Two initiatives have recently been undertaken to harmonise by means of a directive some aspects of the substantive insolvency laws of the Member States. These initiatives are: a) the EU Commission’s Inception Impact Assessment; b) Consultation on an effective insolvency framework.
Insolvency law, and especially restructuring proceedings, are increasingly at the core of EU policies. In June 2015, Regulation 848/2015 came into force – albeit with a clause delaying its application. The Commission now intends to harmonise some aspects of substantive insolvency laws by means of a directive. According to the Commission: “[i]f before making an investment it is not possible to predict what will happen with the investment throughout its life-cycle, it is also not possible to predict, quantify and manage risks which can affect this investment.”
a) The Inception Impact Assessment (‘IIA’) contains an analysis of the state of the harmonisation of insolvency regimes in the EU and a road map – though it is accompanied by the statement that the road map may be subject to change. The Commission states that Member States have not fully adopted the approach suggested by the Recommendation ‘On a new approach to business failure and insolvency’; and, if they have, they have adopted it in so selective a manner that important differences between national laws still remain. Accordingly, the Commission suggests adopting a directive and by means of this instrument – which is binding – harmonising both the topics covered by the Recommendation and some other areas where harmonisation seems to be equally worthwhile and achievable.
The Commission announces that this directive will cover the following topics:
- preventive restructuring procedures, and a discharge of debts for entrepreneurs as provided for by the Recommendation;
- common minimum rules for directors’ duties and liabilities in anticipation of insolvency, as well as their disqualification due to the breach of those duties;
- common minimum rules for the ranking of claims in insolvency and avoidance actions, with a view to bringing more legal certainty in the cross-border flow of capital;
- a simplified approach to the insolvency of SMEs, for example by providing standard forms for filing claims and putting in place electronic means to reduce costs;
- common minimum rules for insolvency practitioners with the aim of making it easier to exercise this profession and setting up standards that would ensure the proper conduct of these professionals;
- protection of investors’ rights by ring-fencing securities from the insolvency regimes of intermediaries with whom investors have deposited their securities;
- provisions for natural persons on the availability of insolvency procedures, both debt restructuring and liquidation procedures; and
- provisions for natural persons on the discharge of debts after a reasonable period of time.
b) The Consultation aims to seek stakeholders' views on the topics dealt with by the IIA. It is open until 14 June 2016 and available here.
Renato Mangano is Professor of Commercial Law and Insolvency Law at the University of Palermo and a Visiting Fellow of the Commercial Law Centre of the University of Oxford.