Corporate Insolvency Law and EU State Aid

Since 1st January 2016, the Single Resolution Mechanism has been fully operational. Given the Eurozone’s still struggling banking sector, it took little more than a year for the first test cases to emerge.

These paint a mixed picture, with a smooth application of the resolution framework in one case (Banco Popular); and the utilization of escape clauses leading into the alternative resolution regimes of national corporate insolvency law (Banca Popolare di Vicenza and Veneto Banca) and/or EU State Aid (Monte dei Paschi di Siena) in others.

Under BRRD and SRM, the application of resolution tools and powers is conceptualized as an ultima ratio alternative to normal insolvency proceedings where resolution is justified in the public interest on systemic risk grounds. Where the public interest requirement as a condition for resolution is not satisfied, normal insolvency proceedings apply as the default option for resolving failing banks.

At the other end of the spectrum, there is reason to believe that the largest and most complex institutions will not be subject to the BRRD/SRM resolution framework either. The bank resolution framework contains many loopholes that allow authorities to circumvent its strict loss-sharing principles. The ‘hard’ cases are likely to be bailed out, as was the case with the Italian lender Monte dei Paschi di Sienna, Italy’s fourth largest lender, that was bailed-out by the Italian state on the basis of a so-called ‘precautionary recapitalization.’

This will be the main subject of an afternoon seminar being organised by the Malta Law Academy within the Malta Chamber of Advocates, in collaboration with the Malta European Law Association on Wednesday 21st February.

The two-hour seminar between 2pm and 4pm will be held at the Chamber of Advocates’ Conference Hall within the Courts of Justice in Valletta and will address Corporate Insolvency Law, EU State Aid and the EU’s regulatory and supervisory aspects of securities business.

The main speaker during this conference will be Michael Anderson Schillig, Professor in International Commercial and Financial Law at King’s College London who will address the topic Corporate Insolvency Law and EU State Aid – Recent Cases under the EU Bank Resolution Regimes and the impact of the BRRD/SRM.

Dr Christopher Buttigieg, Lecturer in the European and Comparative Law Department at the University of Malta will also address the topic of EU Regulation and Supervision of Securities Business and will give a brief critical analysis of the challenges faced by the national competent authorities of small EU and EEA EFTA member states.

Dr David Fabri, Head of the Department of Commercial Law and member of the Advisory Board of the Malta Law Academy thanked the Malta European Law Association for its collaboration on this event and for securing the presence of Professor Michael Schillig who is regarded as one of the world's leading specialists in EU Company Law, Insolvency and Corporate restructuring.

“The participation of Professor Michael Schillig and Dr Christopher Buttigieg at this seminar shows once again the efforts that the Malta Law Academy has been dedicating over these past years. As the Chamber of Advocates’ Foundation, the MLA remains committed to strengthen the legal profession through opportunities for more knowledge that ultimately leads to a better and more informed legal community.”

This will be the first seminar to apply for the Chamber of Advocates’ newly established Continued Professional Education Scheme and will be equivalent to 2 CPE hours. Official certificates will be issued by the Malta Law Academy to all those attending the seminar.

This seminar is free of charge and should be of particular interest to all those working in the banking and financial services sector. To register, send an email on events@avukati.org