sold following the due national procedures, but the price had to be paid to the bankruptcy court.

On the contrary, the theory of territoriality can be described as the real theory of bankruptcy, which applies immediately and directly the concept of territorial supremacy of the single State and denies that the bankruptcy judgment passed in a Country could be extended outside its territory. In fact, territorial supremacy deals with the properties located within the State; therefore we need to give so many judgments so many are the States involved in bankruptcy.

Only recently these theories have been overcome. If we look at the then European Economic Community, the six founder States, in 1972, Ireland, Denmark and United Kingdom joined it and their contribution in 1980 led to a convention project on the insolvency matter (2), accepted by Greece, too,

1(*)For further references, see C. VELLANI, L’approccio giurisdizionale all’insolvenza transfrontaliera, Milano, 2006.

(?) In ENRIQUES, Universalità e territorialità del fallimento nel diritto internazionale privato, Roma, 1934, p. 7, note 1 wide mentions to doctrine and jurisprudence of 1900 on this matter.

2(?) See JORIO, item Fallimento nel diritto comunitario, in Dig. disc. priv. - Sez. comm., vol. V, Torino, 1990, p. 448 ss.; GALLESIO-PIUMA, Aspetti sostanziali del progetto di convenzione sul fallimento e sulle altre procedure concorsuali, in L’influenza del diritto europeo sul diritto italiano edited by Cappelletti e Pizzorusso, Milano, 1982, p. 319 ss.; COLESANTI, Aspetti processuali del progetto di convenzione sul fallimento e sua incidenza nel diritto italiano, ivi, p. 433 and DANIELE, Il fallimento nel diritto internazionale privato e

which joined EEC in 1981. It was a project linked to principle of unitariness and universality proceedings, which excluded the coexistence of different proceedings against the same debtor in the different Countries, providing on the contrary, for the application of the convention, regardless of the existence of international implications, to every kind of proceedings it was referred, that is to say, the convention should have been extended to every bankruptcies, even merely internal ones (3). Anyway, at Committee stage, the strong opposition to such project by the Federal Republic of Germany had to be registered (4), and the impossibility to come to an agreement led to the substantial desertion of the works.

At the European Council stage, in parallel with these events, at first in competition with the works within EEC, an initiative aiming at fixing the rules relevant to cross-border insolvencies hypothesis, started off. It was a less ambitious project than the EC one, aiming at reaching a convention which disciplined some of the most relevant aspects, such as the powers to be recognized to the trustee within States different from that which opened the proceeding, and the proof of debt procedures abroad. Such project was not particularly incisive, but during works Chapter III was added, whose content was very innovative, containing the renunciation to a single and universal proceeding and the recognition of the possibility to open “secondary” bankruptcy proceedings in Countries different from the one in which the proceeding has started off (5).processuale, Padova, 1987, p. 232 ss., which quotes the text in appendix: p. 329 ss.; lit is published, together with Relazione, nel Supplemento 2/82 al Bollettino delle Comunità Europee; see also PROTO, Le procedure concorsuali nella Comunità europea, in Il fall., 1995, p. 1169.

3(?) More widely on the matter DANIELE, op. cit., p. 241 s.4(?) Actually, the extension of the convention rules to merely internal bankruptcies,

would have probably caused a burdening, even in economic terms, of the proceedings.5(?) In Chapt. III, the discipline of “secondary” proceedings entails their opening only

for the fact that a debtor has already been declared bankrupt in another contracting State, regardless of the insolvency, provided that the decision is taken in accordance with art. 3 conv., and no other proceeding has been opened (art. 16); the only necessary condition is the presence in the State in which the secondary bankruptcy proceeding is requested, of a secondary establishment, or properties of the bankrupt (art. 17). The people entitled to request such secondary bankruptcy proceeding are the liquidator of the main proceeding and every other subject granted to request the opening of a bankruptcy proceeding by the law of the contracting State in which the secondary proceeding is required (art. 18). The bankruptcy law which will govern secondary bankrupts is that of the Country where the proceeding is opened (art. 19).

All claim may be lodged in the liabilities of the secondary bankruptcy proceeding; such claims shall be notified to the liquidator of the main bankruptcy proceeding and the notification is a valid proof of debt in this last proceeding (art. 20). Anyway, the desertion of the theory of universality entails that the main bankruptcy proceeding, even accepting the proofs of debt of the whole creditors, allows, in the secondary bankruptcy proceeding, the liquidation and distribution of the proceeds of the sale of local properties destining them to the direct enjoyment of preferential claims or covered by a tangible security, public law claims, claims arising from the operation of an establishment of the debtor or employment in the contracting State in which the secondary bankruptcy proceeding has been opened, arranging therefore for the transfer of the sole assets surplus and unsecured credits in the main bankruptcy proceeding (art. 21-22). On this surplus, the principle of equality of creditors is in force, and therefore the creditors of the main bankruptcy proceeding shall be treated equally, regardless of any privileges or advanced deductions (art. 24). Claims arising before the opening of the secondary bankruptcy proceeding , but after the opening of the main one, may participate in a dividend only on the surplus transferred in the latter bankruptcy proceeding (art. 23). Coordination between the main bankruptcy proceeding and secondary proceedings entails that the secondary bankruptcy proceeding can be terminated only when an opinion has been obtained from the liquidator of the main bankruptcy proceeding, within a reasonable period of time (art. 26). From this provision we understand that this opinion is not binding, as it is on the contrary stated for the termination of the secondary bankruptcy proceeding by means of an agreement, even if in such hypothesis the consent cannot be refused if it is proven that the agreement is not detrimental for the interests of the creditors

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It is a notation of a “territoriality” aspect of bankruptcy proceedings which overcomes the idea of universal character, normally attributed to national bankruptcy proceedings, which basically have to extend their effects even on the properties located outside the national territory, to reconcile territoriality aspects deeply rooted in the procedural provisions.

The works ended in 1989 with the European convention on certain international aspects of bankruptcy, of the European Council (6), also known as the Istanbul Convention. Anyway, such Convention has been ratified only by Cyprus, and its entry into force seems decidedly improbable. Besides, it would be overcome, in the relationships among EU States, by the insolvency proceedings Rules.

At the EU community stage, the activity remained suspended, also for the will to wait for the conclusion of the negotiations entered within the EU Council; once the Istanbul Convention was signed, in 1990 the works resumed in a continuity line compared with the outcome of the negotiations entered at the EU Council stage. Not only the explicit mention to the principle of universality and unitariness disappears, but most of all the consequences involved in such choice. The adopted solution was in line with the Istanbul Convention. It is the judge of the contracting State in whose territory the main centre of the debtor’s interests is situated, who has the jurisdiction to open a bankruptcy proceeding; next to this, there is also the possibility that the judges of another State in whose territory a dependency is located, open, with effects limited to the properties which are situated in such territory, a “secondary” proceeding. Besides, the decision to open a proceeding must be recognized by all the other contracting States as soon as it produces effects in the Country where it has been opened. For what concerns the procedural aspects and aspects of substantive nature, the principle of the enforcement of the law of the State in which the proceeding is opened, is indicated. These are only some of the essential contents of the Convention on insolvency proceedings worked out within the scope of what has meanwhile become the European Union, to which in 1986 Spain and Portugal had jointed (7).

The EU Convention on insolvency proceedings is opened to signature in Bruxelles on 23 November 1995, but, of the twelve member States, only eleven signed it, not the United Kingdom (8). Once the term for the signature has elapsed, fixed for 23 May 1996, as per art. 49, paragraph 3, of the same Convention, this does not come into force, being subject to the approval of the whole member States. Meanwhile, in 1995, with the fourth EU enlargement, of the main bankruptcy proceeding .

6(?) Convention approved by the European Council on 12 November 1989, open to signature in Istanbul on 5 June 1990 and underwritten by Italy on 15 January 1991. It can be read in the appendix in BONSIGNORi, Introduzione al diritto fallimentare, Torino, 1993, p. 95 ss.; in Riv. dir. int. priv. e proc., 1994, p. 712 ss.

7(?) It can be read in Riv. dir. int. priv. e proc., 1996, p. 661 ss. and in POCAR, TREVES, CLERICI, DE CESARI, TROMBETTA PANIGADI, Codice delle convenzioni di diritto internazionale privato e processuale, 3a ed., Milano, 1999, p. 1364 ss. Vedi DORDI, La convenzione dell’Unione europea sulle procedure d’insolvenza, in Riv. dir. int. priv. e proc., 1997, p. 333 ss.; GUZZI, La convenzione comunitaria sulle procedure di insolvenza: prime osservazioni, in Dir. comm. int., 1997, p. 901 ss.; LUPONE, La convenzione comunitaria sulle procedure di insolvenza e la riforma del sistema italiano di diritto internazionale privato, in Contratto e impresa / Europa, 1999, p. 429 ss.; L. S. ROSSI, Le convenzioni tra gli Stati membri dell’Unione europea, Milano, 2000, p. 51 ss.

8(?) Among the main problems, though never officially stated, it seems there was the enforcement to Gibraltar, and more generally, the “breaking off” attitude against the European Union from the United Kingdom for the events occurred after the so-called “mad-cow disease”, cf. L. S. ROSSI, op. cit., p. 53 ss.; ZAMPERETTI e NODARI, Verso l’armonizzazione comunitaria del diritto fallimentare: lo stato dell’arte, in Giur. comm., 1997, I, p. 609.

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Austria, Finland and Sweden join the community (9).Convention on insolvency proceedings remains outstanding.

The EU Regulation on insolvency proceedings is the result of art. 65 EC Treaty, on whose basis the Initiative of the federal Republic of Germany and Republic of Finland to adopt a Council regulation on insolvency proceedings, presented to the Council on 26 May 1999 (10), has been presented and led to the adoption of the same Regulation. Actually the content of the Regulation is effectively identical to the one of the EU Convention dated 1995; anyway, thanks to this different juridical instrument, it has been possible to let the rules come into force, which, in a conventional capacity, should not be enforced lacking the signatures of the whole contracting States. Anyway, it is worth reminding how thirteen protocols are attached to the Amsterdam Treaty, among which the one on the position of the United Kingdom and Ireland and the one on the position of Denmark with regard to Title IV of the EC Treaty “ Visas, asylum, immigration and other policies related to the free movement of persons” (11). The United Kingdom, even if it did not signed the previous Convention, has notified, together with Ireland, the will to take part in the adoption and enforcement of the Regulation; therefore, it is enforced towards such Countries, whereas it cannot be enforced towards Denmark which is not involved in the adoption of the Regulation following the mentioned Protocol.

As already pointed out, the EU Regulation on insolvency proceedings, reproduces almost completely the provisions of the Convention on insolvency proceedings, dated 1995 and, within the scope of our interest, it follows the choices adopted in the Convention of Istanbul. It turns out to be evident the success of an international bankruptcy model based on the definable criterion of “limited universality” (12), limited by the possibility to open “secondary” proceedings in a State different from the one in which the centre of the main interests of the debtor are situated and where the main proceeding has been opened, and all this without having to reexamine the objective or subjective insolvency assumption in that Country, too.

2. – It is not a completely new solution. Difficulties which arise for international bankruptcies within systems linked to the unitariness and universality of insolvency proceedings, had already been faced from single laws with orientations known as “particular universality” or “universal plurality”(13).

9(?) On the basis of the Treaty of Accession signed in Corfu on 24 June 1994 (such act provided for the accession of Norway too, but the population of this Country expressed negatively by means of the referendum dated 27 - 28 November 1994).

10(?) In Gazz. uff. delle Comunità europee, 3 August 1999, n. C 221; it can be read also in Dir. fall., 1999, I, p. 1236 ss.; see also Riv. dir. int. priv. e proc., 2000, p. 287 s.

