The intersection of insolvency and successions is a field that demands legal precision and a detailed understanding of European regulations. With EU Regulation 2015/848 on insolvency proceedings and EU Regulation 650/2012 regarding jurisdiction, applicable law, recognition, and enforcement of decisions in succession matters, professionals in succession law face unique challenges. In this article, we will analyze how these regulations interact when the deceased had open insolvency proceedings, exploring both the regulatory framework and the practical and litigious implications that arise in our daily practice.
Regulatory Framework of the EU Regulations
EU Regulation 2015/848, applicable since June 26, 2017, governs cross-border insolvency proceedings within the European Union. Its main objective is to facilitate the management of insolvency proceedings involving debtors with assets or creditors in multiple Member States. On the other hand, EU Regulation 650/2012, in force since August 17, 2015, establishes a unified framework for international successions, allowing a single national law to govern the entire succession.
The coexistence of these regulations raises the question of which should prevail in case of conflict. Article 3 of Regulation 650/2012 states that it shall not apply to obligations arising from other matters, such as insolvency. However, practice has shown us that reality does not always align with normative theory, requiring a case-by-case analysis.
Interaction between Insolvency and Successions
One of the greatest complexities arises when the deceased, at the time of their death, is subject to an insolvency proceeding. In such cases, the applicable insolvency law under Regulation 2015/848 may conflict with the succession law determined by Regulation 650/2012. This conflict is particularly relevant in matters such as the administration of the estate and the priority of debts.
From a practical standpoint, the administration of the inheritance can be severely affected by insolvency. Insolvency administrators may need to coordinate with executors, often leading to tensions and additional complications. For example, identifying and valuing the deceased's assets in different jurisdictions requires close collaboration between professionals from both legal areas.
Common Practical and Litigious Aspects
In our experience, one of the most litigious situations occurs when the creditors of the deceased attempt to assert their rights within the succession proceeding. Determining jurisdiction and applicable law can lead to jurisdictional conflicts, especially when assets are distributed across multiple Member States.
Courts have approached these issues with varying perspectives. In case C-556/17, the Court of Justice of the European Union emphasized the need to interpret the regulations in a manner that respects the principle of mutual recognition and judicial cooperation. However, interpretations vary and, in some cases, have led to contradictory outcomes, underscoring the importance of expert legal advice from the outset of the process.
Jurisprudential and Doctrinal Considerations
The doctrine has extensively debated the interaction of these regulations. A significant part of the discussion focuses on the nature of insolvency debts and their treatment in the succession context. According to Article 23 of Regulation 650/2012, succession law governs the transfer of the deceased's assets and liabilities. However, this is not always straightforward when debts are subject to an insolvency proceeding.
Jurisprudentially, the Spanish Supreme Court, in its ruling 456/2023, clarified that although insolvency law may take precedence over certain assets of the deceased, succession law remains applicable to determine ownership and remaining succession rights. This ruling has provided some clarity but has also left open questions regarding the coordination between applicable laws.
Strategies for Managing Complex Successions
Given the inherent complexity of these cases, it is crucial for succession law professionals to adopt strategies that allow for effective management. Advance planning plays a fundamental role, especially when advising clients with assets in multiple jurisdictions.
Maintaining open communication with insolvency administrators is essential to ensure that the interests of heirs and creditors are adequately protected. Additionally, conducting a thorough analysis of the applicable regulations, considering potential reforms underway for 2025-2026, can help anticipate and mitigate potential conflicts.
- Thoroughly review the deceased's assets and debts.
- Coordinate with insolvency administrators from the outset.
- Evaluate the applicable regulations in each involved jurisdiction.
The coordination between succession law and insolvency law in the EU is a challenge that requires a strategic approach and a detailed understanding of the applicable regulations. Tools like LexPartis can assist professionals in managing these processes, providing a more efficient and rigorous framework for addressing complex cases.