Harmonising insolvencies and restructurings across Europe

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Harmonising insolvencies and restructurings across Europe
  • Why harmonisation is needed
  • European Commission recommendation
  • European Commission's evaluation of the implementation of the Recommendation
  • EU Directive on harmonisation

Harmonising insolvencies and restructurings across Europe

Why harmonisation is needed

The divergence between Member States' laws has an impact on:

  1. the recovery rates of creditors in different jurisdictions

  2. investment decisions, and

  3. the restructuring of groups of companies

A more coherent approach at EU level would not only improve returns to creditors and the flow of cross-border investment, but would also have a positive impact on entrepreneurship, employment and innovation. The World Bank has produced substantial reports to show improved insolvency laws promote greater investment in that country (see Practice Note: Table of advantages and disadvantages of restructuring in various jurisdictions worldwide and News Analysis: Coronavirus (COVID-19)—A nucleus for significant reform), and discrepancies between national frameworks lead to increased costs and uncertainties in assessing the risks of investing in another Member State.

The Regulation (EU) 2015/848 (OJ L141 5.6.2015 p 19), Recast Regulation on Insolvency [EU Recast Regulation on Insolvency] does not seek to harmonise or affect national insolvency rules and procedures, which continue to apply. However some of the reforms in the EU Recast Regulation on Insolvency, such as coordination proceedings for groups and additions to the annexes, involve a degree of harmonisation (see Practice Note: Recast Regulation on Insolvency (Member State to Member State)—treatment of groups and group co-ordination proceedings).

In contrast, the purpose of the UNCITRAL Model Law is to harmonise cross-border insolvency throughout the

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