11(?) See L. S. ROSSI, op. cit., p. 174 ss. We have to add that Denmark was not bound even to the provisions of Regulation n. 44/2001 on jurisdictional cognizance, recognition and execution of decisions on civil and commercial matters; Todays things have changed: the Commission has come to an agreement between the European Union and Denmark which extends to Denmark the provisions of Regulation n.44/2001, agreement signed on 19 October 2005, and finally approved under decision of the Council on 27 April 2006.

12(?) Others prefer the expression “moderate universality”, cf. FUMAGALLI, Il regolamento comunitario sulle procedure di insolvenza, in Riv. dir. proc., 2001, p. 687.

13(?) Definition quoted by LUPONE, Verso una disciplina bilaterale delle procedure concorsuali, in L’unificazione del diritto internazionale privato e processuale. Studi in memoria di Mario Giuliano, Padova, 1989, p. 566.

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We can mention the federal Swiss law on the international private law dated 18 December 1987 (LDIP, in German IPRG) (14), which envisages ad hoc regulations of insolvency proceedings with cross-border implications, in chapter 11, on the «Bankruptcy and Composition» (artt. 166-175). According to art. 170, the recognition of the foreign insolvency proceeding gives rise to a Swiss bankruptcy proceeding, limited to the debtor’s assets situated on the Helvetic territory; at the end of this proceeding, the prospective credit balance will be at the disposal of the foreign proceeding or entitled creditors (as provided by the following art. 173) (15).

Hints for an extensive interpretation in this direction, had already been pinpointed by the pre-existing German legislation of Konkursordnung par. 238 (16). Then, the Insolvenzordnung (InsO) dated 1994 followed, in force from 1° January 1999, and related law containing preliminary and implementation provisions, that is Einführungsgesetz zur Insolvenzordnung (EGInsO) dated 5 October 1994 (17), divided in three parts, and in the last one, art. 102 disciplined the international insolvency law (18). Such discipline in a few words: an insolvency proceeding opened abroad, included also the properties situated in Germany, unless, according to German laws, the judicial authorities of the State in which the proceeding was opened, lacked jurisdiction, or, the recognition that the foreign proceeding was in contrast with the basic principles of German regulations. Recognition of the foreign proceeding did not exclude the opening in Germany of a separated insolvency proceeding, limited to the properties therein situated. The opening of this secondary proceeding did not need the evidence of the debtor’s insolvency. Here, the reference to EU Regulation was evident; no wonder Germany, together with Finland, promoted the EU regulation proposal on insolvency proceedings, as we reminded here above. Today, the legislative set-up relevant to German international insolvency law, has still further changed with the new law dated 14 March 2003 Gesetz zur Neuregelung des Internationalen Insolvenzenrechts, in force from 20 March 2003 (19). Such law

14(?) See LALIVE and PATOCCHI, L’arbitrato ed il fallimento internazionali, in Il nuovo diritto internazionale privato in Svizzera, edited by Broggini, Milano, 1990, p. 323 ss., the law is in the appendix.

15(?) More in detail, the foreign regulation, to be effective in the Swiss system, must be recognized by the judge, who, upon request of the foreign trustee or creditors, verifies the presence of the requirements fixed in art. 166, which, among other things, requires the jurisdiction of the foreign judge of the place where the debtor’s domicile is situated, enforceability of the bankruptcy opening decree in the foreign State, compatibility with public order and internal procedural principles and reciprocity. Once the recognition has occurred, the foreign trustee has no authority to take or directly manage the bankrupt’s properties present in Switzerland, but, as already mentioned, the recognition entails the opening of an ancillary proceeding (mini-faillite), limited to the assets present in the State, governed by the lex fori, aiming at ensuring the satisfaction of preferential creditors, domiciled in Switzerland. Only the possible balance will be delivered to the foreign authority.

For a review of Swiss jurisprudence, both federal and cantonal, on the recognition of a foreign bankruptcy regulation or a composition, see LEMBO and JEANNERET, Il riconoscimento in Svizzera di un fallimento straniero: situazione attuale e considerazioni pratiche, in Riv. dir. int. priv. e proc., 2004, p. 1249 ss.

16(?) As pointed out by LUPONE, op. ult. cit., p. 569 ss.17(?) They both can be read in GUGLIELMUCCI, La legge tedesca sull’insolvenza

(Insolvenzordnung) del 5 ottobre 1994, Milano, 2000, p. 29 ss.18(?) The first part of Einführungsgesetz zur Insolvenzordnung is dedicated to the new

drawing up of the law on the revocatory action (artt. 1-20), the second part deals with the abrogation and modifications of some laws (artt. 21-101), and finally the third part deals with the international bankruptcy law (art.102) and temporary and final rules (artt. 103-110).

19(?) Law is published in Bundesgesetzblatt, parte 1, n. 10, of 19 March 2003, a unofficial translation is present in DE CESARI and MONTELLA, Le procedure di insolvenza nella nuova disciplina comunitaria, Milano, 2004, p. 338 ss.

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wholly reformulates the mentioned art. 102 of preliminary and implementation provisions to the law on insolvency proceedings, changing its content: it is no more a matter of international insolvency law, but according to its new headline, it disciplines the “Implementation of (EC) Regulation n. 1346 dated 2000 on insolvency proceedings». Today, the mentioned art. 102 is a structured provision, made of 11 sections, divided in paragraphs, which introduces the necessary adaptations of the German set-up and insolvency law to the European rule. After having introduced these implementation rules of the EU regulation, law dated 14 March 2003 makes changes to Insolvenzordnung dated 1994, too, which today is no more made up of eleven but twelve parts and the eleventh part is wholly reformulated dealing with international insolvency law, which, disappearing the discipline initially contained in the amended art. 102 of the preliminary and implementation provisions to the law on insolvency proceedings, is now widely disciplined directly inside the Insolvenzordnung through art. 335-358. The German international insolvency law is now based on the general principle, stated by the amended art. 335 of Insolvenzordnung, so that the insolvency proceeding and its effects are governed, with a few exceptions, by the State law in which proceeding has been opened. Exceptions are contained in the first chapter of the eleventh part of Insolvenzordnung, which contains other two chapters: the second one on foreign insolvency proceedings (art. 343-353) and the third one on territorial proceedings for the assets situated in Germany (art. 354-358).

Even the Spanish insolvency law is very interesting, recently amended: l. 22/2003 dated 9 July 2003, in force from 1° September 2004. Before such rule, Spain was totally lacking in legal rules on international insolvency, since it had not concluded bilateral or plurilateral international conventions on the matter (20). With the new law, the Spanish legislator has widely dealt with international insolvency. If we consider the Exposición de motivos XI of l. 22/2003, this points out the special attention given to insolvency proceeding assumptions which showed extraneousness elements; this attention led to the introduction in the prescriptive text of Title XI (art. 199 - 230) entitled De las normas de derecho internacional privado, specifically dedicated to international insolvency law, which do not exhaust the discipline on the matter, for which we have to refer also to art. 10 - 12 on jurisdiction and cognizance, and to art. 49. Going back to the Exposición de motivos XI, this explains that the rules of private international law introduced follow, with proper adaptation, the provisions of EC Regulation n. 1346 dated 2000 and which likewise have been influenced by UNCITRAL model law on cross-border insolvency. These paternities are evident if we examine the prescriptive text. The above mentioned rules are not applied to “internal” insolvencies, but exclusively to international ones, excluding the cases which involve the sole community scope, which will follow Regulation n. 1346 dated 2000.

Once examined these experiences of continental origin, we now refer to common law experiences. We have to point out that, with regard to cross-border profiles, both in the Unites States and in Great Britain, the opening of secondary proceedings had already been envisaged: “ancillary”, which can be a matrix to which refers the individuation of solutions linked to the limited universality model, even if we must be very cautious to refer them to the

20(?) See CALVO CARAVACA e CARRASCOSA GONZÁLEZ, Derecho concursal internacional, Madrid, 2004, p. 177 s.

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current EU Regulation or our experiences, which are hardly comparable with the Anglo-Saxon law.

In Great Britain the main regulatory reference is the l’Insolvency Act dated 1986, which, with various modifications and integrations, contains general discipline of insolvency proceedings. The Insolvency Act dated 1986 deals with the cooperation among magistrates having jurisdiction on bankruptcy matters in sec. 426, but the core aspect of the evolution of cross-border regulation, is constituted by the Insolvency Act dated 2000, which modifies and integrates the Insolvency Act dated 1986, and in sec. 14 authorizes the state secretary Minister, in England and in Wales in agreement with the Lord chancellor, and in Scotland in agreement with ministers, to adopt, even without modifications, the UNCITRAL model law on cross-border insolvency. Such authorization became topical with the Statutory Instrument 2006 n. 1030, dated 3 April 2006, in force from the following day; the act deals with insolvencies both for companies and individuals, and takes the name of «Cross-border Insolvency Regulations 2006». With such legislative instrument, the UNCITRAL model law on cross-border insolvency is legally binding in Great Britain in the report contained in Attachment 1, report which contains the modifications to model law deemed necessary to adapt it to the British system. Attachments 2 and 3 follow, dealing with procedural aspects in England, Wales and Scotland. We expect that in case of conflict between the regulation on insolvency and the new Cross-border Insolvency Regulations 2006, these last should prevail, stating that for their interpretation it is necessary to refer to the UNCITRAL text, and related preparatory works, as well as to the Guide to enactment of the UNCITRAL model law.

The basic regulatory reference for insolvency law in the U.S.A. (21) is the Bankruptcy Reform Act dated 1978 also known as Bankruptcy Code (22) and procedural rules of the Federal Rules of Bankruptcy Procedure (23), which provide various proceedings and the presence of qualified judges, that is to say specialized federal jurisdictions (bankruptcy districts, in some States, there are more than one). The Bankruptcy Code has been recently modified and approved on 20 April 2005, wholly come into force on 17 October 2005. It is a wide legislative regulation, which, as we can understand from its title «Bankruptcy Abuse Prevention and Consumer Protection Act of 2005», deals, from many points of views, with private bankruptcies which are not isolated assumptions, but represent a high percentage of the American insolvency proceedings. Within the American insolvency law, the principle of limited universality is present for a long time. First of all, effects are recognized at the opening of an insolvency proceeding within the State in which the debtor has domicile, habitual residence, establishment o the greatest part of his assets; anyway, consequences arising from a bankruptcy sentence, such as the

21(?) The Constitution of the United States gives the Congress the authority to establish uniform laws for the whole national territory on insolvency matter: Art. I, sec. 8, cl. 4 «To establish ... uniform laws on the subject of bankruptcies through the United States».

22(?) With the first definition, we mean le whole law, whereas the second one refers more specifically to one of its parts, that is Title I, codified in Title 11 of the United States Code.

23(?) These rules, rewritten many times, have not been issued by the Congress, but drawn up by the Supreme Court. In fact, the Congress has the constitutional power to establish uniform laws on procedural matters, but by tradition in this field, once substantial rules and some procedural rules have been laid down, it gave space to Supreme Court enabling it to establish procedural rules.

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freeze on individual shares, are subject to practical and economical considerations, such as, most of all, the protection of American creditors. Already in the Bankruptcy Reform Act dated 1978 (24), par. 304 enabled the foreign trustee to request the opening of an ancillary proceeding in the United States, to assist the foreign proceeding, should there be assets on the American territory which the American judge could give the trustee of the foreign proceeding. Even if there are no bankrupt’s assets in the United States, the foreign trustee could act as above, to prevent creditors from obtaining judgments in their favor within the American jurisdiction. The following par. 305, with respect to a request for bankruptcy presented in the United States with a insolvency proceeding pending abroad, authorized the foreign trustee to request its suspension or interruption (25). Anyway, they are institutions defined in an unsystematic way, very flexible, which allowed great discretionary power to the American judge, considerably different from the very structured concept of secondary insolvency proceedings dealt in the EU Regulation. The reform occurred in 2005 has seen a considerable evolution of the regulatory framework related to the international insolvency: sec. 801 has added Chapter 15, to Title 11 of the United States Code, or, according to another designation, to the Bankruptcy Code; sec. 802 introduces various coordination amendments both to Title 11 and to Title 28, of the United States Code (26). To sum up, the new Chapter 15 aims at adopting the Model law on cross-border insolvency worked out within UNCITRAL, to better manage the assumptions of cross-border insolvency.

