Yesterday, a political agreement was reached by the European Parliament and EU Member States on a set of European rules on business insolvency. The text must now be formally adopted by the European Parliament and the Council of the EU. Following final adoption, the Directive will be published in the EU’s Official Journal and enter into force 20 days later.
A summary of the agreement can be found here.
As part of the compromise, several provisions were added or amended compared to the Council’s positions. Those include:
- the introduction of provisions on the duties of company directors in insolvency proceedings. Those provisions include: having due regard for the interests of creditors, other stakeholders and equity holders as well as taking steps to avoid insolvency and avoiding deliberate or grossly negligent conduct. Those duties could be implemented at national level by ensuring that judicial authorities take them into account when assessing the liability of the director in cases of breach of duty of care;
- an article on worker’s rights has been introduced to recall that member states should ensure that the existing rights of workers under national and Union law are not affected by the preventive restructuring procedure (e.g. the right to collective bargaining and industrial action and the right to information and consultation);
- provisions on the appointment of a restructuring practitioner: Council and Parliament agreed on a few cases where the appointment of a practitioner to assist the debtor and creditors shall be required (e.g. in case a cross-class cram-down would be necessary to adopt the restructuring plan, when such appointment is requested by the debtor or a majority of creditors or when it is decided by judicial authorities in case of general stay of individual enforcement actions). For other cases, the directive states that appointments of a restructuring practitioner should be decided on a case-by-case basis depending on the circumstances of the case, except in those cases where member states may require a mandatory appointment.