The Committee on Legal Affairs confirmed, with 16 to none
and 7 abstentions, the agreement reached with Council on a
directive that aims to enhance the rescue culture of
businesses and to remove barriers to free flow of capital
due to restructuring and insolvency procedures in member
states.
The insolvency framework covers three main measures:
- preventative restructuring framework, that allows
companies in financial difficulty to negotiate a
restructuring plan with creditors, while maintaining their
activity and preserving jobs
- second chance for honest insolvent or over-indebted
entrepreneurs, through full debt discharge after a maximum
period of 3 years, with safeguards against abuse
- targeted measures for member states to increase
efficiency of insolvency, restructuring and discharge
procedures, in particular expedient treatment of procedures
The final text also includes guarantees that workers’
rights, such as collective bargaining and industrial
action, right to information and consultation, will not be
affected by restructuring procedures.
Requirements on the duties of the company director in
insolvency proceedings were also introduced. They include
regard to the interest of creditors, other stakeholders and
equity holders, taking steps to avoid insolvency and
avoiding deliberate or grossly negligent conduct that
threatens the viability of the business.
Next steps
Once the directive is formally approved by the full House
and EU Council of Ministers, it will be published in the
Official Journal of the EU and enter into force 20 days
later.
Background information
Today in Europe, half of businesses survive less than 5
years. It is estimated that in the EU, 200 000 firms go
bankrupt each year (or 600 a day), resulting in 1.7 million
direct job losses. In several Member States, there is a
tendency to steer viable enterprises in financial trouble
towards liquidation rather than early restructuring.
The Commission presented its proposal in
November 2016 and Parliament adopted its position July
2018. The rules complement the 2015
Insolvency Regulation on resolving conflicts of
jurisdiction and laws in cross-border insolvency
proceedings, and ensures the recognition of
insolvency-related judgements across the EU. It does not
harmonise insolvency laws across member states.
