Speech Minister for Legal Protection Teun Struycken at CERIL International Conference on European Restructuring and Insolvency Law
Speech held on Friday 9 May 2025 at the 3rd CERIL International Conference on European Restructuring and Insolvency Law, Leiden (Netherlands)
Ladies and gentlemen,
Dear members of the Conference on European Restructuring and Insolvency Law,
Dear chairman – professor Reinout Vriesendorp,
Thank you very much for having me here today. For me personally, this is a day when many things come together – a crossroads of lives and careers of many of us, and Reinout and myself in particular. I am here now as a member of the government, more in particular staatssecretaris Rechtsbescherming, or in English: Minister for legal protection. With insolvency law, both domestic, European and international, as part of my responsibilities. This new job since July of last year ended my career as an insolvency lawyer in Amsterdam. But before the start of my career as a practising lawyer, I was an academic, and it was then that I first came across an early draft of what many years later became the European insolvency regulation. It must have been sometime in 1995 I think. It was during a conference a bit like this one, somewhere south of London, and I was carrying the bag of a young professor at the time. Not my bag, but the bag of a certain professor Reinout Vriesendorp! And now, 30 years later – older and wiser? –, we are here, again at a conference on international insolvency law…
I start by telling a story about a man who made a film about a mouse almost a century ago this month, in May 1928. The man – his name was Walt Disney – doubted people would pay to see talking cartoon animals.
So he did everything to make the drawings perfect. He added lines that were missing and erased lines that didn’t work. But even a perfectly drawn cartoon could not take away his concerns. So before going public, he asked a test audience to look at his film called Steamboat Willie, which also featured Mickey Mouse. It was the first ever animated movie with synchronised sound. The test audience loved it… Mickey Mouse became one of the most famous animated characters ever… and Walt Disney changed cinema forever.
The point of this story? Disney was brilliant but he also had doubts, so he asked others for help. Because he knew consultation and cooperation brings you further. You see, even the most brilliant person in the world will not succeed on his own. We need to work together, just like Walt Disney did with his success formula of adding what was missing, removing what he didn’t need and cooperating to avoid blind spots.
This cooperative spirit brings me to today. I cannot think of anyone more cooperative than Reinout Vriesendorp. Don’t get me wrong – it is rather Walt, more than Mickey Mouse, whom I am comparing Reinout with. Reinout is always looking for dialogues, for views of others, to test his own views and ideas, however rudimentary. Reinout is the type of lawyer and academic who finds utter delight in the debate, not just for arguing but also for making ideas and theories better.
We are also celebrating European cooperation today. It is exactly 75 years ago that Robert Schuman proposed the establishment of a European Coal and Steel Community. This conference fits into Schumans’ ideal of creating a more united Europe. 75 years of taking incremental steps to build laws that converge the economies and societies of the Member States.
And what tremendous success it has been! In fact, I strongly believe the Insolvency Regulation (1) is one of the most successful projects in the history of the European Union. And I’m looking forward to the new directive harmonising certain aspects of insolvency law, which is currently subject of negotiations in the EU. People joke that amongst all ministers assembled at the European Council of Ministers of Justice discussing this topic, I am the only one who has a clue what he is talking about… Last December, the European Council reached partial agreement on the proposal, including on issues like avoidance actions and directors’ duties. The European Parliament has also made progress by publishing a draft report. So we clearly have momentum. And that is important, since we want to conclude these negotiations about the new Insolvency Directive both carefully and swiftly. This directive will help with promoting international investment and preventing unnecessary loss as a result of insolvency.
But if we want to achieve these goals, we need to do more. So today, I would like to look ahead and explore what more we need. Specifically, I would like to discuss three subjects, the harmonisation of insolvency law, reform of the European Insolvency Regulation, and the creation of a 28th Regime. For these three topics, I point towards Walt Disney’s success formula, because when it comes to insolvency law reform on the EU-level, I believe we also need to add what is missing, remove what is unnecessary and cooperate to avoid blind spots.
As a general remark, I would like to point out that a key objective of insolvency law is to ensure predictability, as an element of legal certainty. To promote cross-border investments, predictability for investors is key. When it comes to insolvency law reform, predictability outweighs justice as a driver.
Let me start with the harmonisation of insolvency law. What can we add here? What is still missing from the draft harmonisation directive currently under negotiation, is the procedural side of insolvency proceedings, especially the speed of those proceedings. To put it more provocatively: how useful is an entitlement if it takes ten years to enforce? For creditors involved in a bankruptcy, it is not only relevant to know what amount they can expect to recover from the insolvency. Creditors gain far less from a high recovery if it is unpredictable when they will receive it or when they must wait years to receive it.
In fact, the lengthy duration of insolvency proceedings in a Member State can be a deterrent for investment in that country, and the wide variety across the EU when it comes to the length of insolvency proceedings is a problem. That is why I argue that the EU should harmonise timelines for insolvency proceedings in EU Member States. Because harmonised timelines can enhance predictability for creditors. We could arrange this by maximising time limits for among other things:
The courts deciding to open insolvency.
