On 22 November 2016, The European Commission announced a proposal for a new, more consistent approach to business insolvency across the member states of the EU. It is hoped that the proposed directive will create greater efficiencies in the insolvency process, enhance financial stability and provide greater certainty to investors and companies operating across the EU.
One of the key changes under the proposed directive will be to harmonise the second-chance provisions across the EU by allowing a full discharge from insolvency after a period of three years. Currently, discharge periods in member states range from 1 to 10 years and in some states there is no possibility of discharge whatsoever. Another important change contained in the proposal is the introduction of a framework for restructuring a business' affairs prior to insolvency (4 member states do not provide a defined restructuring period prior to insolvency). Other significant features of the proposal include:
- Access to tools that will enable businesses to better detect a deteriorating financial situation
- A set of common principles across member states to allow flexible restructuring at an early stage
- A four-month non-enforcement period during restructuring to allow negotiations with a view to achieving a successful restructure
- Rules preventing minority creditors from blocking restructuring plans
- Protections for financing of restructured business
- Protection of workers' rights during the restructuring process.
While these proposed rules will apply to business insolvencies (whether through a company or otherwise), the Council also recommends that member states extend the provisions to individual consumer insolvencies as well.
See the Commission's press release here