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.

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