EU Ministers Back Proposal on Cross-Border BankruptciesRebecca Christie
Businesses that go bust across borders in the European Union could seek restructuring over immediate liquidation under proposals approved by the bloc’s justice ministers today.
The new bankruptcy rules would make it easier to restructure a failing business and would provide rules for determining legal jurisdiction, the European Commission said in a statement. The proposals aim to give creditors a better chance to recoup their investment than if a troubled business were liquidated immediately.
“Europe needs a ‘rescue and recovery’ culture for viable businesses -– the modernized insolvency rules will facilitate a fresh start,” EU Justice Commissioner Viviane Reding said. “The changes will allow for increased entrepreneurship in Europe, boosting growth and jobs. Citizens can also rest assured that when their employer faces financial difficulties, the business will stand a better chance of survival.”
About 50,000 businesses a year are affected by cross-border insolvency proceedings, or one in four bankruptcies, according to European Commission data.
The European Parliament approved its version of the rules in February. Nations and the parliament now will work together to try to reach a final accord by the end of this year.