Cross-Border Insolvency in the EU: What the Recast Regulation Actually Changed

EU cross-border insolvency is governed by Regulation 2015/848, which determines jurisdiction based on the debtor's Centre of Main Interests (COMI). The Recast Regulation codified CJEU anti-manipulation safeguards, introduced group insolvency coordination, and mandated interconnected registers across all Member States except Denmark.

In 2024, corporate insolvencies across Western Europe reached 190,449 cases — a 12.2% increase from the prior year. The Eurozone saw a 19% jump. Germany was up 23%. Italy, 45%. These are not abstract macroeconomic indicators. They represent businesses with creditors, employees, assets, and obligations that frequently span multiple jurisdictions. When a company with operations in three EU Member States enters insolvency, which court has jurisdiction? Whose law governs the claims? How are foreign creditors treated?

Since 26 June 2017, these questions have been governed by Regulation (EU) 2015/848 — the Recast Insolvency Regulation. It replaced the original Regulation 1346/2000, which had been in force since 2002 and which the Court of Justice of the European Union had spent fifteen years interpreting through a series of landmark rulings. The Recast did not merely codify existing case law. It introduced new mechanisms — group insolvency proceedings, mandatory interconnected registers, expanded scope covering rescue procedures — that fundamentally changed the operational landscape for cross-border insolvency practice in Europe.

Understanding what actually changed, and what the CJEU has done with those changes, is essential for any practitioner dealing with cross-border claims, creditor enforcement, or restructuring in the EU.

COMI: The Jurisdictional Foundation

Everything in cross-border insolvency begins with the Centre of Main Interests — COMI. Article 3(1) of the Recast Regulation provides that main insolvency proceedings shall be opened in the Member State where the debtor has its centre of main interests. For companies, the presumption is the registered office. For individuals with independent business, the principal place of business. For consumers, habitual residence. These presumptions are rebuttable — but only by factors that are “objective and ascertainable by third parties.”

The language is deceptively simple. In practice, COMI determination is the most litigated aspect of cross-border insolvency. The foundational case remains Eurofood IFSC (C-341/04), decided in 2006 under the original Regulation. The CJEU held that the COMI presumption at the registered office can be rebutted only by objective, ascertainable factors demonstrating that the actual situation differs from what the registered office location suggests. Critically, the Court ruled that corporate control alone — for example, a parent company directing the subsidiary’s strategy from another jurisdiction — is insufficient to relocate the subsidiary’s COMI. Each legal entity has its own COMI determination.

This principle was reinforced in Rastelli (C-191/10, 2011), where the CJEU held that intermixing of assets between related companies is insufficient to establish a common COMI. The separate corporate personality of each entity must be respected in jurisdictional analysis. Expanding an insolvency judgment to a related company requires that company to have its own COMI in the same Member State — not merely a financial connection to the debtor.

Anti-Manipulation: Locking In Jurisdiction

One of the most important practical protections in the Regulation is the anti-manipulation rule established in Staubitz-Schreiber (C-1/04). The CJEU held that the court seised with an insolvency request retains jurisdiction even if the debtor moves its COMI to another Member State after the request is lodged but before the court issues its decision. This prevents a debtor from filing for insolvency in one jurisdiction and then relocating to another before the court acts — a tactic that would otherwise enable systematic forum shopping.

The principle was tested again in 2022 in Galapagos BidCo (C-723/20), a case arising from the private equity restructuring space. The CJEU reaffirmed that the court seised retains exclusive jurisdiction where COMI moves after the insolvency request is lodged. The Court added that neither assets nor human resources alone determine COMI — what matters is where the debtor conducts the administration of its interests, as ascertainable by third parties.

For creditors, these rules provide a critical safeguard. Once an insolvency request is filed, the jurisdictional question is effectively locked. A debtor cannot escape an unfavourable forum by shifting operations or registered office during the period between filing and the court’s decision. This is particularly important in complex group insolvencies, where debtor entities may have incentives to concentrate proceedings in jurisdictions with more debtor-friendly regimes.

Recognition: Automatic but Not Unconditional

Article 16 of the Recast Regulation establishes automatic recognition: once insolvency proceedings are opened in one Member State, all other Member States must recognise them from the moment the judgment becomes effective in the opening state. No separate recognition procedure is required. The insolvency practitioner’s powers are equally recognised — they can exercise in any Member State the same powers available to them under the law of the opening state.

The recognition principle was tested in MG Probud (C-444/07), where the CJEU held that once main proceedings are opened, other Member States cannot order separate enforcement measures when the opening state’s law does not permit them. This means recognition is not merely formal — it constrains what other courts can do with respect to the debtor’s assets in their territory.