Making a first distribution;
Initiating legal proceedings, for annulling a contract or a security interest, or for holding directors liable;
and potentially also for finalising the proceedings.
These time limits need not be hard and fast; rules could provide for exceptions or assumptions and for a discretionary power for the courts to extend a time period. A European incentive that somehow speeds up insolvency proceedings all across the EU would be most helpful.
Next, I would like to turn the European Insolvency Regulation. To start, something could be added here. Its scope could be extended to include rules on the relationship with third countries. The European Insolvency Regulation is valuable for regulating cross-border insolvencies within the EU, but we don’t have a similar instrument for insolvencies that regard countries outside the EU. Currently, all Member States apply their own rules. In some Member States, such as the Netherlands, there is no clear legal framework on the relationship with third countries at all. For creditors, this will make the outcome of such cross-border insolvency proceedings unpredictable.
So something could be added to the Insolvency Regulation. But are there also elements that could be removed?
The recast of the Insolvency Regulation in 2015 has introduced a revolutionary new concept: synthetic insolvency proceedings. I believe that this concept enables us to reconsider two other key elements of the Insolvency Regulation that may perhaps be removed. I am referring in particular to the concept of secondary insolvency proceedings and to the treatment of rights in rem in Article 8 of the Insolvency Regulation, two key elements that are intellectually related. Let me explain this.
You see, as Minister for Legal Protection, I am responsible for instruments that should be used to improve the quality of legislation. To assess whether legislation is appropriate, we have the so-called Policy Compass.
This procedure ensures that, prior to any legislative project, key questions are asked:
What is the problem?
What is the intended goal?
What are the consequences of the various options for achieving that goal?
When you look at secondary insolvency proceedings, their purpose is to address a specific issue. Namely, the situation where a debtor has an establishment in a Member State other than the one where the centre of the debtor’s main interests is situated and where the main insolvency proceedings have been opened. This situation does not occur often, since most companies that operate across borders set up a separate legal entity in the other Member State. As a result, the option to open secondary insolvency proceedings is rarely used.
What’s more, secondary insolvency proceedings would have undesirable consequences. They create a great deal of duplication for all parties involved. Claims of creditors must be submitted twice, and those claims must be verified in two separate procedures.
In addition, complex questions arise regarding the division of powers between the different proceedings. For example, which insolvency practitioner is authorised to terminate a particular contract? May the insolvency practitioner in the secondary proceedings hold the directors liable for mismanagement? Looking at this with the Policy Compass in mind, I question whether secondary insolvency proceedings are really needed and useful.
There is a reason that secondary proceedings were included in the original Regulation. The possibility to open secondary insolvency proceedings is intellectually related to Article 8 of the Insolvency Regulation.
Article 8 ensures that the opening of insolvency proceedings does not affect the rights “in rem” that debtors have over assets situated in another member state at the time of the opening of proceedings.
In general, Article 8 is explained as making these rights “in rem” immune for foreign proceedings. For example, the holder of a security right on an asset situated in another member state, may exercise its right, despite the fact that the insolvency practitioner in the main insolvency proceedings has ordered a “stay of enforcement actions”. This makes Article 8 a fundamental divergence from the principle of universality of the main insolvency proceedings. This immunity is only lifted by opening secondary insolvency proceedings in the Member State where the assets are situated.
In my previous life as a lawyer and a scholar, I looked into the reasons underlying Article 8. (2) From the limited material found in the literature and the recitals of the Insolvency Regulation, it can be inferred that this provision supposedly protects the legitimate expectations of the holders of these rights “in rem”. For these holders, it was thought that it must be predictable to what extent their rights are enforceable. This predictability would be undermined if these rights were suddenly affected by insolvency proceedings in another Member State where different rules apply.
Article 8 ensures that such rights may only be affected by insolvency proceedings in the Member State where the assets are situated.
Predictability for creditors is therefore an important principle underlying both Article 8 and the possibility to open secondary insolvency proceedings.
As I have already said, predictability needs to be a key objective of insolvency law. However, legal predictability may be achieved in different ways. That another solution is possible, is shown by the introduction of the concept of synthetic local insolvency proceedings in the recast of the Insolvency Regulation of 2015. The word synthetic here means that local secondary proceedings are not actually opened but parties act as if they were. According to Article 36 of this regulation, the insolvency practitioner in the main proceedings may promise to comply with the law of another member state when distributing the assets located in that member state. In this way, the opening of secondary insolvency proceedings can be avoided. As a practitioner, I have never seen these synthetic proceedings actually being used, but the concept behind them deserves further reflection.
