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Summaries of EU Legislation

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Reorganisation and winding-up of credit institutions

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Reorganisation and winding-up of credit institutions

SUMMARY OF:

Directive 2001/24/EC — a single bankruptcy procedure for banks with branches in more than one EU country

SUMMARY

WHAT DOES THE DIRECTIVE DO?

It aims to ensure that, where a credit institution (generally a bank) with branches in other EU countries fails, a single bankruptcy procedure is applied to all creditors and investors.

KEY POINTS

The directive:

applies the principle of home country control. This means that the law of the EU country where the failed credit institution has its registered office applies to the entire bankruptcy proceedings;

requires all relevant parties, including known creditors to be informed of the bankruptcy proceedings and re-organisation measures. This includes publication in the Official Journal of the European Union and at least 2 national newspapers in each host country (i.e. those in which the bank has its headquarters and its branches);

provides that, as regards the winding-up proceedings, the applicable law is that of the home country. It should in particular cover such matters as:

the respective powers of credit institutions and liquidators,

the effects of the bankruptcy proceedings on any lawsuits brought by individual creditors, and

the allocation of costs and expenses.

clarifies the impact of the bankruptcy proceedings and applicable law in relation to certain contracts and other legal rights that may be affected by the proceedings such as employment contracts and property rights;

requires all persons required to receive or divulge information in connection with the bankruptcy proceedings to guarantee professional secrecy.

FROM WHEN DOES THE DIRECTIVE APPLY?

It entered into force on 5 May 2001. EU countries had to incorporate it in national law by 5 May 2004.

BACKGROUND

Winding-up of credit institutions

ACT

Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ L 125, 5.5.2001, pp. 15–23)

The successive amendments and corrections to Directive 2001/24/EC have been incorporated in to the original document. This consolidated version is of documentary value only.

last update 05.01.2016

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