On 20/5/2015, the European Parliament has adopted modernised rules on insolvency, taking one step closer towards the creation of a business-friendly environment in Europe, which will help economic recovery. These modernised rules will make it easier for businesses to restructure and for creditors to get their money back, while ensuring that procedures for cross-border insolvencies are effective and efficient.
The modernised Regulation has a broadened scope, containing rules that cover a broader range of commercial and personal insolvency proceedings, such as the so-called Spanish scheme of arrangement, the Italian reorganisation plan procedure or the Finnish consumer insolvency procedures. The overall reform aims at legal certainty and safeguards against bankruptcy tourism. If a debtor relocates shortly before filing for insolvency, the court will have to carefully look into all circumstances of the case to see that the relocation is genuine and not abusive.
It also establishes interconnected insolvency registers, giving businesses, creditors and investors easy access to any national insolvency register on the Europeane-Justice Portal. This system has already been piloted for seven Member States. A parallel aim is to increase the chances to rescue companies from insolvency. The new rules avoid secondary proceedings in other Member States being opened, while at the same time guaranteeing the interests of local creditors. It is contemplated that it will be easier to restructure companies in a cross-border context.
This runs in conjunction with a framework for group insolvency proceedings. The reasoning is that with increased efficiency for insolvency proceedings concerning different members of a group of companies, there will be greater chances of rescuing the group as a whole. The EU believes that efficient national insolvency regimes will likely reduce the number of firms that actually go bankrupt, thus helping to preserve jobs and know-how in viable companies.