New rules facilitating cross-border insolvency proceedings enters into force
Yesterday, the new rules on cross-border insolvency proceedings, proposed by the Commission in 2012 and adopted by the EU legislators in 2015, came into force throughout the European Union.
The new rules aim at facilitating debt recovery in cross-border insolvency proceedings. They will make it easier for businesses to restructure and for creditors to get their money back, by ensuring that collective procedures for cross-border debt recovery are effective and efficient. The Regulation focuses on resolving the conflicts of jurisdiction and laws in cross-border insolvency proceedings. It also ensures the recognition of insolvency-related judgments across the EU.
European Commission First Vice-President Timmermans said:""In a real internal market businesses who need to restructure should not be hampered by conflicts over which national rules apply, nor should national borders be an obstacle for creditors to recover their claims. These new rules will support companies and investment through increased legal certainty. We will need to go further and adopt common EU rules to make sure companies restructure early, as already proposed by the Commission."
Commissioner Věra Jourová, EU Commissioner for Justice, Consumers and Gender Equality, said: "The new Insolvency Regulation will facilitate cross-border insolvency within the EU and prevent from "bankruptcy" tourism. With the proposed new rules on restructuring and second chances, the insolvency framework will remove barriers for investments and support honest entrepreneurs."
Key features of the new rules
- Wider scope: The new rules apply to a wider range of national restructuring proceedings. Certain modern and efficient types of national restructuring proceedings were not covered by the old set of rules, meaning that they could not be used in cross-border cases. It will now be possible to use the modern national restructuring proceedings to rescue businesses or recover money from debtors in other EU countries.
- Increased legal certainty and safeguards against bankruptcy tourism: If a debtor relocates shortly before filing for insolvency, the court will have to carefully look into all circumstances of the case to see that the relocation is genuine and not to take advantage of more lenient bankruptcy rules. The court will have to check that the debtor is not acting as a "bankruptcy tourist".
- Increased chances to rescue companies: The new rules avoid "secondary proceedings" (proceedings opened by courts in an EU country other than the one where the company's registered office is based). This will make it easier to restructure companies in a cross-border context. The rules at the same time also provide for safeguards guaranteeing the interests of local creditors.
- Group insolvency proceedings: The new rules introduce framework for group insolvency proceedings. This will increase the efficiency of insolvency proceedings involving different members of a group of companies. In turn, this will increase the chances of rescuing the group as a whole.
- Linking insolvency registers: By the summer of 2019 there will be an EU-wide interconnection of electronic national insolvency registers. This will make it easier to obtain information on insolvency proceedings in other EU countries.
The European Commission put forward a proposal in 2012 updating the 2000 Regulation to improve the application some of its provisions, so as to enhance the effective administration of cross-border insolvency proceedings. This proposal was adopted by the European Parliament and the Council of the European Union on 20 May 2015 and came into force yesterday.
In 2014, the Commission has also issued a Recommendation on restructuring and second chance. When the Commission reviewed the implementation of the Recommendation by Member States, it became clear that rules still diverge and remain inefficient in some countries.
This is why the European Commission proposed a Directive on business insolvency in November 2016, which focuses on facilitating early restructuring and second chance.
These two legal instruments – the new Insolvency Regulation and the proposed Directive – will create a coherent framework supporting growth and entrepreneurs.
For more information
Latest News from
Preliminary deal on €5 billion fund to mitigate the effects of Brexit18/06/2021 16:33:00
A five-billion-euro fund to overcome the consequences of the UK's withdrawal came a big step closer to adoption yesterday after the Council and the European Parliament reached a preliminary agreement on the draft regulation.
World Refugee Day: Joint Statement by the European Commission and the High Representative18/06/2021 15:25:00
World Refugee Day: Joint Statement given by the European Commission and the High Representative.
NextGenerationEU: European Commission endorses Denmark's €1.5 billion recovery and resilience plan18/06/2021 14:33:00
The European Commission yesterday adopted a positive assessment of Denmark's recovery and resilience plan.
Protocol on Ireland / Northern Ireland: Statement by the European Commission following the UK's request to extend the grace period for chilled meats18/06/2021 14:02:00
The European Commission yesterday received a request from the United Kingdom to extend a grace period concerning the movement of chilled meats from Great Britain to Northern Ireland, agreed within the context of the Protocol on Ireland / Northern Ireland.
State aid: Commission approves €166.7 million Greek public support for construction of LNG terminal in Alexandroupolis18/06/2021 13:25:00
The European Commission has approved, under EU State aid rules, a €166.7 million Greek support measure for the construction of a new liquid natural gas (“LNG”) terminal in Alexandroupolis, Greece.
EU asylum agency: Council agrees extended mandate for negotiations with the European Parliament18/06/2021 12:38:00
EU ambassadors recently (16 June 2021) extended the Council's negotiating mandate on the EU asylum agency regulation.
NextGenerationEU: European Commission endorses Greece's €30.5 billion recovery and resilience plan18/06/2021 11:33:00
The European Commission yesterday adopted a positive assessment of Greece's recovery and resilience plan.
Surcharge-free roaming – Council agrees its position on continuation and revision of the policy18/06/2021 10:38:00
The EU is preparing a law to ensure that people can continue to make calls, send text messages and surf on the web while travelling in other EU countries, without the fear of a shock when they get their bill, after the current roaming regulation expires on 30 June 2022.
Commission to invest €14.7 billion from Horizon Europe for a healthier, greener and more digital Europe18/06/2021 09:10:00
The Commission has adopted the main work programme of Horizon Europe for the period 2021-2022, which outlines the objectives and specific topic areas that will receive a total of €14.7 billion in funding.
State aid: Commission approves a Polish scheme to compensate large companies for damages suffered due to coronavirus outbreak and provide liquidity support18/06/2021 08:20:00
The European Commission has approved, under EU State aid rules, a Polish scheme to partially compensate large companies for the damages suffered due to the coronavirus outbreak and the restrictive measures implemented by the Polish government, while providing them with direct liquidity support through subsidised loans.