Japan has adopted only certain elements of the common law experience (27); anyway, it is worth mentioning them for its economic and commercial situation. With reference to cross-border aspects, with the issuing of the Civil rehabilitation law dated 1999 (28), and Law on recognition and assistance toward foreign insolvency proceedings, Japan has introduced in the insolvency regulation a discipline inspired by the limited universality model; the second mentioned regulation, is basically based on the UNCITRAL model law, even if the provision text of the articles is considerably different.

24(?) With regard to cross-border aspects of insolvency proceedings, it wanted to give an answer to the real problems arisen from bankruptcies of the previous years, such as the famous case of Bankhaus I. D. Herstatt KgaA, a credit institute whose registered office was in the Federal republic of Germany, branch offices in Switzerland and Luxemburg, considerable deposits at the Chase Manhattan Bank in New York.

For an outline of the law, CASTAGNOLA, La nuova disciplina del fallimento negli Stati Uniti, in Giur. comm., 1987, I, p. 319 ss.

25(?) Specifically on such aspects GITLIN, FLASCHEN, GRIMES, United States treatment of foreign insolvency proceedings, in Cross-border insolvency: comparative dimensions, United Kingdom National Committee of Comparative Law, vol. XII, edited by Fletcher, Londra, 1990, p. 69 ss., in particular p. 75 ss., then GALLETTO, La protezione e l’apprensione dei beni situati all’estero, in Il fall., 1998, p. 959 s.

26(?) In particular sec. 1410 of Title 28 of the United States Code, has been replaced: now sec. 1410 Venue of cases ancillary to foreign proceedings.

27(?) As it is well known, Japan in the time of Meiji revolution, adopter German civil code, along a curious path. As VAN CAENEGEM sums up, I sistemi giuridici europei, Bologna, 2003, p. 14 s., to make Japanese Empire modern and westernized, it was decided to adopt western legislative models, looking first on England, which was the main world power of the time, but the lack of a codification in this Country, turned out to be an insurmountable obstacle. So, the Japanese turned their attention to France, a world colonial power, which had a civil code. Preparations for the adoption of the Napoleonic Code started off, and professor Boissonnade went to Japan to arrange the «transplantation». But, the defeat of France by Bismarck in 1870 convinced the Japanese that German law was superior to French one, since German weapons defeated the French ones. So, the Japanese decided to adopt BGB just two years after its adoption in Germany.

28(?) The text has been subsequently amended.

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3. – Now, the necessity to mention UNCITRAL model law on cross-border insolvency is evident, model law based on the limited universality principle; we can reassert that it adopts the same solution of the EC Regulation n. 1346 dated 2000 and before this, the EC convention dated 1995, same formulation of the Istanbul Convention dated 1990, as well as some national disciplines.

UNCITRAL is the Anglophone acronym which identifies the United Nations Commission on International Trade Law; therefore it is an issuing of the United nations, constituted in 1996, whose aim is an worldwide standardizing action of the trade law. Among its activities, we point out the approval, in 1997, of the model law on cross-border insolvency (29), which should be the common reference base for the States in the organization of their laws on the cross-border insolvency phenomenon. As stated above, in the United Kingdom, U.S.A. and Japan, a legislation based on such model law has been adopted, and this has happened also in the judicial system of Poland, Romania, Montenegro, Serbia, Mexico, South Africa, British Virgin Islands, Colombia and Eritrea (30).

The main purpose of the model law is to assist the States in the organization of their legislative instruments, with the ultimate aim that these come out to be formulated on a common basis. It is obvious that the model law, addressing the generality of the States, has to face very different judicial systems; therefore it does not aim at realizing the unification of the laws on insolvency proceedings, but at promoting their approach, to reach the practical result to allow a subsequent easier cooperation among the authorities of the systems involved in a cross-border bankruptcy. This is explained also in the Guide to enactment, attached to the model law, which defines it «a vehicle for the harmonization of laws».

A necessary characteristic of the model law is flexibility, that is, the single State which decides to adopt it, can introduce all necessary modifications to the standard text to make it compatible with its own regulatory system, even if the Guide to enactment contains the recommendation that States introduce the smallest possible changes during its incorporation in their own systems, in order to get a sufficient degree of harmonization in the discipline of cross-border bankruptcy.

In the first two chapters, the model law deals with some principles and definitions of general character. The scope of enforcement is defined in art. 1, which excludes enterprises subject to special insolvency regulations, such as insurances and credit institutes; the next article points out the meaning of the terminological definitions used, taking, anyway, a substantial significance, establishing in particular the meaning of the foreign proceeding, and identifying the requirements which qualify it as an insolvency proceeding (art. 2 lett. a). Art. 2 also defines the concepts of main proceeding (opened where the main debtor’s interests are situated) and secondary proceeding (opened where a branch office of the debtor’s company is situated). Then, the prevalence of international conventions (art. 3), as well as the reservations of public order, are considered (art. 6). The second chapter of the model law deals with the organs of proceedings and creditors, allowing the organs of the foreign proceeding the direct access to local courts, without particular

29(?) The model law worked out at the UNCITRAL stage, is the result of negotiations lasted five years and it has been approved during XXX section in Wien on 30 May 1997. It can be read in Dir. comm. int., 1998, p. 646 ss.

30(?) As it is stated in the internet UNCITRAL site: http://ww.uncitral.org in the sub-item Status of texts of the item Cross-border Insolvency.

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formalities, (art. 9), and that foreign creditors have the same rights than the national ones, both for the opening of a proceeding and for the participation to it (art. 13). Therefore, model law is divided into three further chapters, dealing with the recognition of foreign decisions on bankruptcy matter, cross-border cooperation of authorities and bodies, coordination of national and foreign proceedings.. For what concern our interest, it is essential the recognition of foreign insolvency proceedings, which represents the necessary junction to enforce rules on cooperation and coordination of proceedings and, most of all, to obtain the opening of a local secondary proceeding. The Guide to enactment at n. 184, specifies that art. 28 of the model law provides, together with art. 29, that the recognition of a main foreign proceeding does not prevent from opening a secondary proceeding, if the debtor has assets in that State (31). Anyway, it is not provided a subordination of the secondary local proceeding to the main foreign proceeding (32); even if the recognition of a foreign proceeding leads to an insolvency presumption (art. 31), it is provided that relationships between such proceedings are assessed by the inner judge most of all on the basis of the effect compatibility (art. 29). In principle, the recognition of the main foreign proceeding entails the suspension of individual executive actions against the debtor’s assets and rights, as well as the prohibition for the same to make his disposition by will (art. 20). Then, if local proceeding is opened after the recognition of the foreign proceeding, a review of the existing precautionary or suspensive measures can take place (33).

4. – These preliminary remarks deal with the form taken by the legislative instruments of the European Union, European Council, UNCITRAL and numerous States within the cross-border insolvency management. Anyway, it is true that the variety of structures used by companies to operate at cross-border level, is very wide. In this report, we are dealing with the case of a company which has its registered office, or better its main interests place in a Country and branch offices, that is to say establishments, in other States.

Anyway, within the economic situation, there could be very different forms of control and coordination, and a non-negligible phenomenon is that of multinational groups characterized by a different forms from the mentioned one, that is to say enterprise groups, legally autonomous. By a great simplification, we can have a unique entity from an economic point of view, yet composed of a plurality of enterprises from a juridical point of view, normally companies, one in each State in which the enterprise operates.

Practically, this way to operate on foreign markets is considered more advantageous than the setting up of an establishment in another Country by a foreign company. In Italy, if we follow the establishment way, we apply art.

31(?) Integrating in this way what provided by the mentioned art. 2 which refers to the presence of a debtor’s establishment.

32(?) I point out how close bonds between main proceeding and secondary proceeding are typical of the EU Regulation.

33(?) I point out how in 1999 the Commission started the works on the discipline of insolvency inside Countries, specifically with regard to corporate insolvency. In this field, it was preferred to choose the instrument of the legislative guide and not a real regulatory text model, since the matter involves not only technical aspects, but also legislative policy ones. Works ended in 2004 with the adoption of UNCITRAL legislative guide on insolvency law. Among the matters dealt, there is the cross-border insolvency, with a request to the States to fully discipline such aspect, suggesting the adoption of the above mentioned model law.

The text is available on the UNCITRAL internet site : http://ww.uncitral.org under the item Adopted texts, sub-item Insolvency.

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2507 ss. c.c., and in particular art. 2508 c.c., which adopts the text of the corresponding ante reform article of the corporate law, already conformed to XI directive 89/666/CEE dated 21 December 1989, on harmonization of corporate law (34).

In front of the phenomenon of enterprise groups, it is hard to define the context even for the clearest assumptions of belonging to an unitary group; for example, in the double case of bankruptcy of an Italian company controlled by a foreign company and vice versa, the insolvency of a controlling Italian company which has set up in other Countries companies or other bodies under its control.

A datum is certain: at the moment it is not possible to find a rule of international law which allows to exceed the limit of the distinct corporate status of the single companies belonging to a group (35). The principle of the separation of the juridical persons, in particular the assets of the parent company and subsidiary company, is generally accepted by international laws. This leaves some open questions which now turn into remarks of ideal character. For example, there is the pressing concern to face in a correct way conducts such as those of a parent company which intentionally pauperizes the companies under its control, located in other Countries. The phenomenon can reach extreme situations, in which political matters are involved, such as the will of big multinational companies to influence the life of an economically weak State. There are sensational examples of such operations, but they go over the limits of a juridical remark and they cannot be faced in this report.

If at the international level there is no possibility to go over the principle of corporate status, not even in case of distorted use, we can only conclude with the complete extraneousness, under a juridical profile, of any liability of the parent company and, generally speaking, of the group. There is no possibility to extend bankruptcy to the parent company or at least involve it in recovery plans.

In our system, we certainly have an exception to the equation juridical person/assets autonomy, already represented in the experience prior to the corporate law reform by art. 2362 c.c., together with art. 2497 c.c. Today, art. 2362 c.c. provides the obligation of data registration regarding the sole member and the effects vis-à-vis company creditors of the relationships existing between the same and the company; the discipline of the sole shareholder is completed by art. 2325, paragraph 2 c.c., which sets a reverse rule to the pre-existing one, that is to say, an unlimited responsibility of the sole shareholder only in case of non-execution of art. 2362 c.c. and art. 2342 c.c., which provides for the obligation of the complete release of the shares if the plurality of members ceases (36). In these specific cases, we can see an overcoming of the liability limitation arising from corporate status. Similar provisions are provided for limited companies by art. 2470 c.c., together with art. 2462 and 2464 c.c. Moreover, the abuse of the corporate status is subject of discussion; it can be summed up as the abuse of the rights which law links to the presence of a juridical person, mainly the benefit of the limited liability,

34(?) The rule according to pre-existing numbering of the civil code was art. 2506; see FIMMANÒ, Riconoscimento e stabilimento delle società nel nuovo sistema italiano di diritto internazionale privato, in Riv. dir. impresa, 1998, p. 320 ss.

35(?) On this matter LUPONE, L’insolvenza transnazionale. Procedure concorsuali nello Stato e beni all’estero, cit., p. 22.

36(?) Elsewhere there is reference to the sole member, as in art. 2331, paragraph 2, c.c.

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that is the right of properties separation. Therefore, the suppression of the abuse of the corporate status would be equivalent to the disapplication of the benefits linked to the concept of corporate status, putting the ordinary unlimited patrimony liability into effect (37).

Today, we have to take into account art. 25, paragraph 2, lett. h), l. n. 218 dated 1995 which states that the regulating law of the corporation disciplines the liability for its obligations. If we apply such provision to the phenomenon of the groups, we have to conclude that patrimony autonomy of a foreign corporation will be the one provided by its legislation and not by lex fori (38).

