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EU members eye beefed-up insolvency powers

EU governments have agreed on some of the measures that they would like included in proposed rules aimed at harmonising some aspects of insolvency law across the union. 

A draft proposal on the issue put forward by the European Commission in late 2022 was aimed at facilitating more cross-border investment. 

A statement from the EU Council said that, currently, cross-border investors had to take 27 different insolvency rules into account when assessing an investment opportunity. 

Information on assets 

The governments agreed on several provisions covering ‘avoidance actions’ – ways of challenging the debtor’s transaction before the bankruptcy procedure starts that are aimed at preventing the illegitimate removal of assets. 

Under these provisions, member states would give courts or other authorities the power, at the request of an insolvency practitioner, to access and search national centralised bank-account registers of all member states for information on such assets. 

Insolvency practitioners would also gain access to beneficial-ownership registers and certain national registers and databases.  

Three-month deadline 

A statement from the governments said that member states could maintain existing, or introduce new, measures that further facilitated access to information by insolvency practitioners. 

The EU Council also proposes that directors must submit a request for the opening of insolvency proceedings within three months of becoming aware that the company is in financial distress. 

The governments say that they will discuss the remaining provisions of the proposed directive during the six-month Polish EU presidency, which begins in January.