Directive (EU) 2019/1023 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on procedures concerning restructuring, insolvency and discharge of debt

Summary:

Directive of the European Parliament and of the Council of 20 June 2019 designed to harmonise financial restructuring frameworks across the European Union (EU).

Further information:

This initiative aims at providing new legal tools to rescue viable businesses in distress and given honest but bankrupt entrepreneurs a second chance. It focuses on three core elements:

• common principles on early restructuring tools;
• rules to allow entrepreneurs to benefit from a second chance through discharge of debt;
• targeted measures for Member States to increase the efficiency of insolvency, restructuring and discharge procedures.

The overall objective is to reduce the most significant barriers to the free flow of capital stemming from differences in Member States' restructuring and insolvency frameworks, and to enhance the rescue culture in the EU based on the principle of second chance. The rules also aim to reduce the amount of non-performing loans (NPLs) on banks' balance sheets and to prevent the accumulation of such NPLs in the future.

The European Commission presented the proposal on 22 November 2016, as one of the actions of the Capital Markets Union (CMU) Action Plan. The European Parliament approved its negotiating position in September 2018, and the Council of the European Union adopted its general approach on 11 October. An informal agreement between the co-legislators was reached on 12 December. The Parliament formally endorsed this on 28 March 2019, followed by the Council on 6 June.

Official

EUR-Lex: COM(2016)723: Proposal for a Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures https://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2016:723:FIN

EUR-Lex: SWD(2016)357: Impact assessment https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2016:357:FIN

EUR-Lex: SWD(2016)358: Executive summary of the impact assessment https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2016:358:FIN

European Parliament: Legislative Observatory: Procedure File for Proposal on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2016/0359(COD)

European Parliament: Legislative Train: Business insolvency http://www.europarl.europa.eu/legislative-train/theme-deeper-and-fairer-internal-market-with-a-strengthened-industrial-base-financial-services/file-business-insolvency

European Commission: Press Release, 22/11/2016: Commission proposes new approach to business insolvency in Europe: promoting early restructuring to support growth and protect jobs http://europa.eu/rapid/press-release_IP-16-3802_en.htm

European Commission: Fact Sheet, 22/11/2016: Proposal for a Directive on insolvency, restructuring and second chance http://europa.eu/rapid/press-release_MEMO-16-3803_en.htm

Council of the European Union: Press Release, 11/10/2018: Directive on business insolvency: Council agrees its position https://www.consilium.europa.eu/en/press/press-releases/2018/10/11/directive-on-business-insolvency-council-agrees-its-position/

Council of the European Union: Press Release, 19/12/2018: EU agrees new rules on business insolvency https://www.consilium.europa.eu/en/press/press-releases/2018/12/19/eu-agrees-new-rules-on-business-insolvency/

Council of the European Union: Press Release, 06/06/2019: Giving entrepreneurs a second chance: new rules on business insolvency adopted https://www.consilium.europa.eu/en/press/press-releases/2019/06/06/giving-entrepreneurs-a-second-chance-new-rules-on-business-insolvency-adopted/

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News

Lexology, 04/04/2019: EU Parliament adopts Directive on preventive restructuring frameworks https://www.lexology.com/library/detail.aspx?g=4e2895c0-7f81-41b9-8033-4dbf769a3089

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Commentary and Analysis

Norton Rose Fulbright: Publications, December 2016: EU proposals for a harmonised approach to restructuring https://www.nortonrosefulbright.com/en-gb/knowledge/publications/3ce15bca/eu-proposals-for-a-harmonised-approach-to-restructuring

EPRS: Briefing, May 2017: Preventive restructuring, second chance and efficient restructuring, insolvency and discharge procedures [Initial Appraisal of a European Commission Impact Assessment] http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2017)603236

EPRS: Briefing, June 2018: New EU insolvency rules give troubled businesses a chance to start anew [EU Legislation in Progress] http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2018)623548

White & Case: Publications, January 2019: Restructuring across Europe – a new era? https://www.whitecase.com/publications/alert/restructuring-across-europe-new-era

European Law Blog, 15/03/2019: The imminent distortion of European private, company and insolvency law by the introduction of relative priority European style https://europeanlawblog.eu/2019/03/15/the-imminent-distortion-of-european-private-company-and-insolvency-law-by-the-introduction-of-relative-priority-european-style/

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