If we let ourselves be influenced by the argument we are dealing, we could assume an expedient, decidedly arbitrary, to overcome the principle of corporate status. With an evident straining, we could claim that the legal ownership by a foreign company of a control share in an insolvent Italian company, can be considered as a sign of the execution of a business activity in our Country (39). Therefore, the foreign company should be considered as an entrepreneur performing a business activity on our territory, where it would have a sort of establishment; anyway, this would sound arbitrary.

Corporate status is an inalienable instrument of modern law, even if it does not seem opportune the unconditioned acceptance of the limitations which entails the “veil” it has constituted, not only in the insolvency field. We have to take into consideration the theory of “lifting the corporate veil”, veil represented by the separation of juridical persons, a theory particularly developed in the common law world, to overcome the corporate shield and so the corporate status. In short, such theory arises from the overcoming of the classical concepts on the nature of the juridical person, seen as a pretence or as a patrimony bound to a purpose, or else on a regulatory basis, etc. (40). The juridical person is seen as a differentiated technique of benefit attribution (41), benefits which, anyway, have a relative character; the overcoming of the corporate status is possible for the safeguard of public or private interests, both of the members of the same juridical person, and of third parties, in particular, the creditors (42). In the common law area, this formulation is present in England and in the United States, where a legitimacy presumption of the use of the patrimony separation scheme is in force, which anyway can be won by a comparative evaluation between the creditors’ interests to its overcoming and the members’ interests to its preservation (43).

37(?) Widely GALGANO, I gruppi di società, in Le società, treaty directed by da F. Galgano, Torino, 2001, p. 231 ss.

38(?) BENEDETTELLI’s opinion, Commento all'art. 25 (Società ed altri enti), in Legge 31 maggio 1995, n. 218. Riforma del sistema italiano di diritto internazionale privato, Commentary edited by Bariatti, in Le nuove leggi civili commentate, 1996, p. 1119.

39(?) See LUPONE, L’insolvenza transnazionale. Procedure concorsuali nello Stato e beni all’estero, cit., p. 174 ss.

40(?) See references in DI MAJO and PRESTIPINO, item Persone giuridiche, punto III, Diritto comparato e straniero, in Enc. giur. Treccani, vol. XXIII, Roma, 1990, p. 1.

41(?) So, DI MAJO and PRESTIPINO, op. cit., p. 1 ss.42(?) Again DI MAJO and PRESTIPINO, op. cit., p. 3, who points out how in England the

legislator has stated that the company shield must not be taken into account in well specified hypotheses such as that of the reduction of the members below the quorum and the fraudulent trade. For more recent references MANES, La teoria del lifting the veil of incorporation in Inghilterra, in Contratto e impresa, 2, 1999, p. 718 ss.

43(?) As reported by PONZANELLI, voce Lifting the corporate veil, in Dig. disc. priv. - Sez.

comm., vol. IX, Torino, 1993, p. 111.

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I think it is worth pointing out how such problem is coming out with regard to the compensation for damage arising from cross-border industrial incidents. The serious environmental incidents occurred in these last years and the difficulties to obtain the compensation for damage, constitute a considerable input toward the identification of a liability, even indirect, of the parent company, not only for the compensation of the injured party, but also to spur it to a correct conduct towards subsidiary companies (44).

5. – The structure of Regolamento relativo alle procedure d’insolvenza (Regulation on insolvency proceedings) n. 1346 dated 2000 of the EU

44(?) The accident of Bhopal, in the State of Madya Pradesh, in India, was particularly tragic: in the night between 2 and 3 December 1984 a toxic gas escape killed 3.828 people and injured more than 350.000, many of whom with permanent injures at the respiratory tract and eyes. The plant was managed by Union Carbide India Limited, Indian company hold for 50,9 % by Union Carbide Corporation, American company set up in the State of New York and registered injured people decided to address the American judges, who, even declining the jurisdiction of the American court, imposed certain conditions, such as the pledge of the controlling company Union Carbide Corporation to be submitted to the Indian court jurisdiction; effectively, they lifted the corporate veil. After a complex judicial case in India, the Union Carbide Corporation paid 470 million of dollars for compensation, to the Indian Government and not directly to injured people, to whom, according to press news, compensation had been paid, starting from November 2004, that is to say, twenty years after the event.

Another similar interesting case is Amoco Cadiz. It is the name of a super-oil tanker which, due to a damage, on 16 March 1978 was wrecked in Brittany, near the village of Portsall, pouring into the sea 230.000 tons of crude oil, which polluted 375 km of coast, with consequent destruction of the 30% of the marine fauna and 5% of marine flora and heavy repercussions on the fishing activities, oyster farming and tourism. Amoco Cadiz was owned by a Liberian company, the Amoco Transport Co., whose shares were held by a company of a multinational group, operating worldwide in the chemical and oil field which referred to Standard Oil Co., American company set up in Indiana whose registered office was in Chicago, Illinois. French government and other local authorities, claimed damages for 769 million of dollars. The American judges, appointed to decide on the matter, overcoming the formal aspects of corporate status of the different companies involved, pragmatically emphasized substantial elements, such as the title of the decisions and control of the group, ascribing liability for the fact to the American company Amoco International Oil Co., set up in Delaware whose registered office was in Chicago, which managed the sea transport field of the group referring to Standard Oil Co., parent company held responsible for non-control of the tanker management, together with the Liberian company Amoco Transport Co., owner of the same tanker. The American judges lifted the corporate veil, since the company structure was functional to the operativeness and realization of the financial net profit of the parent company, of which, substantially, the group carried out the decisions. It was emphasized that inside the group, the managers had interchangeable positions and the shares of many companies of the group, were not object of market negotiations.

A different case is the accident of Seveso, where on 10 July 1976 from a plant of the ICMESA spa, a company, set up in Italy in 1921 and, at the date of the event, with registered office in Meda, a toxic substances escape, among which the so-called dioxin, occurred, polluting an area of 1.807 square hectares in the municipal districts of Seveso, Meda, Cesano Maderno and Desio. The civil liability of ICMESA spa was evident, which anyway had not availability of capital to facethe extent of the damages caused, estimated at L. 121.635.866.606, in addition to physical injuries suffered by the residents, hardly assessable, most of all for the future.

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Council (45), provides that a national proceeding plays the role of “main” proceeding, having a prominent role at European level; anyway, derogatory regulations on specific aspects which limit the extent of such proceedings, are provided, and have a basically universal extent in the whole Union. The first derogation in favor of national laws, is the possibility to open secondary proceedings; but, apart from this “structural” profile, a series of interests and rights are autonomously estimated, in the difficulty to identify a common discipline or to enforce the law of the State in which proceeding had been opened, considering the deep diversities at the national discipline level. I mainly refer to the provisions contained in art. 5 – 15 of the Regulation.

Art. 3 of the Regulation can be the starting point for the treatment of the relationships between main proceeding and secondary proceedings, since it deals with the attribution of jurisdictional cognizance. The basic jurisdiction criterion is represented by the presence in a member State of the “place where the debtor’s main interests are located”. Among the whole proceedings which can be opened in the Countries of the Union following the insolvency of a subject whose properties and relations are placed in more than one State, the Regulation chooses to give relevance to the proceeding opened in the member State in whose territory the place of main interests of the debtor is located (46); for companies, this place is, until proved otherwise, the registered office. Basically (art. 3), only the judges of the State in which there is the place of main interests, have the jurisdiction to open the insolvency proceeding; in fact, the judges of another State are competent to open a proceeding only if in their territory there is an establishment of the debtor’s activity, and anyway the effects produced by such business in their jurisdiction will merely be territorial, that is to say, limited to the debtor’s properties

Three Swiss companies held ICMESA spa and control, through Givaudan et C. s.a., was performed by Hoffman La Roche group. Private people and the municipalities involved, sued in Italy, the controlling company Givaudan et C. s.a., even if it was evident that they did not have the juridical instruments to overcome the liability limitation granted to joint-stock companies, as well as it was hardly possible that Switzerland could then recognize an Italian conviction for Givaudan et C. s.a. Therefore, the Italian government and Lombardy Region, in subrogation, for the money paid down by way of compensation for damage, preferred to follow the transaction way, accepted, for political and image reasons, by Givaudan et C. s.a., which anyway wanted to maintain the corporate separation, and through a novation act, simply assumed the obligations of ICMESA spa, agreeing on a compensation which did not wholly cover the damages caused. Almost all private petitioners chose the compromise agreement.

45(?) Regulation n. 1346/2000, approved by the EU Council on 29 May 2000, in Gazz. uff. delle Comunità europee, 30 June 2000, n. L 160, p. 1 ss., in force from 31 May 2002.

46(?) Point 13 of the preamble intends to clarify the meaning of the notion «place of the main interests of the debtor» as the place in which the debtor performs in a regular way, and therefore recognizable by third parties, the management of its interests.

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which are located in such territory (art. 3, par. 2) (47). Such jurisdiction criteria do not provide for derogations and therefore the will of the involved parties cannot have any influence. With regard to the jurisdiction, even the place in which the debtor’s properties are located, has ant relevance (48). The jurisdiction criteria identified in art. 3 are binding; anyway they only identify the member State whose judges can open the insolvency proceeding; the internal division of the cognizance in such State will be determined in compliance with the national law (49).

To sum up, what above mentioned entails that the “main” proceeding is the one opened in the place where the debtor’s main interests are located, to be recognized in all the other Countries and whose organs basically manage, even at cross-border level, bankruptcy. The main insolvency proceeding has therefore a “worldwide” extent, includes all debtor’s properties, located everywhere, and involves all creditors, no matter where they are (50). This is the foundation rule to which follows that the lex fori determines the lex concursus, too.

The general criterion of art. 3, does not exclude, in the second paragraph, that the judges of a State in whose territory the place of main interests of the debtor is not situated, can open an insolvency proceeding, limited anyway to the debtor’s properties situated in such State, and on condition that the debtor has an establishment there. Nevertheless, it is necessary to pay attention, since there is the possibility to open two different categories of secondary proceedings. There are the secondary proceedings, that we can call “ordinary”, which follows the opening of the main proceeding and their purpose is the best management of the local bankruptcy in a State which is not the place of the main proceeding, and they are disciplined in chapter III of the Regulation (art. 27 ss.). But, according to paragraph 4, of art. 3, a territorially limited proceeding, based on the presence of a simple establishment, can be opened, even regardless of the opening of the “main” proceeding, without any judgment of insolvency by the judges of the State in which the place of main interests of the debtor is situated. This can happen when, it is not possible to open an insolvency proceeding towards the debtor, due to the regulatory system of the State in which the place of his main interests is situated. Besides, it can be opened if the request for the opening of the proceeding comes from a creditor situated in the State where the establishment is located, or is the debt is exclusively related to the business activity of such secondary place. The purpose is to limit to the utmost the opening of “independent” proceedings from a main proceeding. Therefore, there are not only secondary proceeding that for convenience I called “ordinary”, but also “independent” territorial proceedings, even if this is not a correct definition since the subsequent opening of a main proceeding can weight on them (art. 36 and 37).

Going back to the structure of the Regulation, even with the specific particularities of the assumptions of “independent” proceedings to which I will come back later on, there is a subordination criterion, fixed by paragraph 3 of

47(?) See anyway art. 18, par. 2, on the trustee’ s powers.48(?) See FUMAGALLI, op. cit., p. 689.49(?) Cf. point 15 of preamble.50(?) According to what stated in point 16 of the preamble, the judges cognizant to

open the main proceeding, should be allowed to impose the adoption of temporary and conservative regulations since the request of opening of the same proceeding.

