The publication of the Capital Markets Union Action Plan in September 2015 has changed the dynamic on insolvency. In the Capital Markets Union Action Plan, the European Commission acknowledges that there are many obstacles, including insolvency, that stand in the way of cross-border investment.

In March 2016, the Commission (DG JUSTICE) released a consultation on effective EU insolvency frameworks. The Commission explained that “inefficiency and divergence of insolvency frameworks make it harder for investors to assess credit risk, particularly in cross-border investments, preventing the integration of capital markets in the EU.”

The European Commission officially released the proposed Insolvency Directive on 22nd November 2016. As expected, it focuses on rules supporting businesses in temporary distress to encourage them to restructure their debt early on so as to prevent bankruptcy. It also aims to give entrepreneurs a second chance at doing business after a bankruptcy.

Discussions in the Council of Ministers and European Parliament have proceed slowly, as the introduction of these minimum standards in EU law requires sufficient flexibility to allow tailoring to Member States’ particular legal systems and traditions. Negotiations could conclude in the coming months.

Invest Europe position

We welcome the Proposal, as released by the European Commission, as the introduction of such harmonised rules across the EU will risk assessments in cross-border investments easier to ascertain, thereby leading to increased investment. In our Position Paper, we outline suggested improvements to the Proposed Directive in areas such as creditor protection and participation of equity holders in the preventive restructuring process.


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