Study on Substantive Insolvency Law

Study on a new approach to business failure and insolvency. Comparative legal analysis of Member States’ relevant provisions and practices

This is a European Commission contracted Study on Substantive Insolvency Law which will enhance the knowledge base of the Commission and potentially inform future legal change in the field of insolvency, both corporate and personal, and over-indebtedness.

In March 2014 the European Commission adopted a Recommendation on a new approach to business failure and insolvency for the EU. It aimed to enable efficient restructuring of viable enterprises in financial difficulty and give honest entrepreneurs a second chance to run a successful business. It also urges Member States to explore the possibility of applying the principles on discharge also to overindebted consumers.

The study includes data collection from the 28 EU member states covering the following topics:

• Reforms in the EU Member States that implement the Commission Recommendation on a new approach to business failure and insolvency.
• Completion of the comparative law information available to the Commission in matters such as the regulation, status and powers of insolvency practitioners; the duties and liabilities of directors and the recognition of disqualifications, rules on the ranking of claims/order of priorities and the conditions under which certain detrimental acts can be avoided, conditions for opening insolvency proceedings and fast-track or standardised procedures for SMEs.
• The procedures available to overindebted consumers/households explaining how overdebtedness is dealt with in the Member States including the conditions and timeframe for debt reduction and discharge.

The data will then be comparatively analysed; identifying areas where disparities in national laws produce problems that have impacts outside national boundaries: creating an environment that tries to avert business failure but sanctions severely conduct that constitutes an abuse of the fundamental freedoms underpinning the EU legal order (e.g. ‘rogue’ directors evading national disqualification orders relocating to another country).