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the same art. 3, between the insolvency proceeding of the place where the main interests of the debtor are situated, and the opening of secondary proceedings. First of all, these last are territorial, play the role of secondary, ancillary proceedings and finally, they must obligatorily be liquidation proceedings. The subordinate and secondary role of such proceedings, is due to the fact that the proceeding opened in the place where the main interests of the debtor are situated, is the only proceeding which can have an international role, and therefore basically aiming at including all the properties and assets and liabilities of the debtor; the other proceedings have only significance for the single national territories. The ratio of such choice is linked to the consideration that the place where the main interests of the debtor are situated, that is the place where the debtor regularly does his businesses, is the place where the core of his patrimony should be, and where presumably creditors mainly refer. This definition is reflected in different specific aspects. First of all, ex art. 27, to request the opening of a secondary proceeding, it is not necessary to demonstrate the insolvency status of the debtor, since the assessment performed at the opening of the proceeding is sufficient. Besides, the entitlement to request the opening of the secondary proceeding, as per art. 29, is due to the trustee of the main proceeding (51), pointing out that a similar entitlement is not mentioned for trustees of other possible secondary proceedings already existing in other Countries; we can deem that this is a further aspect of the role of the main proceeding, the only one to have a basically universal significance. To sum up, the main proceeding is effective and has a universal extent, including all the assets of the debtor’s patrimony, even those situated outside the State in which it is opened; anyway such universal extent can be limited if, in a member State in which the debtor has an establishment, a secondary proceeding is opened.

This leads to the coexistence of two or more proceedings, the main one with universal extent, except for the Countries in which a secondary proceeding has been opened, in whose territories the secondary proceeding is effective; it takes the shape of an auxiliary instrument of the main proceeding but if it has also an efficient function to safeguard local interests. Evident corollary of this structure, is that the opening of an insolvency proceeding with main character, precludes the subsequent opening of a proceeding of the same kind in other Countries (52). But this is not all, as per art. 3, par. 3, I reassert that the secondary insolvency proceeding must obligatorily be a liquidation proceeding (it must be one of the proceedings listed in attachment

51(?) This structure of the entitlement would be clear, but BARIATTI, L’applicazione del Regolamento CE n. 1346/2000 nella giurisprudenza, in Riv. dir. proc., 2005, p. 692 s., points out the decision dated 23 January 2004 of the Landgericht Köln, in EIR Database, n. 21, concerning the request for the opening of a secondary proceeding in Germany, State of the registered office of the debtor, following the opening of a main proceeding in England, considered the place of the main interests of the debtor. The German judge thought that the opening of the secondary proceeding could be requested in Germany even by the debtor, even if a trustee had been appointed in England, provided that, according to lex concursus (the English law), the trustee had not completely succeeded the debtor. The A. correctly points out that it would have been preferable to solve the matter following the Regulation, where art. 29 lett. b), refers to the law of the State in whose territory the opening of the secondary proceeding is requested for the determination of the subjects that, in addition to the trustee of the main proceeding ex lett. a), are entitled to request the opening of the secondary proceeding. Besides, as per art. 28, the lex concursus of the secondary proceeding, is the one of the State opening this same proceeding, and not that of the State where the main proceeding is opened.

52(?) Cf. FUMAGALLI, op. cit., p. 690.

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B) (53); from all this it follows that, once a main proceeding is opened, it is not possible to open recovery proceedings in the States where the debtor has an establishment; therefore the secondary proceeding is bound to a specific purpose and can have an exclusively liquidating character.

The territorial proceedings, that we defined “independent”, are not subject to such obligation, that is, the proceedings opened in the absence of a main proceeding, as per art. 3, par. 2, in compliance with the provisions of art. 3, par. 4. These proceedings could also be recovery proceedings, but, as we mentioned before, the subsequent opening of a main proceeding can weight on this aspect, too. Art. 36 provides, where compatible, for a subordination following to the main proceeding subsequently opened, and art. 37 specifies that the trustee of the main proceeding can request the conversion of the territorial balancing proceeding in a liquidation proceeding, in the interest of the creditors of the main proceeding.

It is interesting to mention the Parmalat case, which allows the practical verification of the system introduced by the Regulation. As already highlighted, the secondary proceeding can only be one of the liquidation proceedings indicated in the attachment B. For what concerns Italy, the proceeding listed here are: bankruptcy, agreement with creditors with cession of property, forced liquidation, extraordinary administration with program of cession of corporate structures and extraordinary administration with a restructuring program of which an agreement with cession of property is integral part. If we consider the insolvency of Parmalat group, art. 3, paragraph 3, of Marzano decree, extends the enforceability of the new extraordinary administration even to the companies of the group. This has happened for the subsidiary company Eurofood, with registered office in Ireland, of which the court of Parma, with judgment dated 20 February 2004 (54), declared the insolvency status. Actually, according to such judgment, it is the Italian jurisdiction which assesses the insolvency status of a subsidiary company, when the registered office, merely formal or dummy, is in another member State of the European Union, and the head office is located in Italy at the premises of the controlling company, to be considered as the place of real management and organization of the company. Anyway, the Italian proceeding of admission to the extraordinary administration has caused a conflict between the court of Parma and the Irish High Court, which, in its judgment dated 23 March 2004, stated that the main proceeding was the one already opened in Ireland, where, on 27 January 2004, the Irish High Court had adopted the proceeding of appointment of a provisional liquidator for Eurofood, with immediate authority to take possession of the whole property of the company, manage its business, open a current account in the name of the company and recruit a lawyer. Therefore, while the Irish judicial case was developing, under decree of the Minister of Productive Activity on 9 February 2004, even Eurofood IFSC Ltd company was admitted to the secondary

53(?) With reference to Regulation n. 1346 del 2000, on insolvency proceedings, there have been several modifications to the attachments concerning the lists of insolvency proceedings, liquidation proceedings and liquidators, adopted in EC Regulation 603/2005 of the Council, dated 12 April 2005; later on, these attachments have been replaced again by (EC)Regulation , n. 694/2006 of the Council, dated 27 April 2006 and finally (EC) Regulation n. 681/2007 of the Council, dated 13 June 2007 has modified again these lists.

54(?) It can be read in Foro it., 2004, I, c. 1567 ss.; in Riv. dir. int. priv. e proc., 2004, p. 1062 ss.; in Giur. it., 2005, p. 1199 ss., and in Il fall., 2004, p. 1265 ss.

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administration proceeding ex art. 3, paragraph 3, of l.d. n. 347 dated 2003, as company of the Parmalat group, and our magistracy, too, pronounced on it.

Therefore in the Eurofood case, both the Irish and the Italian judge declared cognizant to open the main proceeding. The focus element is the individuation of the place of the main interests of the debtor, which, according to different considerations in fact and in law, is in Ireland, according to Irish judges, and in Italy, according to Italian judges.

Then, the Irish Supreme Court decides to submit to the Court of Justice the preliminary questions concerning the notion of “opening of an insolvency proceeding” as per art. 16 of Regulation, the preclusive effect of the decision of opening a main insolvency proceeding for the jurisdiction of other States, and the definition of the place of the main interests of the debtor.

With regard to the request for preliminary ruling proposed by the Irish Supreme Court in the Eurofood case, the decision of Court of Justice interprets the Regulation rules in an opposite way compared to the interpretation of the Italian judges, not accepting the argument which prefers the controlling company (55). According to the Court, when the debtor is a subsidiary company, whose registered office is situated in a member State different from the one in which its parent company is situated, the presumption contained in art. 3 n. 1, second sentence, of Regulation n. 1346 dated 2000, for which the place of the main interests of such subsidiary company is situated in the member State in which there is also its registered office, can be overcome only if objective and verifiable elements by third parties allow to determine the existence of a real situation different from the one which it is deemed to correspond to the position in such registered office (56). It is necessary to have something more, something different than the mere corporate control.

Now, if we have to recognize the Irish proceeding as the main proceeding, since it has been opened prior to the Italian proceeding, we wonder which the destiny of the Italian proceeding is. From the point of view of our interest, to which I will come back later on with more general considerations, to play the role of secondary proceeding, the Italian proceeding will have to fall within one of the above mentioned assumptions of extraordinary administration. But in this specific case, the matter could be

55(?) Court of Just., 2 May 2006, in case C-341/04, Eurofood IFSC Ltd, which can be found on the official website of the Court of Justice http://curia.eu.int/, case C-341/04, and in Guida al diritto, 2006, n. 20, p. 113 ss.

56(?) the Court has clarified other points of the Regulation: art. 16, n. 1, paragraph 1, must be read in the sense that the main insolvency proceeding opened by a judge of a member State, must be recognized by the judges of the other member States who cannot control the competence of the Judge of the opening State.

Essentially, the Regulation does not provide for instruments for the settlement of jurisdiction conflicts, apart from the mere prevention “a priori” instrument. Secondly, art. 16, n. 1, paragraph 1, must also be interpreted in the sense that it constitutes a decision for the opening of the insolvency proceeding; in accordance with such rule the decision of a judge belonging to a member State to whom such request has been addressed, based onn the debtor’s insolvency and aiming at the opening of a proceeding in accordance with attachment A of the same Regulation, when such decision involves the debtor’s dispossession and includes the appointment of a trustee provided for by attachment C of the mentioned regulation. Such dispossessions involves the debtor’s loss of management powers on his patrimony. Finally, according to the Court of Justice, art. 26 of Regulation must be interpreted in the sense that a member State can refuse to recognize an insolvency proceeding opened in another member State if the decision to open it has been taken in manifest infringement of the basic right to be heard, a right that a subject involved in such proceeding, has.

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now more complicated, since it seems that in Italy Eurofood hasn’t any establishment; there is only the Italian decision to open the proceeding on the basis of an assessment, wrong according to the Court of Justice, that the place of the main interests is located c/o the controlling company; obviously, the Italian judgment cannot be of opening of a main proceeding, already opened in Ireland, but if Eurofood hasn’t any establishment in Italy, it cannot even be considered as a judgment of opening of a secondary proceeding, lacking the precondition; therefore it seems insusceptible of any purpose (57).

Now I have to deal more in detail two aspects: the recognition of the judgments and the concept of “establishment” as precondition to open a secondary proceeding.

With regard to the effects of the recognition, we have make it clear the different extent of the recognition of a main proceeding compared to a territorial proceeding. The principle of the automatic recognition is valid for the whole proceedings, but that of a territorial proceeding has more limited effects.

The recognition of a main proceeding, art. 17, par. 1, “produces in every member State, without any other formality, the effects provided for by the law of the State which opened it”; consequently, after the opening of a main proceeding in the State where the place of the main interests is situated, in the other member States, the existence of such proceeding and the action of its organs must be recognized; if necessary, it will be possible to open only a secondary proceeding in situ.

The recognition of the decision to open a territorial proceeding has not this extent, considering that the role and effects of such proceedings are essentially territorial; anyway these effects have to be taken into consideration, without questioning them, every time they are prominent for activities or for the solution of conflicts before authorities of other States (58).

We have to highlight the opinion according to which, in the presence of the opening of an “independent” territorial proceeding, obviously before the main one, the judge, to whom has been subsequently requested the opening in another member State of the main proceeding, is bound, for assessment purposes, evidently positive of the debtor’s insolvency status, by the previous decision of opening of the territorial proceeding (59). It seems that this argument cannot be shared. It is undoubtedly true that the principle stated in art. 16, that is to say, the recognition of the decisions of opening the insolvency proceedings, must be applied to the whole decisions taken within the scope of art. 3, and therefore even those taken in accordance with its par. 4. It is also evident, that if a judge has opened a territorial proceeding, it is because he has assessed the debtor’s insolvency. Anyway, we have to consider

57(?) At the date of the meeting, the proceeding, filed at n. 19/2004 is still open in Parma. On 23 March 2007 a hearing was held to verify the liabilities, at the end of it, the G.D. has put off to 30 January 2008 for the closing of the liabilities, with the following reason: «waiting for the final judgment relevant to the jurisdiction of the insolven, coicy declaration».