Recognition can be refused on one ground only: the effects of recognition would be “manifestly contrary” to the public policy of the recognising state. This is a narrow exception, construed restrictively by courts. In practice, refusals are exceptionally rare. The system is designed to function on trust — mutual recognition as a foundational principle of EU judicial cooperation.

More recently, in Air Berlin (Joined Cases C-765/22 and C-772/22, decided April 2024), the CJEU addressed a practical challenge: how to allocate assets when main and secondary proceedings overlap. The Court clarified that the law of the state opening secondary proceedings applies only to claims arising after that secondary proceeding opens — not to claims arising in the interim between main and secondary proceedings. This temporal boundary is critical for creditors whose claims span multiple phases of a complex insolvency.

Group Insolvency: The Recast’s Major Innovation

Chapter V of the Recast Regulation (Articles 55–74) introduced an entirely new framework for group insolvency proceedings — one of the most significant innovations in the Recast and something the original Regulation did not address at all. A “group” is defined as a parent undertaking and all its subsidiaries. The framework does not consolidate group members into a single proceeding. Instead, it creates mechanisms for structured coordination between separate proceedings.

The centrepiece is the group coordination proceeding. Any insolvency practitioner appointed for a group member may request that a court with jurisdiction over any group member’s proceedings appoint a “coordinator.” The coordinator develops a coordination outline — essentially a restructuring or liquidation strategy across the group — and manages cooperation between the separate insolvency proceedings. Practitioners from individual entities may object within a specified timeframe, preserving voluntariness.

Articles 37–38 and 40–41 impose mandatory cooperation and communication duties. Insolvency practitioners must communicate immediately any information relevant to other group proceedings, explore restructuring possibilities, and coordinate asset realisation and administration. Courts have parallel duties. These obligations are mandatory — not discretionary — and apply regardless of whether a formal group coordination proceeding has been established.

In practice, the group insolvency framework remains under-utilised. Most corporate groups that enter insolvency still proceed with separate national liquidations, coordinated informally (if at all) between practitioners. The formal coordination mechanism requires judicial willingness to participate, adequate resources, and a genuine prospect that coordination will produce better outcomes than fragmented proceedings. Where these conditions are met — as in complex multi-jurisdictional groups with shared assets, intercompany claims, and common creditors — the framework offers substantial efficiency gains. Where they are not, it adds procedural cost without proportional benefit.

The Nordic Dimension: Sweden, Denmark, and the Opt-Out

The Regulation applies uniformly across the EU — with one significant exception. Denmark opted out under Protocol No. 22 on Denmark’s position. Danish insolvencies are not covered by Regulation 2015/848, and Danish courts are neither bound by the COMI framework nor obligated to recognise proceedings opened in other Member States under the Regulation. This creates a jurisdictional gap for groups with operations spanning Denmark and other EU countries.

Sweden and Finland are fully subject to the Regulation. Sweden’s insolvency framework operates under the Konkurslagen (Bankruptcy Act) and the Företagsrekonstruktionslagen (Corporate Reorganisation Act), both of which have been adapted to accommodate the Regulation’s requirements. Swedish courts participate in the Interconnected Insolvency Register system (discussed below) and are bound by the mutual recognition and cooperation obligations.

Norway, as a non-EU member, falls outside the Regulation entirely. Cross-border insolvencies involving Norway are governed by the 1933 Nordic Bankruptcy Convention — a pre-EU instrument still in force between Denmark, Finland, Iceland, Norway, and Sweden. For Nordic insolvencies, practitioners may need to navigate both frameworks simultaneously: the Regulation for EU Member State dimensions, and the Nordic Convention for Norwegian and Danish aspects.

The Interconnected Registers: Transparency Infrastructure

Article 25 of the Recast Regulation mandated that all Member States establish publicly accessible insolvency registers, interconnected through the European e-Justice Portal. The system became operational with a second-generation interface (IIR 2.0), providing federated search across national registers. Queries are routed to national databases and responses returned within seconds.

Mandatory content includes: the date proceedings were opened, the court and case reference number, the type of proceeding, time limits for lodging claims, and the insolvency practitioner’s identity and contact details. The registers serve a dual function: providing creditors with timely notice of proceedings that may affect their claims, and preventing the opening of duplicate proceedings in multiple jurisdictions by making existing proceedings visible across the EU.

The practical impact has been meaningful but uneven. Information quality varies significantly by Member State. Some registers are comprehensive and regularly updated; others provide minimal data or suffer from delays. For creditors monitoring cross-border exposure, the registers are a necessary but insufficient tool — they must be supplemented by direct inquiry to national courts and insolvency practitioners.

