Brussels, 13/12/2012 (Agence Europe) - On 12 December in Strasbourg, the European Commission proposed a revision of its rules on cross-border insolvency procedures. A press release indicated that these rules would no longer be exclusively focused on liquidating businesses but would also focus on ways to rescue viable companies, whilst protecting the right of creditors to get paid.
The proposal revises a regulation of 2000 and adapts it to the current context of crisis. According to Commission figures, company insolvency at a cross-border level affects an estimated 50,000 companies across the EU every year (out of an average of 200,000 bankruptcies in total). 1.7 million jobs are estimated to be lost due to insolvencies every year. The Commissioner for industry, Antonio Tajani, co-wrote the draft report with Commissioner for Justice, Fundamental Rights and Citizenship Viviane Reding. “Insolvencies are a fact of life in a dynamic, modern economy. Around half of enterprises survive less than five years… But evidence suggests that failed entrepreneurs learn from their mistakes and are generally more successful the second time around. Up to 18% of all entrepreneurs who go on to be successful have failed in their first venture. It is therefore essential to have modern laws and efficient procedures in place to help businesses which have sufficient economic substance, overcome financial difficulties and to get a 'second chance'” states a Commission press release. The amendments introduced are very technical: the scope of the regulation has therefore been expanded by way of a new definition of insolvency procedures. This new definition includes, for example, notions of pre-insolvency procedures. It is proposed that the scope will include procedures that do not involve a liquidator but in which the assets and capital of the debtor are subject to control or supervision by a court. The Commission explained that this amendment would allow for more personal insolvency procedures to be included within the regulation's framework. The other highly technical amendments involve the rules that decide on what jurisdiction is appropriate and what the so-called “secondary” insolvency procedure should be. The regulation also improves information for creditors. Member states will be, for example, obliged to publish the main decisions, such as the decision on opening insolvency procedures, explained the Commission. The regulation also stipulates that when a debtor is subject to insolvency procedures in several member states, the jurisdictions used in the different legal proceedings launched must work with one another closely. The press release indicates that this regulation “is a first step towards an EU 'rescue and recovery' culture for companies and individuals in financial difficulties”. The Commission is also looking at what it should do in the future, particularly with regard to drawing up different rules for honest entrepreneurs and for fraudulent insolvencies or those due to negligence on the behalf of the debtor. (SP/transl.fl)