The European Commission is seeking views on whether its insolvency laws need to be modernised in order to best promote economic recovery.
In a new consultation will run until June, the Commission is asking for feedback on the existing rules. The Insolvency Regulation, which sets out how corporate and individual insolvencies should be coordinated in cross-border cases, came into force in 2000 and applies whenever a debtor has assets or creditors in more than one member state.
EU Justice Commissioner Viviane Reding said that a modern insolvency law was “essential” for financial stability in the single market: “A modern insolvency law will help fuel the economy as it will help give economically solid businesses, which are in short term financial difficulties, a second chance.
“It is an essential part of a modern Single Market and encourages entrepreneurs to take risks,” she continues. “And, if necessary, it provides an orderly way for businesses to close down. That is why we are consulting businesses as well as lawyers, judicial authorities and the public at large.”
The European Parliament published a report recommending revisions to the Insolvency Regulation, particularly with regards to coordinating insolvency proceedings involving corporate groups, in October 2011. The report also recommended harmonising certain aspects of insolvency law and company law, and the creation of a central EU register for insolvency cases.