The European Parliament has approved a proposal by the European Commission to modernise the current European rules on insolvency. The new rules would ensure that cross-border insolvency procedures become more efficient and effective, creating a business-friendlier environment in Europe and promoting economic growth. The rules apply where a debtor undergoes an insolvency procedure included in appendix A to the regulation. For the Netherlands, this will be bankruptcy, suspension of payments, or the debt restructuring scheme for natural persons. The regulation sets out the effects these procedures have in the other Member states.
The modernised rules will also make it easier for companies to restructure and, simultaneously, for creditors to get their money back. Companies with cross-border activities will find it good to know that it will be easier to survive a threat of insolvency, but that the new rules help creditors as well.
Figures have shown that companies and individuals increasingly choose to move all or part of their business to countries other than where they are seated or residing. In the European Union, this could lead to complications on the internal market when businesses go bankrupt. This is because approximately 25% of the 200,000 businesses that enter an insolvency procedure have to deal with cross-border aspects. 1.7 million jobs are at risk as a result. The European Union wants to address these problems by modernising the current European insolvency rules, which date from 2000.
The new rules are to ensure that cross-border insolvencies proceed more efficiently and effectively, thus promoting economic growth in Europe. Where cross-border aspects play a role, the current insolvency procedures are still too expensive and complex. The new regulation will facilitate company restructuring and at the same time make it easier for creditors to get their money back.
The regulation contains harmonised rules regarding court jurisdiction, governing law and recognition of court decisions, thus safeguarding legal certainty. In addition, the new rules would ensure that insolvency procedures affecting a group of companies can be carried out efficiently. Finally, a public online register – available in all member states – will be developed to keep track of all cross-border insolvency cases. Relevant information about these insolvencies can be consulted by courts and creditors from different countries. This will avoid parallel insolvency procedures having to be filed in more than one member state.
The new regulation came into force on 25 June 2015, but only applies to insolvency procedures filed after 26 June 2017. Insolvency procedures filed before this date will be covered by the 2000 regulation. A regulation is binding as a whole, and it has direct effect in all member states: they are not required to implement these European rules in their national laws. Denmark, however, has not taken part in the regulation.
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