WIREDGOV

Recently, the European Commission launched a public consultation on modernising EU rules governing insolvencies. The existing rules (the Insolvency Regulation) date from 2000 and set out how bankruptcies – of companies or individuals – should be coordinated between several EU countries. The results of the consultation will help determine whether and how the existing Regulation needs to be revised in order to bolster businesses and strengthen the EU's Single Market. It forms part of the EU's efforts to preserve jobs and to promote economic recovery, sustainable growth and a higher investment rate, as set out in the Europe 2020 strategy.

Insolvencies are a fact of life in a dynamic, modern economy. Around half of enterprises survive less than five years. In 2010, a total of 220,000 businesses went into liquidation in the EU. This means that some 600 companies in Europe went bust every day. This trend continued in 2011. It is therefore essential to have modern laws and efficient procedures in place to help businesses, which have sufficient economic substance, overcome financial difficulties and to get a "second chance".

"A modern insolvency law is essential for financial stability and for the efficiency of the financial system. It is an essential part of a modern Single Market and encourages entrepreneurs to take risks. And if necessary, it provides an orderly way for businesses to close down," said EU Justice Commissioner Viviane Reding. "A modern insolvency law will help fuel the economy as it will help giving economically solid businesses, which are in short term financial difficulties, a second chance. That is why we are consulting business as well as lawyers, judicial authorities and the public at large."

The Insolvency Regulation of 2000 has improved legal certainty and facilitated judicial cooperation in the treatment of cross-border insolvency cases. However, after ten years in application, important developments in national insolvency law and considerable changes in the economic and political environment call for a fresh look at the Regulation.

The Commission is consulting small and large businesses, self-employed individuals, insolvency practitioners, judicial authorities, public authorities, creditors, academics and the general public on their experience with insolvency and in particular cross-border insolvency. Their answers will help the Commission to determine whether and how the current legal framework should be improved and modernised.

The consultation is open until 21 June 2012.

The consultation can be found here:

http://ec.europa.eu/justice/newsroom/civil/opinion/120326_en.htm

Background

European Insolvency Law is laid down in Regulation (EC) No 1346/2000 on insolvency proceedings (the “Insolvency Regulation”), which has applied since 31 May 2002. The Regulation contains rules on jurisdiction, recognition and applicable law and provides for the coordination of insolvency proceedings opened in several Member States. The Regulation applies whenever the debtor has assets or creditors in more than one Member State.

For more information

European Commission – Insolvency proceedings:

http://ec.europa.eu/justice/civil/commercial/insolvency/index_en.htm

Justice Directorate General Newsroom:

http://ec.europa.eu/justice/news/intro/news_intro_en.htm

Homepage of Vice-President Viviane Reding, EU Justice Commissioner:

http://ec.europa.eu/reding