In its recent Enefi judgment (C‑212/15, read here, no English translation available yet) the Court of Justice interpreted article 4 of Regulation 1346/2000. The judgment illustrates the shifting boundaries of the framework underlying the Insolvency Regulation.
The facts can be summarized as follows. Enefi was a company with its registered seat in Hungary and with an establishment in Romania. On 13 December 2012, insolvency proceedings were commenced against Enefi in Hungary. On 7 January 2013, the Regional General Directorate of Public Finance of Brasov, Romania (‘the Taxman’), was notified about the commencement of the insolvency proceedings in Hungary and about the possibility of registering claims against Enefi in those proceedings. The Taxman attempted to register two claims in January 2013. He failed, however, to respect the applicable deadline and to pay the applicable registration fees.
Between 5 and 25 June 2013, while the insolvency proceedings were still ongoing in Hungary, the Taxman carried out a tax control at the premises of the claimant’s establishment in Romania. On 25 June 2013, he issued a post-insolvency tax notice concerning additional VAT obligations. No claim relating to this notice was registered in the Hungarian insolvency proceedings. Instead, enforcement proceedings were started in Romania. An enforcement order was issued against Enefi on 7 August 2013 by the Romanian authorities. Note that no secondary proceedings were opened in Romania.
The insolvency proceedings in Hungary were closed on 7 September 2013. Prior to that, Enefi initiated proceedings to oppose the enforcement order in Romania, arguing that when the tax control leading to the issuance of the post-insolvency tax notice occurred, it was already subject to the insolvency proceedings in Hungary. To enforce its payment obligations under the post-insolvency tax notice, the Taxman should have registered its claim in the insolvency proceedings. By failing to do so timely, the Taxman’s right to payment under the post-insolvency tax notice was forfeited.
The Regional Court of Mureș referred two questions to the Court of Justice. The first question concerned the possible impact of the law of the State in which proceedings are opened on foreign claims. The second question concerned the relevance of the nature of the foreign claim. The answer to the first question is far more important that the answer to the second question.
The answer to the first question
Pursuant to article 4 (h) of Regulation 1346/2000, the rules governing the lodging, verification and admission of claims are determined by the the law of the State of the opening of proceedings. Hungarian law thus determines the consequences of the non-timely filing of claims. Allowing foreign creditors who have not respected the rules of the lex concursus to pursue enforcement procedures, would circumvent the effectiveness of this rule.
Does this prevent the Taxman from opening secondary proceedings in Romania? The Court considers it does. Once the claim of a creditor is forfeited according to the lex concursus, this creditor is barred from initiating secondary proceedings. This may sound logic, but remember that the (post-insolvency) claim of the Taxman came into existence (long) after the deadline for lodging of claims.
The answer to the second question
The answer to the second question is straightforward: no distinction is made between the claims of public and private creditors. The public nature of the claim of the Creditor does not prevent this claim to be forfeited. What goes for John Doe, goes for the Taxman.
Regulation 1346/2000 is based on the model of modified universalism. The universal ambition of the main insolvency procedure is tempered by the territorialistic nature of secondary proceedings. The Enefi-judgment serves as an illustration of the increasingly dominant nature of the main procedure. Foreign creditors who have missed the boat of the main procedure, cannot seek shelter in a secondary procedure. This goes beyond (just) an extra-territorial application of the lex concursus.
This dominant role of the main procedure is, in many ways, confirmed by Regulation 2015/848. The importance of secondary proceedings continues to diminish under the Insolvency Regulation.