The European Commission wants struggling companies to have the chance to restructure and survive, and will unveil a proposal to this effect on 19 October to harmonise European regulatory frameworks for corporate insolvency.
An initial draft, which EUROPE has seen, promises early warning mechanisms for identifying problem situations that would lead to company bankruptcy. The Commission explains in the draft that a restructuring framework should allow entrepreneurs to solve their financial problems at an early stage when insolvency can be avoided and they can be sure to continue their businesses, adding:
"Making it easier for entrepreneurs to have a second chance would also lead to higher self-employment rates in the member states".
The Commission seems to promote early restructuring aided by mediators or supervisors without requiring any legal bodies. The proposal foresees that companies, but only honest companies, would be able to benefit from a discharge of their debts. Over-indebted entrepreneurs should be fully discharged of their debts which were subject to a bankruptcy or similar procedure after no more than three years.
The initiative is part of the European Commission’s action plan for a Capital Markets Union. In mid-September, the Commission unveiled a roadmap to speed up introduction of the Capitals Market Union (see EUROPE 11624). Three legislative proposals are currently being negotiated. The Commission wants two of them – regulations to revitalise the securitisation market and a proposal to simplify reports to be published by companies quoted on the stock market – to be endorsed by the end of the year. (Original version in French by Elodie Lamer)