Briefing - Harmonisation of insolvency laws: Economic perspectives - 15-01-2025
newsare.net
Insolvency laws are the rules governing the legal proceedings applicable to companies unable to repay debts as they fall due. The convergence of non-financial companies' insolvency laws across the Member States is high on the EU's policy agenda: the two reporBriefing - Harmonisation of insolvency laws: Economic perspectives - 15-01-2025
Insolvency laws are the rules governing the legal proceedings applicable to companies unable to repay debts as they fall due. The convergence of non-financial companies' insolvency laws across the Member States is high on the EU's policy agenda: the two reports requested from former Italian prime ministers Enrico Letta and Mario Draghi both emphasised the importance of the convergence of insolvency laws for the defragmentation and proper functioning of EU capital markets. This would help unlock capital and support both the EU's green and digital transitions and its competitiveness in general. In 2019, the EU adopted a directive to harmonise the preventive restructuring framework. The European Parliament and the Council are currently debating a European Commission proposal on the harmonisation of certain aspects of insolvency regimes. Theoretical and empirical economic literature has provided substantial evidence suggesting that insolvency regimes impact the conduct of business, in particular access to equity and debt, and their respective costs. The insolvency regime is an implicit component of the contract between a company and its financiers, and determines the chance of recovery of credits in the event of company failure. Converging corporate insolvency rules would also increase the predictability of returns on cross-border financing, enhancing volumes while decreasing costs. The European Parliament and the Council have expressed support for harmonising insolvency laws with a view to completing the savings and investment union and boosting the financing of the EU's economy. Source : © European Union, 2025 - EP Read more