58(?) For example, the opening of a secondary proceeding in Italy, following a French main proceeding, has effects only on our Country, but a third Country, for example Germany, cannot disown to the Italian trustee, the entitlement to operate in Germany for the recovery of goods, already appurtenant to the Italian establishment of the bankrupt debtor, and that this last had diverted to Germany after the opening of the proceeding (art. 18, par. 2). In the similar way, this should happen with regard to the actions that the Italian trustee starts in Germany to recover the credits relevant to the operations of the Italian establishment of the debtor subject to Italian territorial proceeding. So, DE CESARI and MONTELLA, Le procedure di insolvenza nella nuova disciplina comunitaria, Milano, 2004, p. 193.

59(?) As asserted by DE CESARI and MONTELLA, op. cit., p. 250.

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the role of secondary proceedings, which can be put into explicit regulatory estimates. The same art. 3, par. 2, states that the opening of a territorial proceeding is linked to the activity of an establishment; therefore at par. 4, it states the specific opening conditions. Thus, the assessment of the relevant authority to open a territorial proceeding is linked to the existing situation at the partition of the company operating on the territory of his jurisdiction. If we can accept that the insolvency assessment, made in the place where the debtor’s main interests are situated, can be binding upon the whole Union, it cannot be acceptable that the insolvency of an establishment can have such effects. The declaration of opening a territorial proceeding is automatically recognized in the other member States, but only as decision of opening a territorial proceeding. We have to remind that art. 27 provides that only a main proceeding, as per art. 3, par. 1, opened by a judge of a member State and recognized in another member State, allows the opening, in this other member State, of a secondary insolvency proceeding, without examining the debtor’s insolvency in this other State. In the Regulation there is no evidence of similar effects, which follow the opening of a secondary proceeding, for the declaration to open a main proceeding.

I will not stop on the matter of the “place of the debtor’s main interests” which legitimates the opening of the main proceeding; it is better to stop on the opening of a secondary insolvency proceeding, as per art. 3, par. 2, in the presence of an “establishment”, which becomes the prerequisite for the opening of a secondary proceeding (60). The word «establishment» is defined in art 2, lett. h), which refers to «any place of operations in which the debtor carries on an economic activity in a non-transitory way, using human means and properties». Therefore, it is not sufficient that the debtor’s properties are situated in a State; the mere presence of assets does not legitimate the opening of a secondary proceeding (61), even if an opinion has been expressed on the possibility to open a local proceeding against a mere patrimony and lacking a “dependent” company activity, provided that a main proceeding has already been opened and that the secondary proceeding aims at the better management of the patrimonial yielders present on the territory. This opinion is expressed with regard to the considerando n. 19 which, among the purposes of secondary proceedings, includes also the one of an “effective management of the assets”; lacking the operations of a business activity, the opening of a local proceeding by autonomous action would be in any case

60(?) We have to point out that the opening of secondary proceedings has not been deemed applicable to natural persons by the Bundesgerichtshof under decision dated 27 November 2003, see BARIATTI, op. cit., p. 692.

61(?) The statement is supported by the fact that during the drawing up of the Regulation, proposals advanced in these terms have been disregarded. cf. DE CESARI and MONTELLA, op. cit., p. 100.

In jurisprudence Landesgericht Klagenfurt, 2 July 2004, Zenith, in EIR Database, n. 46, ma contra our Court of Cassation, actually, according to Cass., sect. un. (ord.), 28 January 2005, n. 1734, in Riv. dir. int. priv. e proc., 2005, p. 450 ss., the fact that a company whose registered office is in another member State, owns an immovable property in Italy, even if it is the only property eligible to satisfy the creditors’ demands is not a valid element to found, according to art. 3, par. 1, Regulation n. 1346 dated 2000, the Italian jurisdiction in order to open a main insolvency proceeding against the companies «being an element suited to justify (at the most, if the other conditions provided for by the regulation exist) the opening of a secondary proceeding, in accordance with the second paragraph».

BARIATTI, op. cit., p. 692, note 46, quotes the decision of a Belgian judge dated 18 march 2003, Conception Enterprises, concerning the opening of a secondary proceeding in Belgium of an English company, in EIR Database, n. 23, where the secondary proceeding has been opened even if the branch office was only a post address.

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precluded (62). On the contrary, following art. 2 and 3 of the Regulation more literally, it comes out the necessity of a minimum organization of human means and goods able to operate towards the outside with continuity, within the scope of the activities of the parent company. Besides, we have to take into account that if we link the possibility to open a secondary proceeding to the mere presence of patrimonial goods, would considerably weaken the universal character of the main proceeding (63). It has been inferred that the mere reference to any continuative activity, susceptible of economic significance, can include activities different from those normally included in the concept of trading company, such as the private practice or a craft (64). The establishment must not have a corporate status (65) nor even be “another place of activity”, as provided for in Regulation n. 44 dated 2001, definition which replaces the concept of branch office provided for in the Brussels Convention dated 1968. The requisite seems more minimal: a structure with a certain stability, which should allow those who enter into contact with a structure recognizable as “establishment”, not to be impaired for the fact of being acquainted with what seems the offshoot of a foreign parent company.

From the viewpoint of the jurisdiction allocation inside the State, it seems logical to use the same criterion used for the establishment, that is, the judge of the place where the establishment is situated, has the jurisdiction; for our Country this means to apply the same rule of art. 9 b.l. from which we can infer that even if there are more than one establishment, the internal competence is due to the judge of the place where the main establishment is situated, or anyway, the place of reference with regard to the activity carried on (66).

6. – When one plans to open a secondary proceeding, once ascertained the competence in accordance with the Regulation, it is necessary to reason on the preconditions to reach the concrete opening of such proceeding. The principle of the recognition of the main proceeding in the other States, entails that an insolvency proceeding concerning a non-trader has effect in other Countries, too, for example in Italy where such debtors cannot be subject to insolvency proceedings. On the contrary, the dependent character of the secondary proceeding does not seem to allow the overcoming of the national preconditions on whose basis the real opening of an insolvency proceeding occurs. In conclusion, the national authority called to pronounce on the opening of a secondary proceeding will not assess as a necessary and

62(?) See MARINONI, Le procedure locali di insolvenza autonome e secondarie, in Dir. e pratica soc., 2005, fasc. 3, p. 30 ss.

63(?) So, CAPONI, Il regolamento comunitario sulle procedure d’insolvenza, in Foro it., 2002, V, c.. 223.

64(?) According to E. F. RICCI’s considerations Le procedure locali previste dal regolamento CE n. 1346/2000, in Giur. comm., 2004, I, p. 910.

65(?) There are some judgments in this sense, pointed out by BARIATTI, op. cit., p. 692, note 43: the above mentioned decision of the Belgian judge dated 18 March 2003, Conception Enterprises, concerning the opening in Belgium of a secondary proceeding of an English company; the decision of the Rechtbank Hertogenbosch dated 24 May 2004, Transbus International Ltd.; the decision of the Court of Athens n. 693/2003; the Oberlandesgericht Linz, 7 September 2004, in the absence of an activity, means and staff resources in Austria, it has not opened a secondary proceeding in such State of a company whose registered office and place of main interests were situated in Germany.

Therefore, see DE CESARI and MONTELLA, op. cit., p. 101, who refer to another doctrine, ivi, note 29.

66(?) See E. F. RICCI, op. cit. , p. 910.

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sufficient prerequisite for the decision, the existence of an establishment on the territory, but will apply the internal law on the existence of subjective preconditions with regard to the debtor (67). In our Country the judge will be linked to the precondition of the debtor’s running of a not little business house (68). A remark is to be made to art. 27, when, a main proceeding opened in a member Country, involves the opening of a secondary proceeding in another Country “without examining the debtor’s insolvency in this other State”. The objective precondition is the opening of the proceeding occurred in the State where the place of the main interests is situated. It is an inevitable corollary of the Regulation principles, that the authority who has to decide on the opening of the secondary proceeding could adopt an “insolvency” concept different from the concept of its national law. Anyway, it has been pointed out that the non-assessment of the insolvency status, can affect the real enforcement of the insolvency regulation (69).

Not all these considerations can be used for “independent” or “autonomous” proceedings as per par. 4 art. 3. The case in point is linked to the lack of a main proceeding in the State where the place of the debtor’s main interests is situated (70). Obviously, in this hypothesis, it is the authority of the State in which the establishment is situated that must assess the debtor’s insolvency. Therefore, these proceedings are not born as dependent proceedings and the ratio of this structure can be inferred from the two assumptions in which they can be opened. They are specific cases which, as already said, show the aim of the EC legislator to limit the use of these proceedings, which present as an anomaly with regard to the general structure (71). The assumptions are described in letters a) and b) of par. 4 art. 3, respectively.

The first one refers to the conditions provided for by the member State laws in which the debtor has the place of his own main interests, which do not allow to open a main insolvency proceeding according to par. 1 of the same art. 3. As already said, we are in front of an anomaly. Basically, only the authority of the State in which the debtor has the centre of his main interests can open a proceeding, which will be main and universal. Considering the legislative differences among the member Countries, it may happen that in the State where the debtor has the centre of his main interests, some of the

67(?) It follows that in Italy the opening in another Country of a main insolvency proceeding against a non-entrepreneur, will produce all its effects, owing to the principle of the automatic recognition, from the dispossession to the liquidation of the patrimony, but in Italy it will not be possible to open a territorial proceeding..

68(?) Again E. F. RICCI, op. cit. , p. 910 s.; MARINONI, Procedure territoriali di insolvenza: profili comuni, in Dir. e pratica soc., 2005, fasc. 4, p. 37 s.; DE CESARI and MONTELLA, op. cit., p. 231.

69(?) According to E. F. RICCI, op. cit. , p. 912 s., with regard to our Country, in the secondary proceeding there will be the same kind of problems arisen in the dependent bankruptcy e ex art. 147 b.l.., in particular with regard to the challenges to a fraudulent preference. In a similar way, MARINONI, op. cit., p. 38.

70(?) We notice a certain expression inaccuracy by DE CESARI and MONTELLA, op. cit., p. 123, contained in par. 4, for which «a territorial insolvency proceeding.., can take place before the opening of a main proceeding». The expression is inappropriate and reproduces a similar inaccuracy in the text of the considerando 17, since we can infer from it that it is true that territorial proceedings of par. 4 can be opened before the main proceeding, but they must anyway be followed by a main proceeding. Actually, it is not like that: for what concerns the assumption of letter a), it expressly presupposes that not only a main universal proceeding has not been opened, but also, that it is not even possible to open it; for what concerns letter b), the opening of a main proceeding in another Country constitutes only a possibility, but not a necessity, since the creditors could be satisfied with a territorial proceeding.

71(?) See FUMAGALLI, op. cit., p. 693; E. F. RICCI, op. cit. , p. 916.

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preconditions to submit him to an insolvency proceeding are missing, while they are present in the law of the State in which an establishment of the same company is situated. If we take for example the Italian law, which is one of the most restrictive on the matter, it does not admit bankruptcy of the non-entrepreneur private natural person, who can have in Italy the centre of his main interests and an establishment in another Country, where bankruptcy of the non-entrepreneur is admitted. In this case, the authority of this last State can open an insolvency proceeding, which obviously will be autonomous, independent, lacking the main proceeding, but it will not be a main proceeding, and will be limited to the bankrupt’s patrimony present on the territory of that specific State. The practical scope of application of this assumption seems limited, but it is worth a remark with regard to active entitlement to request the opening of such a proceeding, which is not limited as in the case of the following lett. b). We can assume that an Italian creditor, being unable to obtain the opening of an insolvency proceeding in Italy, takes legal steps for bankruptcy in the Country where the establishment is situated, and presumably, he can do this even for the credits which are not directly linked to such establishment, being the same a mere place of operation of the main activity (72).

