Enhancing the convergence of insolvency proceedings

Background

Efficient insolvency laws have been found to be one of the key criteria for investors when deciding on whether to invest across borders. On 7 December 2022, the European Commission published a draft directive which aims to reduce discrepancies between national laws in this area and to encourage cross-border investments as part of a well-functioning Capital Markets Union.

Key points

The EESC sees this proposal as only a first step in the right direction, hopefully to be followed by more ambitious measures in future.

To improve the draft directive, the EESC:

• recommends striking a balance between the premature liquidation of companies, which can be very harmful, and starting proceedings too late, which will be useless. An insolvency regime should first and foremost encourage debt restructuring and internal reorganisation. This will also help preserve jobs and protect workers, which often lose both their job and the salaries owed to them when a company is wound down;
• providing a harmonised definition of grounds for insolvency and the ranking of creditor claims. In the absence of this, the EESC doubts whether the proposal will help close existing gaps in the Capital Markets Union as the Commission hopes, given the very many ways in which insolvency is defined in the Member States;
• revising Article 27 of the draft directive, which in its current form curtails entrepreneurial freedom by obliging counterparties, such as suppliers to a business that is entering insolvency proceedings, to sign executory contracts, which are then assigned to the acquirer of the business without their consent. Suppliers that are artificially bound to a contract partner they have neither chosen nor vetted will be unwilling to provide credit if deprived of contractual rights of termination.

Link to full opinion

Additional information

EESC section responsible: Single Market, Production and Consumption (INT)

Opinion type: mandatory referral

Rapporteur: Sandra PARTHIE (Employers/Germany)

Co-rapporteur: Philip VON BROCKDORFF (Workers – Malta)

Reference: COM(2022) 702 final

Date of adoption by section: 10 March 2023

Result of the vote: 43 in favour, none against, with no abstentions

Date of adoption by plenary session: 22 March 2023 

Result of the vote: 207 in favour, none against, with 3 abstentions

Contacts

Daniela Marangoni

Press officer

Tel.: + 32 2 546 8422 | Mob: +32 475 99 94 32

email: daniela.marangoni@eesc.europa.eu

Dalila Bernard

Policy officer

Tel.: +32 2 546 8438

email: Dalila.Bernard@eesc.europa.eu