The European Commission announced in its Capital Markets Union Action Plan of 24 September 2020 the preparation of an initiative enhancing convergence between national insolvency frameworks. In line with this announcement, the Commission’s Work Programme for 2022 includes a proposal harmonising certain (core) aspects of substantive law on insolvency proceedings, with planned date of adoption in the third quarter of 2022.
In addition to the public consultation that took place from December 2020 to April 2021, the Commission decided to organise a dedicated workshop for selected European stakeholders with specific interests in the EU insolvency policy.
14 stakeholder representatives were assembled for a discussion on the possible form and content of a new initiative of the European Commission on harmonising certain aspects of substantive law on insolvency proceedings in the light of feedback from the public consultation. Prof Dr Stephan Madaus provided input based on the recommendations in the ELI Report on Rescue of Business in Insolvency Law that was published in 2017.
In the light of the discussion, it seems likely that the European Commission will publish a legislative proposal for a directive in the course of 2022 that could well include more harmonised rules in the area of avoidance actions, of simplified proceedings for micro and small businesses or on the possibility to quickly liquidate an insolvent company through its sale as a going concern in a pre-packaged administration procedure (‘pre-pack’). The European Commission is also considering harmonised rules for the ranking of creditors, particularly the rights of secured creditors, and their representation in proceedings, the duties of directors in the vicinity of insolvency, or the ability to trace and recover assets that the debtor transferred across borders prior to insolvency proceedings.
ELI is grateful to Prof Dr Stephan Madaus for representing it at the workshop and for providing advice to the European Commission on the basis of the ELI Report.
