European Parliament proposes significant changes to reform the EC Regulation on Insolvency

European Parliament proposes significant changes to reform the EC Regulation on Insolvency

Restructuring & Insolvency analysis: What changes have been proposed by the European Parliament to the reforms to the EC Regulation on Insolvency previously circulated by the Commission? What further steps are needed to implement this legislation?
Press Release: European Parliament backs Commission proposal to give viable businesses a 'second chance', LNB News 05/02/2014 147

Proposals, including extending insolvency rules to cover rescue proceedings, have been approved by the European Parliament in order to modernise the EU’s rules on cross-border insolvency. The vote endorsed the main elements of the European Commission's proposal regarding the creation of an EU-wide system of web-based insolvency registers, the possibility of avoiding the opening of multiple proceedings, and the rules dealing with the insolvency of groups of companies.

What are the latest developments?
On 5 February 2014, the European Parliament voted on the European Commission's proposal to modernise Europe’s rules on cross-border insolvency. The plenary vote followed a general endorsement of the Commission’s initiative from the European Parliament’s Legal Affairs Committee (JURI) on 17 December 2013 (MEMO/13/1164) as well as a positive initial debate by the European Council in December.

The European Parliament vote (with an overwhelming majority 580 for, 69 against and 19 abstentions) endorsed the main elements of the Commission's proposal, particularly as regards:

• extending the rules to cover rescue proceedings
• the creation of an EU-wide system of web-based insolvency registers
• the possibility of avoiding the opening of multiple proceedings, and
• the rules dealing with the insolvency of groups of companies

However, the European Parliament have made some fairly major and unwelcome changes to the draft reforms originally circulated by the Commission, sparking some heated debate.

What changes have the European Parliament proposed?
The European Commission prepared the legislative proposals back in December 2012, which were largely welcomed by UK practitioners. For a summary of these proposals, see Practice Note: Reforms to EC Regulation on Insolvency 1346/2000.

On 20 December 2013, European Parliament rapporteur, Klaus-Heiner Lehne, produced a report on the Commission's

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.