Poland 1 - Germany 0: Unlawful Attachment in MG Probud
The European Court of Justice (Case Number C-444/07) has held that the German court was not entitled to make an attachment order against the German assets of MG Probud Gdynia sp. z o.o. ('MG Probud'), which was subject to Polish winding up proceedings.
Polish law provides for a stay of enforcement proceedings against the assets of a company that goes into liquidation. Shortly after the Polish proceedings were opened, the local court in Saarbrücken, Germany had ordered an attachment of various bank accounts and claims in Germany on the application of the German Customs Office
The Polish liquidator’s appeal was dismissed by the regional court in Saarbrücken on grounds that ‘there was reason to fear that those responsible within MG Probud would shortly collect the sums payable and transfer the corresponding amount to Poland in order to prevent the German authorities from having access to them’. It was also said that the copy of the judgement enclosed with the appeal was inadequate to enable determination of whether relevant Polish proceedings had been opened.
The ECJ emphasised that it is inherent in the principle of mutual trust it identified in Eurofood IFSC (Case C-341/04) that the court opening main insolvency proceedings examines whether the debtor’s centre of main interest (COMI) is situated in the Member State of that court. In return, the courts of the other Member States recognise the judgement opening main insolvency proceedings, without being able to review the assessment made by the first court as to its jurisdiction.
In this particular case the ECJ held that the documents available to the court contained nothing to affect the presumption in Article 3(1) of the European Insolvency Regulation No 1346/2000 ('the Regulation') that the place of the company’s registered office was the COMI and that this was therefore situated in Poland.
The ECJ also made clear that only the opening of secondary insolvency proceedings is capable of restricting the universal effect of the main insolvency proceedings.
This case illustrates the importance of COMI and it reminds us of the rebuttable presumption that the COMI is at the place of the company’s registered office. Once insolvency proceedings have been opened it is the insolvency law of the Member State in which they were opened that, subject to the exceptions in Articles 5 to 15 of the Regulation, governs the opening, conduct and closure of the insolvency proceedings.
This is of course why battles about the situation of a company’s COMI have been so intense.
In this case, the ECJ has awarded a clear win to the Polish liquidator (and arguably a yellow card to the German authorities!).
Chris Laughton is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Chris you can call him on 020 7353 1597.
Date: 10th February, 2010
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