The assumption provided for in lett. b) seems more relevant; here the proceeding can be opened upon request of a creditor with residence, domicile or seat in the State in which the establishment is situated, or else whose credit arises from the activity of the same establishment (73). Therefore, the initiative of the debtor or creditors which do not meet such requirements, as well as the official initiatives or initiatives from public bodies such as our public prosecutor, are excluded. It follows that, an Italian entrepreneur who has placed in another member Country the centre of his main interests, in case of insolvency, in the absence or pending the opening of a main proceeding, having in Italy only an establishment, is not subject in our Country to the declaration on the initiative of the public prosecutor, as well as to the petition of certain creditors (74). On the other hand, from the viewpoint of the Regulation, this assumption represents a reasonable mediation between the role of the main proceeding and the exigency not to make the initiative of the creditor too much difficult, in situations of merely local extent, since it seems excessive to oblige him to address the authority of the Country where the centre of the main interests of his debtor is situated. In this way, the assessment is left to the creditor who will have the possibility to start the opening of the main proceeding, for example if the patrimony present on the territory of the State in which the establishment is situated, to which the territorial proceeding is limited, turns out to be insufficient (75).

72(?) As DE CESARI and MONTELLA point out, op. cit., p. 121.73(?) There are experiences in the jurisprudence, on the basis of the location within the

State of an establishment and a creditor: judgment dated 31 March 2003 by Rechtbank van koophandel Tongeren, in EIR Database, n. 38, and previous decision of the same judge dated 9 September 2002, ibidem, n. 36; the decision of the Tribunal de commerce of Brussels, 25 November 2002, Werlin Corporation Ltd., ibidem, n. 54.

74(?) Profile pointed out by E. F. RICCI, op. cit. , p. 916 s.75(?) See DE CESARI and MONTELLA, op. cit., p. 122 who rightly assume the case of a

creditor, holder of a credit arising from the activity of the local establishment, who is free to estimate if the assets of such establishment are sufficient to grant the recovery of his credit, maybe due to a particular privilege recognized by the law of that State: for example, in Italy, the creditor of employee compensations.

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As already said, the secondary independent proceeding, unlike the territorial dependent one, is not subject to the obligations of par. 3 art. 3; therefore it must not obligatorily be a liquidation proceeding, but can be any insolvency proceeding according to the attachment A (76). Only if the main proceeding were afterwards opened, and thus a subordination bond with regard to the territorial proceeding would be established, according to art. 37, the trustee of the main proceeding could request the conversion of the territorial recovery proceeding into a liquidating proceeding.

Anyway, we have to stop for a while on art. 36, which provides for the minimal discipline of the relationships for the case in which to the territorial proceeding, initially independent, follows the opening of the main proceeding. The rule decrees that to the territorial proceeding, art. from 31 to 35 can be applied, that is the provisions on the coordination between the main proceeding and the secondary ones, subsequently opened, rules that according to the formulation of the Regulation, see a supremacy position of the main proceeding (77). The use of such rules on a territorial proceeding of insolvency or recovery type, does not seem to be easy (78). Such supremacy appears with greater force in the mentioned art. 37, which allows the trustee of the main proceeding to ask for the non-liquidating territorial proceeding to be converted, by the judge of such proceeding, into one of the liquidating proceeding of attachment B. The only requisite provided for by the rule, and presumably the only condition which will have to be proved by the trustee to the judge of the territorial proceeding to get the conversion, is that such “conversion turns out to be useful for the interests of the creditors of the main proceeding”. Therefore, the interest of the creditors of the territorial proceeding takes second place; anyway they will be able to avail themselves of art. 32, relevant to the exercise of their rights in the main proceeding, while the prevailing role of the main proceeding appears. In our system, for the rights of the creditors, there should not arise problems on the close succession of the proceedings (79).

A considerable problem in the relationships between main and secondary proceeding, is the possible revocation of the regulation of the opening of the main proceeding. In the Regulation, such pathological event is not provided for; it refers to the closing of proceedings, governing the relationship system between the closing of the secondary proceeding and the closing of the main proceeding. It has been correctly remarked that in case of “loss of effect” of the regulation of the opening of the main proceeding, which could happen due to the non-existence of the insolvency status, the insolvency assessment would fail, which, in the declaration of opening of the secondary proceeding, was not, and it had not to be the object of assessment ex art. 27 (80). It is a decidedly extreme situation, but the Regulation does not offer any solution on the matter. (81). In the doctrine, the possibility of “conditioned”

76(?) See FUMAGALLI, op. cit., p. 693 s.; DE CESARI and MONTELLA, op. cit., p. 122 s.The same debtor, solvent in the Country in which he has the centre of his main

interests, could appeal, with reference to one of his establishments in difficulty, and only for that establishment, to a territorial recovery proceeding, without opening a main proceeding.

77(?) On these articles, see the following paragraph.78(?)E. F. RICCI‘s considerations, op. cit., p. 918; MARINONI, op. cit., p. 40 s.79(?) See E. F. RICCI’s remarks, op. cit., p. 919 s.80(?)Come evidenzia PUNZI, Le procedure d’insolvenza transfrontaliere nell’Unione

europea, in Riv. dir. proc., 2003, p. 1017.81(?)See LUPOI, Conflitti di giurisdizione e decisioni nel regolamento sulle

procedure d’insolvenza: il caso «Eurofood» e non solo, in Riv. trim. dir. e proc. civ., 2005, p. 1406

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decisions has been proposed, that is to say, decisions which declare the opening of the secondary proceeding, ascertaining meanwhile the conditions for the opening of a main proceeding, in case that, during appeal, the main prevenient proceeding is revoked in the State third party. Considering the seriousness of the problems arising from the absence of rules, a similar solution can be considered practicable, even if blamable (82). Other solutions, such as the suspension of the regulation, waiting for the foreign decision to become final, (83) cannot be accepted on the practical plane; the suspension is hardly compatible with the requirements of an insolvency proceeding, since in the defaults, the effectiveness of the same proceeding could be wholly frustrated, except for those systems where it is possible to appoint a temporary trustee, who grants the preservation of the assets.

To close the paragraph, we can make some remarks to the statement, already reasserted, that territorial proceedings are characterized by the fact that their effects are limited to the debtor’s patrimony present in the territory of the opening State. This is certain, but such patrimony could be subject to the jurisdiction of judges from other Countries, on the basis of the rules of international competence. We have therefore highlighted what provided for by art. 17, par. 2 Regulation: in the first interpolated clause it is fixed that “The effects of the proceeding as per art. 3, par. 2, cannot be contested in the other member States”. The fact that the proceedings are territorial, delimits the scope within which their effects are produced, but not the space within which such effects must be protected; this must occur at the level of the whole Union (84). Besides, in the member States, included those in which proceedings have been opened against the same debtor, it is not possible to prevent the trustee of the secondary proceeding from wielding the powers granted him by the Regulation. An example is art. 18, par. 2, where he is granted “the power to enforce, by judicial/extrajudicial means, that a chattel has been transferred from the territory of the opening member State to the territory of another member State after the opening of the insolvency proceeding”. Such power could be enforced in the member States where other insolvency proceedings are pending, in order to deduct from the assets of those proceedings, properties which on the contrary should fall within the assets of the secondary proceeding in question, as well as it could be wielded in other member States, too, in order to bring back to the assets of the secondary proceeding, properties which have been taken away from the insolvency execution (85).

Art. 17, par. 2, goes on stating that any limitation of the creditors’ rights, such as deferred payment or remission of a debt, arising from a

82(?)These are LUPOI’s words, op. cit., p. 1407, even if quoted as a solution for jurisdiction conflicts, resuming what suggested by SANTINI, La quaestio jurisdictionis nel regolamento comunitario n. 1346/2000 sulle procedure di insolvenza, in www.judicium.it, par. 5, that, always from the point of view of the solution of jurisdiction positive conflicts, believes that: if assessing one’s own international competence, the prejudiced judge deems that his jurisdiction is valid as the principal issue, even not declaring it sic et simpliciter, he will be able to issue an acceptance order of the petition for the opening of the main proceeding expressly subject to suspensive condition of the possible loss of effectiveness during encumbrance of the order for the opening of the main proceeding in the foreign State. SAMORÌ, too, seems to opt for this solution Conflitti di competenza nell’apertura delle procedure concorsuali, Napoli - Roma, 2002, p. 294.

83(?)Again SANTINI, op. loc. citt. 84(?) So, E. F. RICCI, op. cit., p. 906; DE CESARI and MONTELLA, op. cit., p. 192 s. 85(?)Cf. DANIELE, Il regolamento n. 1346/20002000 relativo alle procedure di

insolvenza: spunti critici, in Dir. fall., 2004, I, p. 611 s.

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territorial proceeding, can be enforced, for the assets situated in the territory of another member State, only towards the creditors who have given their consent. The meaning of such provision can be presumably linked to the proceedings with a composition nature, and makes a distinction between creditors who have given their consent to the limitations of their rights, and creditors who, not having approved the composition solution, are anyway subject to such limitations following the approval of the same composition solution. Creditors who have approved the composition solution are bound to their consent and could not assault the debtor’s properties situated a State different from the one of the proceeding, whereas creditors who did not consent to the limitation of their rights, keep unchanged their power to satisfy, even with distraint, on the debtor’s properties even if they are situated on the territory of another member State (86). Next to this rule there is the rule contained in art. 34, par. 2, which expresses the hypothesis in which the secondary proceeding ends with a composition or a recovery plan. The expression is not appropriate (87) entailing that “any limitation of the creditors’ rights … can produce effects towards the debtor’s properties which are not object of that proceeding only through the assent of the whole creditors involved”. To give a sense to the rule we can assume that, unlike art. 17, par. 2, it is referred to the properties situated in the State in which the proceeding took place, specifying that the creditors can assault the properties which have not been included in the assets of the proceeding.

7. – The territoriality of secondary proceedings entails a reference to lex fori, as explained in art. 28, which subjects them to the law of the opening State and not to the law of the main proceeding; the reference is valid also for entitlement, since in addition to the mentioned trustee of the main proceeding, to identify the assignees who can request the opening, art. 29, lett. b), refers to the law of the State in which proceeding is opened (88). Any creditor, even residing abroad and even for credits not related to the activity of the establishment, will be entitled. We have to remember that the Regulation wants to face the debtor’s bankruptcy in an organic way, basically by creating a unique assets and a unique liabilities, even if territorial proceedings allow also the safeguard of local interests. Only considering a unitary management we can understand art. 32, concerning the exercise of the creditors’ rights, according to which any creditor can prove a debt in the main proceeding and in any secondary proceedings and the trustees of the main proceeding and secondary proceedings can prove in other proceedings the debts already proved in the proceeding of which they are in charge.

It is really hard to coordinate this system of proofs. Art. 32 does not provide for automatisms or the obligation of crossed proofs; both the creditors and trustees can insinuate themselves in one, some or all proceedings. A first question arises: in the Regulation there is a rule of general character, art. 25, which provides for the automatic recognition of the “decisions related to the development and closing of a proceeding”. It is necessary to clarify if the

86(?)Again E. F. RICCI, op. cit. , p. 907; DE CESARI and MONTELLA, op. cit., p. 123. 87(?)DE CESARI and MONTELLA, op. cit., p. 247, consider it as a rule void of sense. 88(?)Actually, the expression used entails the right to request the opening by “any

person or authority entitled to request the opening of an insolvency proceeding according to the law of the member State in whose territory the opening of a secondary proceeding is requested”.

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decision adopted on the petition of proof of a debt, falls within the “decisions related to the development” of a proceeding, because, in case of positive answer, the bodies of the second proceeding in which I intend to prove the debt, will be bound to the first decision adopted on such debt. I think that a positive answer will have to be given to the question (89); the extent of art. 25 leads to this, since it would be incongruous to exclude decisions which are structurally central for the individuation of the assets, and illogical that the existence of a debt is recognized in one proceeding and excluded in another, even if here some distinguo are necessary. We cannot have a dissimilar decision on the existence of the debt, but, as already said, each proceeding is governed by its own lex concursus, and according to such regulation, even different decisions could be possible, provided that they are not incompatible with the first decision adopted.

