Meeting in Brussels on Friday 13 December, the Justice Ministers of the Member States of the European Union adopted a partial general approach to the proposal for a directive aimed at harmonising certain aspects of insolvency law. The text covers four areas – protection of the estate from insolvency, actions to be taken by directors in the event of insolvency, the tracing of assets and transparency obligations – and forms part of the development of the Capital Markets Union, which is considered essential for making the EU more appealing to investors.
The Hungarian Justice Minister, Bence Tuzson, described the compromise as a “good text” that aligned with the competitiveness objective of the Hungarian Presidency, and one which simplifies the provisions as much as possible while preserving the Member States’ room for manoeuvre.
Title III therefore authorises each country to designate courts or administrative authorities to facilitate access by insolvency practitioners to national bank account registers.
Title V also harmonises the duty of directors, who will have to declare insolvency within three months, unless they take measures to protect creditors.
The European Commissioner for Justice, Michael McGrath, believes that this directive will make it possible to establish a solid capital markets union, thereby facilitating access to financing, particularly for SMEs. He made reference to the expectation there would be significant economic benefits as a result of better recovery of claims and fair distribution among creditors.
The directive also aims to improve the transparency of insolvency regimes by requiring practical information factsheets on national laws. It provides for the interconnection of bank registers via the BARIS system and guarantees the protection of personal data.
These measures should improve the predictability and efficiency of procedures, which in turn should make cross-border investment more attractive.
Despite the progress that has been made, Estonian minister Liisa-Ly Pakosta, who supports the text, noted that numerous small businesses formed the basis of her country’s economy and that she was concerned about the lack of simplified procedures to reduce costs that are too high for small structures. In her view, therefore, these are not exceptional measures in Estonia.
Ms Pakosta also expressed concern about the lack of judicial staff to manage procedures that are not consistent with local procedures.
The Polish minister, Adam Bodnar, whose country will succeed Hungary as President of the Council in January, praised the collective efforts of previous Presidencies. “It’s a relay race”, he declared, affirming his ambition to reach a global agreement by June. Poland also intends to clarify certain provisions, in particular regarding the mechanisms for extraordinary measures. “We understand the need for further clarification, and the Polish Presidency will ensure that this text receives the broadest possible support”, he said.
With four of the seven blocks approved, technical discussions will continue under the Polish Presidency. Proposed in December 2022 (see EUROPE 13079/2), the aim of this directive is to remove obstacles to cross-border investment, which was identified back in 2015 as being necessary for a genuine capital markets union.
Read the partial general approach here: https://aeur.eu/f/esy (Original version in French by Nithya Paquiry)