Post-Brexit: The UK Gap

Since 31 December 2020, the United Kingdom is no longer covered by Regulation 2015/848. UK insolvency proceedings do not benefit from automatic recognition in EU Member States, and EU proceedings are not automatically recognised in the UK. The UK-EU Trade and Cooperation Agreement (TCA) does not address insolvency recognition — a significant omission that has not been remedied in subsequent negotiations.

For UK-based holding companies with EU subsidiaries, this means that main proceedings opened in the UK no longer bind EU courts on COMI determination or jurisdictional questions. EU creditors must participate in UK proceedings by separate application, without the procedural shortcuts provided by the Regulation. Recognition may be available under the UNCITRAL Model Law on Cross-Border Insolvency, but only three EU Member States have adopted it (France, Greece, and Poland). In all other jurisdictions, recognition depends on national common law doctrines of reciprocity and comity — a fragmented and uncertain landscape.

The practical consequence is that multi-jurisdictional restructurings involving both UK and EU entities are significantly more expensive and slower than they were before 2021. For creditors, the loss of automatic recognition means increased procedural risk. For debtors, it means that restructuring plans that would have been enforceable across the EU under the Regulation now require separate recognition proceedings in each relevant jurisdiction.

What Changed, What Didn’t, and What Matters

The Recast Regulation improved the original framework in three structural ways. It codified COMI presumptions and anti-manipulation safeguards that the CJEU had developed through case law, reducing interpretive uncertainty. It introduced the group insolvency framework, providing for the first time a coordinated approach to multi-entity insolvencies. And it mandated interconnected registers, creating transparency infrastructure that the original Regulation lacked entirely.

What it did not change is equally important. The fundamental architecture — COMI-based jurisdiction, automatic recognition, law of the opening state governing most substantive questions — remains intact. The Regulation still does not provide for consolidated group insolvency in the way that US Chapter 11 or UK administration can sometimes achieve. Each entity is treated separately, with coordination mechanisms available but not mandatory. And the system continues to depend on judicial cooperation and mutual trust between Member State courts — a dependency that functions well in routine cases but can strain under the weight of complex, politically sensitive insolvencies.

For cross-border creditors, the practical implications are clear. The EU insolvency framework provides genuine protections: automatic recognition, mandatory cooperation, transparent registers, and anti-manipulation safeguards. These are not theoretical. They are operational tools that, when competently deployed, enable foreign creditors to participate effectively in proceedings across the EU. The framework does not eliminate the complexity of cross-border insolvency. But it provides a structure within which that complexity can be managed — and that structure, for all its limitations, is more comprehensive than anything available outside the EU.

Frequently Asked Questions

What is COMI in cross-border insolvency?
COMI (Centre of Main Interests) determines which Member State has jurisdiction to open main insolvency proceedings. For companies, it is presumed to be the registered office. This presumption is rebuttable only by objective factors ascertainable by third parties, as established in the CJEU's Eurofood IFSC ruling (C-341/04).

What did the Recast Insolvency Regulation change?
Regulation 2015/848 (effective June 2017) codified COMI anti-manipulation safeguards, introduced group insolvency coordination (Articles 55–74), mandated interconnected insolvency registers, and expanded scope to cover rescue procedures. The core architecture of COMI-based jurisdiction and automatic recognition remained intact.

Are insolvency proceedings automatically recognised across the EU?
Yes. Under Article 16, once proceedings are opened in one Member State, all others must recognise them without separate procedure. Recognition can only be refused on the narrow ground that effects would be “manifestly contrary” to public policy.

Does the regulation apply to Denmark and the UK?
Denmark opted out under Protocol No. 22. The UK left the Regulation's scope after Brexit (31 December 2020). Cross-border insolvencies involving these countries require separate recognition under national law or the UNCITRAL Model Law.

How does group insolvency coordination work?
Chapter V creates mechanisms for a court-appointed coordinator to develop a group-wide strategy across separate national proceedings. Cooperation between insolvency practitioners is mandatory, though the framework does not consolidate group members into a single proceeding. For how complex cross-border claims are funded, see our analysis on third-party litigation funding in Europe.

Related Analysis

This article is part of KDA & Partners' research on cross-border legal claims in the EU. For related analysis, see:

• EU State Aid Recovery: The €14 Billion Precedent and the Emerging Asset Class — enforcement mechanics, appellate reversal rates, and the economics of recovery claims.
• Third-Party Litigation Funding in Europe: A €1 Billion Market Waiting for Rules — regulatory fragmentation, PACCAR, and how cross-border claims are financed.