Harmonising certain aspects of insolvency law in the EU.

On December 7th, 2022, the European Commission proposed a long-awaited directive harmonizing insolvency law within the European Union (EU).? The proposed Directive 2022/0408 (COD) addresses the disparities among EU member states’ domestic insolvency laws for non-financial corporations by laying down common rules for member states.

More specifically, it aims to improve three dimensions of insolvency law: the simplicity of the recovery of assets from liquidated insolvent estates, the efficiency of insolvency proceedings, and the predictability and fair distribution of recovered value among creditors.?

To achieve this, the proposed directive covers various aspects of insolvency proceedings and pre-insolvency proceedings, including the annulment of transactions entered into by the debtor prior to the opening of an insolvency proceeding, asset tracing, the appointment of a ‘monitor’ to find buyers for companies, duty of directors to request the opening of insolvency proceedings, simplified winding-up proceedings for microenterprises and provisions for the establishment of creditors' committees with defined rights and powers. Member States are also required to prepare an information factsheet on their domestic laws related to insolvency proceedings.?

It should be noted that the directive does not apply to proceedings related to financial institutions, including insurance and re-insurance companies, credit institutions, investment firms or collective investment undertakings, central counterparties, and other financial institutions.

This directive complements two previously enacted legislations: Directive 2019/1023 on pre-insolvency proceedings and dept discharge following insolvency proceedings, and Regulation 2015/848 on the determination of jurisdiction and applicable law for cross-border insolvency.?

In Parliament the referral of this proposal was announced on the 26th of January 2023, and its file was assigned to the Committee on Legal Affairs (JURI) with Pascal Arimont (EPP, Belgium) as rapporteur.?

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