The concept that the insolvency practitioner of one member states applies the law of another member state, places the need for both Article 8 and secondary insolvency proceedings in a different light. The legitimate expectations of holders of security rights may be protected in another way: by recognition of these rights in the main insolvency proceedings in another Member State, and, where appropriate, by promising to apply some elements of the law applicable to the security interest. This solution has as an advantage that the liquidation of all the debtor’s assets may take place in single proceedings. There will be no longer any need for secondary proceedings. And that saves time and costs.
At the time of the introduction of the Insolvency Regulation, recognition of foreign rights in rem was considered too complex, and it was supposed to impose too great a burden on insolvency practitioners and courts to be put into effect. In fact, it was considered too complicated to fit rights “in rem” from one Member State into another legal system, which may not have an equivalent of these specific rights. In my view, this argument underestimates the capabilities of insolvency practitioners and courts. Courts are regularly required to apply foreign law. So why wouldn’t specialised insolvency practitioners be able to do so as well? They are fully capable of incorporating foreign rights “in rem” into their own legal systems, including when it comes to ranking the rights of creditors in insolvency proceedings.
We have seen many times that complexity diminishes over time as precedents are developed. I don’t see why this would not be the same regarding the integration of foreign rights “in rem” into national systems.
Therefore, I believe it is time to say goodbye to both Article 8 and secondary insolvency proceedings and to take European cooperation a step further. Rights “in rem” under the law of one Member State should be recognized in insolvency proceedings in other Member States, in particular if the principle underlying Article 36, the synthetic approach, becomes a more general feature.
Of course, further reflection is needed on how specific security interests can be incorporated in a particular case into another Member State’s system. Is this complex? Yes, but I know that within CERIL, the knowledge and experience necessary to overcome this obstacle is available. And we could go even further.
That brings me, lastly, to the ‘28th regime’ that was announced by the European Commission. Such a regime may be an example of a way in which more cooperation is possible. Potentially, such a regime – a unified legal framework for all 27 Member States for key areas such as company and insolvency law – could reduce transaction costs and remove legal uncertainty for investors. The need for more steps in this direction has been articulated in recent reports by Enrico Letta and Mario Draghi, that clearly show that we cannot continue as before. Fundamental reforms are needed to remain competitive — especially with the current geopolitical developments.
I’m curious to see how the 28th regime will be developed in more concrete terms. Here, complex questions arise:
Will it be built around a new EU legal entity?
If so, what will it include?
Will it include insolvency law?
Will it only apply to “innovative companies” that are start-ups or scale-ups?
Of course, I have some thoughts of my own. I believe that attracting investment and capital is of vital importance. And to achieve that, I think that looking at only company and insolvency law is not sufficient. We should also look at the law of secured transactions — possibly, or perhaps especially, in the context of the 28th regime. Because investors want certainty that they will recover their investment, and in my view, security rights are essential for that.
I envisage a European security interest alongside and in addition to the national regimes. I am deliberately not using the word harmonisation here; I mean a new uniform European security interest that can be used, and will thus be recognised, all across the EU. All companies within the EU should have the option of providing its investors with a genuine European security right. This option should not be limited to the new special EU legal entity that might be at the core of a 28th regime. With such a European security interest, in particular over movable assets and receivables, we contribute to far better predictability and for ease of access to credit. It would matter much less where insolvency proceedings are opened, and it would matter much less whether the goods are moved across Europe. Therefore, the option of a truly European security right may make cross-border investments more attractive for investors. A European security interest could be a key part of the 28th regime, but it should become available for all companies in the EU, not just for a new corporate entity at the heart of the 28th regime.
As must be clear by now, I believe the development of insolvency law on the EU-level requires us adding what was missing, removing what didn’t work and cooperating across borders. It also needs careful thought. This is where you come in. You, as academics and legal practitioners, are ideally placed to support us — politicians — with your ideas your suggestions and – crucially – by pointing out our blind spots. Because this is how law reform works in the EU: first, academics and legal practitioners discuss problems and possible solutions. Then they determine on which topics there is reason to expect common ground in a significant number of EU Member States. Then all go home and convince their political leaders to take up the issue. Then they start discussing the reforms at a political level. And then, only then, when there is reason to expect common ground on some topics and subjects, the European Commission will initiate a formal reform process. This is necessarily incremental: step by step, we get to better laws. Never perfect, but always a bit better than nothing.
I’m sure your comments will be valued, just like Walt Disney appreciated the feedback he received. In fact, it helped him change the world of movies. Above all, I hope all of you have a productive discussion during the rest of the day, but perhaps not during the last part, where it will be up to Reinout to shoot questions and ideas at us.
Thank you very much.
[1] Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast), which replaced Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings.
[2] The European Insolvency Regulation and Implementing Legislations – a Commentary, Elgar Commentaries in Private International Law series, Eds. Gilles Cuniberti and Antonio Leandro, 2024, p. 175-210; Grensoverschrijdende insolventieprocedures en rechten op goederen in andere landen, NIPR 2022/2, p. 251-276.