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Brussels, 06 June 2014
Modern insolvency rules: EU Ministers back Commission proposal to give honest businesses a second chance
Today, national ministers in the Justice Council backed the Commission's proposal to modernise European rules on cross-border insolvency (IP/12/1354). The modernised Insolvency Regulation will provide a new approach to help businesses overcome financial difficulties, shifting the focus away from liquidation, while protecting creditors' right to get their money back.
"Today's agreement in the Council brings Europe one step closer to providing better conditions for businesses and creditors alike," said Vice-President Viviane Reding, the EU's Justice Commissioner. "Small and medium-sized enterprises are the backbone of the EU's economy. Europe needs a ‘rescue and recovery’ culture for viable businesses – the modernised insolvency rules will facilitate a fresh start. The changes will allow for increased entrepreneurship in Europe, boosting growth and jobs. Citizens can also rest assured that when their employer faces financial difficulties, the business will stand a better chance of survival."
Every year in the EU, cross-border insolvency proceedings affect an estimated 50 000 companies - meaning every year 1.7 million jobs are at stake. About one in four bankruptcies in the EU have a cross-border element. The European Commission is therefore pushing initiatives in the area of justice policy that can foster growth in Europe. The modernisation of cross-border insolvency rules forms just part of this strategy.
Concretely, the new Regulation will:
In February 2014, the European Parliament backed the European Commission's proposal on cross-border insolvency rules (MEMO/14/88) with an overwhelming majority (580 for, 69 against and 19 abstentions). The Justice Council includes the main elements of the European Parliament's position by introducing group coordination proceedings for insolvent members of groups of companies.
Next steps: The European Parliament, the Council of Ministers and the Commission will now engage in negotiations to reach an agreement on a final text. The adoption of the modernised Insolvency Regulation is expected by the end of the year.
The European Insolvency Regulation (Regulation (EC) No 1346/2000 on insolvency proceedings) has been applying since 31 May 2002, which means that the current rules date back to 2000. Benefitting from ten years of experience, the new rules proposed by the Commission on 12 December 2012 aimed to modernise the Insolvency Regulation by:
The updated insolvency rules mark an important step towards implementing an EU rescue culture in cases of companies and individuals in financial difficulties. Together with the Commission's Recommendation of 12 March 2014 on a new approach to business failure and insolvency (IP/14/254), the modernised Insolvency Regulation will truly bring insolvency law in Europe in line with the 21st century.
For more information
Homepage of Viviane Reding, Vice-President of the European Commission and EU Commissioner for Justice: http://ec.europa.eu/reding
Follow the Vice-President on Twitter: @VivianeRedingEU
Commission proposal – press pack:
European Commission Recommendation (12th March 2014) on a new approach to rescue business and give honest entrepreneurs a second chance:
European Commission – Insolvency proceedings:
Follow EU Justice on Twitter: @EU_Justice