A particular aspect must be taken into consideration: the rank with which a debt is admitted, on which a judgment of admission in another has already intervened. We can assume the case of the creditor of a secondary proceeding who, once obtained the admission of his preferential debt according to his national law, wants to prove it in the main proceeding. The rules which govern the main proceeding can follow various criteria for the preferential admission, therefore the credit can turn out to be an unsecured credit like the discipline of the main proceeding. I believe that the decision on the rank of the debt has to be adopted according to the law of the main proceeding; essentially, we do not have to proceed with an indiscriminate introduction in the liabilities of the debt already admitted in another proceeding, and this as a general rule, also because art. 32 uses the term «prove», which cannot be emptied of meaning even if it must be read in the framework of the coordination among proceedings (90). The problem is still more significant for the proof by trustees of other proceedings of the whole liabilities they have created. Taking again the example we have used, we can assume the case of a trustee of a secondary proceeding who, after having formed the liabilities according to the admission criteria of preferential credits specific of his national law, wants to introduce them in the main proceeding. The regulation which governs the main proceeding, follows different criteria for the preferential admission; therefore the credits are no more preferential in the secondary proceeding, but are unsecured credits like the discipline of the main proceeding. The problem can be solved, even if on a practical plane this is a laborious operation, by denying that the trustee of the secondary proceeding can obtain the plain introduction of the liabilities of his proceeding into the liabilities of the main proceeding. We will have to follow literally the provision of art. 32 according to which «the trustees of the main proceeding and secondary proceedings introduce into the other proceedings debts already introduced in the proceeding of which they are charged»; therefore the credits will be singularly introduced and examined by the proceeding in which

89(?)See DE CESARI and MONTELLA, op. cit., p. 240. 90(?)Cf. also DANIELE, Il regolamento n. 1346/2000, cit., p. 614 s. See the judgment of

the Dutch judge 15 March 2001, Suned, in EIR Database, n. 15, according to which the debt proved, is subject to its regulatory.

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the introduction occurs, both for the profile of our interest and to avoid double introductions if one single creditor had started up autonomously (91).

To support what above mentioned, we can refer to art. 41, on the content of the introduction requests; the provision appears as a rule of uniform law, and therefore directly applicable to every proceeding, departing from the reference to lex concursus of art. 4, par. 2, lett. h). The provisions of the rule, which orders the creditor to document his petition, would have no sense if we deemed that the admission of a debt in another proceeding, would make incontestable not only the an, but also the procedures, since in this case it would be sufficient to accompany it with the statement that one’s own debt has already been admitted in another proceeding (92). In this way, we have to look for the solution of the problem of the documentation which the trustee has to produce if he wants to introduce the debts of the proceeding of which he is charged into another concurrent proceeding ex art. 32, par. 2, that is to say, the mere reference to his liabilities will not be sufficient.

An important aspect is the so-called hotchpot rule, for which we have to refer to art. 20, par. 2, that is to say, the apportionment mechanism of the shares already obtained in other proceedings. The prerequisite for the running of such rule, seems to be the introduction of the debt in every proceeding for its whole amount; afterwards, we will have to know which share of this debt has already been satisfied elsewhere and not arrange any distribution until the creditors of the same rank and same category have obtained an “equivalent quota”. «Quota» is not an amount, but a percentage quota, even according to the last interpolated clause of point 21 of the introduction, which uses the allocution «equivalent proportional quota». Therefore, the unsecured creditor, who has obtained a 3% percentage of his own credit in another proceeding, will participate to the allocation only if he liquidates the unsecured creditors with a higher quota (ex. 6%, so he will obtain a further 3%); he will get nothing if the quota is lower (ex. 2%) (93). Art. 35 Regulation, should complete the system, by stating that if some assets are left over after the closing of the liquidation of the secondary proceeding, the trustee should transfer them, without delay, to the trustee of the main proceeding. Anyway, we have to point out that in this way, two assumptions are not provided for. The first one is the liquidation of the secondary proceeding which does not include the whole debtor’s properties, since not necessary to satisfy the creditors; such properties will be given back to the debtor and there will be no assets left to be poured into the main proceeding. Maybe, this could be justifiable in front of the possibility to prove one’s own liabilities by the trustee of the main proceeding. The second assumption concerns the opposite case as to the one provided for by the rule, that is, the Regulation does not provide for the use of the assets surplus of the main proceeding to satisfy the creditors who have been unsatisfied of the secondary proceedings; obviously these are the creditors who did not insinuate themselves into the main proceeding. This, apart from the assumption of the creditor who, for various reasons, cannot see his credit recognized in the main

91(?)Again DE CESARI and MONTELLA, op. loc. ultt. citt., according to whom the trustee ids a representative ex lege of the creditors who are indicated in the liabilities of the proceeding of which he is charged.

92(?)As asserted by DE CESARI and MONTELLA, op. cit., p. 259. 93(?)Again FUMAGALLI, op. cit., p. 696, nota 46.

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proceeding, loads the single creditors of a proof burden in the proceeding outside their State, maybe excessive (94).

The last paragraph of art. 32 in order to coordinate proceedings, states that the trustee of a main or secondary proceeding is entitled to take part in another insolvency proceeding with the same title of any creditor and, in particular, to take part in the meeting of creditors. The most logic interpretation is that which sees the different trustees representatives of the mutual debt relationship – credit among proceedings, but if this is presumably the ratio of the rule, the practical problem of the real exercise of the rights, must be solved. The problem is, for example, the trustee of a secondary proceeding opened abroad who takes part in the meeting of creditors in the preventive composition proceeding existing in Italy as main proceeding. There is the problem of the weight of his vote, how it should be counted, taking into consideration that some of the creditors of the secondary proceeding could be autonomously already present within the group of the creditors of the Italian proceeding. A solution, in line with what above mentioned, is to recognize to the trustee of the foreign secondary proceeding the right of vote, both as number and as credits, for those creditors admitted to the liabilities of his proceeding, who have not opted to act directly in the Italian composition proceeding (95).

The good running of the system is linked to the collaboration among trustees, that art. 31 indicates as a real obligation both for information and cooperation (96). No sanction is related to the infringement of such duties, and therefore possible responsibilities will be assessable only within the single proceedings. Beyond the liabilities level, the most remarkable aspect is that of the possible conflicts among trustees. The rule, at par. 3, states that the trustee of the secondary proceeding must give in due time the possibility to the trustee of the main proceeding to present proposals concerning the liquidation or any other use of the assets. The possibility of conflicts is not impossible and divergences on the management may arise. In this case, too, it seems that remedies must be found on the internal plane of the proceedings. In an Italian proceeding we can assume, even according to the reformulation of the rule provided for by the l.d. 9 January 2006, n. 5 (97), a petition to the official receiver and possible subsequent use of the complaint system ex art. 26 b.l. (98).

The trustee of the main proceeding, due to his role of reference point for the management of the insolvency of the debtor entrusted to such proceeding, has the power to request the suspension of the liquidation operations of the secondary proceeding (99). This comes out to be useful to make an overall

94(?)Other remarks in DE CESARI and MONTELLA, op. cit., p. 247 ss. 95(?)So, DE CESARI and MONTELLA, op. cit., p. 241. 96(?)See DIALTI, Cooperazione tra curatori e corti in diritto internazionale fallimentare:

un’analisi comparata, in Dir. fall., 2005, I, p. 1012 ss. 97(?)In detail, d.lgs. 9 January 2006, n. 5 Rifroma organica della disciplina delle

procedure concorsuali a norma dell’articolo 1, comma 5, della legge 14 maggio 2005, n.80 , in Gazz. uff., general series, 16 January 2006, n. 12, suppl. ord. n. 13/L. Cf. DE CESARI e MONTELLA, op. cit., p. 238.

98(?)Cf. DE CESARI and MONTELLA, op. cit., p. 238. 99(?) As it is highlighted in considerando n. 20, where the efficient liquidation of the

assets of the main and secondary proceedings is linked not only to the coordination among the whole pending proceedings, of which a close collaboration among the different trustees is a precondition and must entail a sufficient exchange of information, but also to instruments which grant a predominant role to the main insolvency proceeding, such as the suspension of the liquidation of the assets of secondary proceedings.

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picture of the allocation of the proceeds, identifying the creditors of the different concurrent proceedings and the extent of their satisfaction. Such power is ruled by art. 33, from which it comes out that it is a real right to obtain the suspension, not of the secondary proceeding, but exclusively of the liquidation operations, even if conditioned to the “manifest non-lack of creditors’ interest of the main proceeding” and linked to the arrangement of “measures suited to grant the creditors’ interests of the secondary proceeding and of certain groups of creditors”. For our system, the reference to “groups” of creditors is not immediate, and maybe it has to be considered as addressed to special categories of preferential creditors. It is not easy to identify the warranty types, because in order to grant the warranty of the creditors’ interests of the secondary proceeding, conservative measures may be assumed, too, maybe in contrast with the same logic of the suspension (100). What mentioned here can lead to think that the suspension can be decided when we have to proceed to a total or partial allocation (101) . Art. 33, par. 1, gives the power of suspension to “the judge who has opened the secondary proceeding” (102); the suspension can be fixed for a period of three months to the utmost, and extended or renewed for periods of the same duration, without fixing any limit to renewals. Therefore it is no easy to define the regulation. On one side we can identify it as a ruling order, not involving the whole secondary proceeding, but only the liquidation operations for a fixed lapse of time and therefore not subject to encumbrance (103); on the other side, it is true that the possibility of extension can lead to a suspension for an unfixed period with repercussions on the real possibility to proceed with the liquidation (104).

According to art. 34 Regulation, the powers of the trustee of the main proceeding perform also in the closing stage of the secondary proceeding; he has a power of initiative with regard to the possibility to close the secondary proceeding without liquidation, or through a recovery plan, an agreement or a similar measure (105); anyway, the closing of the secondary proceeding

100(?) As FERRI points out, Creditori e curatore della procedura principale nel Regolamento comunitario sulle procedure di insolvenza transnazionali, in Riv. dir. proc., 2004, p. 717.

101(?) As OLIVIERI points out, Il Regolamento comunitario sulle procedure d’insolvenza, in www.judicium.it., par. 7. This means that the court will be able to subject the suspension to the demonstration that the creditors of the secondary proceeding have been admitted to the liabilities of the main proceeding and that, especially for preferential creditors, these are not treated worse than others, or to the fact that appropriate conservative measure (always in the State of the main proceeding) have been taken, in order to avoid that the distribution of the proceeds of the main proceeding excludes the creditors of the secondary proceeding.

102(?)Therefore in Italy the suspension order must be passed by the bankruptcy court. 103(?)Again OLIVIERI, op. loc. citt., who adds how the order seems unsuitable to be

detrimental to the creditors’ subjective rights, so that it seems that, in the Italian system, the warranty of the appeal to the Supreme Court, according to art. 111 Cost., cannot be claimed.

104(?)See FERRI’S reasoning, op. cit., p. 717.105(?) Obviously, if such possibilities are provided for by the law applicable to the

secondary proceeding.The literal expression of par. 1, art. 34, is inappropriate; actually it rules “the

possibility to close the proceeding without liquidation through a recovery plan, an agreement, or a similar measure; such measure is proposed by the trustee of the main proceeding”; Therefore, it would seem that the closing measure can be proposed exclusively by the trustee of the main proceeding, but it is not like that, since he has a power concurrent with that of the other entitled subjects, according to the ordinary rules of the secondary proceeding. In this way DE CESARI and MONTELLA, op. cit., p. 245 s. Otherwise, it would be incomprehensible the second interpolated clause of the rule according to which “the closing of the secondary proceeding through a measure as per first paragraph, becomes final only with the assent of the trustee of the main proceeding”; evidently, the assent of the trustee of the main

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through a alternative measure to liquidation, becomes final only with the consent of the trustee of the main proceeding. Such consent can be overcome only if the measure proposed is not prejudicial to the creditors’ financial interests of the main proceeding.

proceeding is requested, since others have proposed an alternative closing to the liquidation.

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