On 12 June 2025, the Council of the European Union (the Council) announced that it has agreed its position on an EU directive aiming to cut down on differences between national insolvency rules. This was followed by the European Parliament's report on the proposed directive on 1 July 2025 marking another step in the negotiations towards agreement of its terms.
Background
On 23 May 2025, the Council published its proposal for a directive to further harmonise the insolvency laws of the 27 Member States.
It aims to ensure that the single market works well, avoiding the need to deal with different national insolvency rules and making the EU more attractive to foreign and cross-border investors.
Key features
- A pre-pack mechanism will become available in Member States, where the sale is negotiated before the start of formal insolvency proceedings. Existing contracts necessary for the continuation of business should be transferable to the buyer under this procedure without the need for the consent of the other party, while still taking into account their interests.
- The size of the creditors' committee should be adaptable to the complexity of the case to ensure the most effective protection of creditors' interests.
- Minimum rules are to be put in place for insolvency contestation, to protect the insolvency estate from being unlawfully reduced.
- It should be possible to access bank account registers and electronic data retrieval systems to identify assets that are part of the insolvency estate, to maximise value.
- There should be a standardised sanctioned obligation for a company’s management to file for insolvency.
Key takeaways
Implementation of the proposed directive could take place early next year and will bring changes to national insolvency laws, but also offer great opportunities. In particular, the pre-pack mechanism will make the purchase of companies attractive to investors and lead to higher average purchase prices, which will also benefit creditors.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.
