Insolvency Law
Very little progress has been made in harmonising insolvency regulations
UM – 06/2024
The standardisation of regulations in
connection with insolvent companies, which is important for the European single
market, is not making much progress. The progress
report from 31st May of this year shows, however: The targeted promotion of
cross-border investments through a targeted harmonisation of insolvency
proceedings is still a long way off.
United in their goal
Political agreement has been reached on the
goal. In a joint declaration issued at the summit on 22nd March, the heads of
state and government expressed their intention to accelerate the consolidation
of the Capital Markets Union and quickly complete the outstanding legislative
work. Once again, this was underlined in the Council conclusions of 17th/18th
April. This also includes the directive on the harmonisation of certain aspects
of insolvency law, which the European Commission proposed on 7th December 2022.
Common rules for avoidance actions
The Commission proposal contains, among
other things, common rules for avoidance actions. The German Social Insurance
had suggested that the regulations on the treatment of contribution funds in
insolvency cases should also be harmonised throughout Europe by excluding them
from the possibility of an action for avoidance. This would prevent social
security contributions already paid by insolvent companies from becoming part
of the insolvency estate and ensure that contribution funds are used
exclusively for the purposes stipulated by social law.
Stalemate in parliament
During the last legislative period, this
idea was adopted by the European Parliament's Committee on Economic and
Monetary Affairs (ECON) as part of its statement issued on 30th November 2023.
However, the Belgian member of the Committee on Legal Affairs (JURI), Pascal
Arimont, was unable to finalise the dossier. It is currently unclear whether
the re-elected Arimont will continue the deliberations in parliament.
Status of discussions in the Council
The Council has been discussing initial
compromise texts on individual titles since April. It should be noted that
there are considerable differences of opinion in the Council delegation,
particularly with regard to the intended special regulations for insolvent
micro-enterprises. The majority of member states reject this. However, there
was also a need for extensive revision of the other provisions. At least an
agreement has been reached on the issue of avoidance actions - on more
flexibility for the organisation of the legal framework.
When things get serious, it becomes more difficult
The tough negotiation process is due to the
fact that insolvency law is regulated nationally and differs greatly. This
applies in particular to the creditor hierarchy. In France, for example, social
security contribution claims are prioritised in insolvency proceedings. In
Germany, however, this was abolished at the end of the 1990s. And according to
René Repasi, author of the ECON opinion, each member state considers its
insolvency law to be the best. This makes it particularly difficult to agree on
common regulations.