The Directive on Preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures and amending Directive 2012/30/EU is now in force, having been published in the Official Journal in July.
The new Directive does not attempt to harmonise core aspects of formal insolvency procedures such as the conditions for opening insolvency proceedings, definitions of insolvency or the ranking of claims. Instead, the Directive focusses, as far as corporate debtors are concerned, on ensuring that a statutory framework is put in place in each Member State which maximises the chances of a company with a viable business being able to restructure its debts before it is forced into liquidation.
Member States have two years to transpose the Directive from its entry into force (i.e. by 17 July 2021), other than the provisions on the use of electronic means of communication - where transposition of the requirement for e-communications relating to the filing of claims, submission of restructuring or repayment plans and notifications to creditors is extended to July 2024 and for the lodging of challenges and appeals to July 2026. Member States encountering particular difficulties in implementing the Directive also have the benefit of a one-year maximum extension.
Significantly, Member States have a broad degree of flexibility in how the Directive is implemented nationally. We highlighted the flexible approach of the Council in the November 2018 edition and much of that remains relevant in the new Directive as passed. What this means, of course, is that while the Directive represents a purposive step in the right direction, a fully harmonised EU-wide restructuring framework remains some way off.