The European Commission is backing a proposal aimed at modernising regulations dating from 2000 which deal with cross-border business insolvency. This proposal establishes a common framework for insolvency proceedings in the European Union, shifts the focus away from liquidation proceedings, and develops a new approach which is expected to help businesses to overcome financial difficulties while protecting creditors’ rights.
The proposed changes will affect several areas in national insolvency laws which have been identified as creating unfriendly business environments to businesses and hindering the development of an efficient insolvency framework in the EU’s internal market.
Justice Commissioner Vivian Reding has remarked that “current insolvency rules need updating to make it easier for viable businesses in financial difficulties to remain afloat rather than go into liquidation. Some 1.7 million jobs are lost to insolvencies every year and we would like to give honest companies and the people they employ a second chance”.
The revision of the EU Insolvency Regulations seeks to update existing rules and to support the restructuring of businesses in difficulties in the context of creating a business-friendly environment.
The update aims to increase legal certainty by providing clear rules which determine jurisdiction; ensure that courts handling different proceedings will work closely with one another when debtors are faced with insolvency proceedings in several member states; provide reliable information to creditors by binding member states to publish key decisions regarding the commencement of insolvency proceedings. According to the Commission, “the new rules will increase the efficiency and effectiveness of cross-border insolvency proceedings which affect an estimated 50,000 companies across the EU every year”. In due course, the proposal will be forwarded to the European Parliament and to the EU Council for further deliberation.
For further information visit http://ec.europa.eu/enterprise/index_en.htm
This information was supplied by Impetus Europe Consulting Group Ltd.
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