European Parliament approves rules on business insolvency and second chance

Today, the European Parliament approved the  directive on business insolvency and restructuring procedures.

The insolvency framework covers three main measures:

  • preventative restructuring framework: that allows companies in financial difficulty to negotiate a restructuring plan with creditors, while maintaining their activity and preserving jobs
  • second chance for honest insolvent or over-indebted entrepreneurs, through full debt discharge after a maximum period of 3 years, with safeguards against abuse
  • targeted measures for member states to increase efficiency of insolvency, restructuring and discharge procedures, in particular expedient treatment of procedures

The final text also includes guarantees that workers’ rights, such as collective bargaining and industrial action, right to information and consultation, will not be affected by restructuring procedures.

Requirements on the duties of the company director in insolvency proceedings were also introduced. They include regard to the interest of creditors, other stakeholders and equity holders, taking steps to avoid insolvency and avoiding deliberate or grossly negligent conduct that threatens the viability of the business.

Author: Arie Van Hoe

Lawyer (NautaDutilh), voluntary scientific collaborator (University of Antwerp)

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