The European Council agreed a general approach on an EU directive to harmonise selected aspects of insolvency law, seeking to narrow divergences between member states’ regimes that create complexity for foreign and cross-border investors. The agreed position would require all member states to make a pre-pack mechanism available, allowing the sale of a debtor’s business to be prepared and negotiated before formal insolvency proceedings are opened so that completion can occur shortly after opening. It also provides for the automatic transfer of executory contracts that are essential to continuing the business from the debtor to the buyer without the counterparty’s consent, alongside safeguards intended to protect freedom of contract. In addition, creditors’ committees would have to be established in defined circumstances, with harmonised features on composition, rights and duties, and members’ personal liability, while allowing member states to restrict the requirement to large enterprises. The Council also pointed to prior agreement on provisions covering measures to preserve the insolvency estate, directors’ duties to request the opening of insolvency proceedings, and transparency obligations. On the basis of this general approach, the Council can start negotiations with the European Parliament once Parliament has set out its position, with the aim of agreeing the final directive.
European Council 2025-06-12
European Council agrees general approach on EU insolvency law directive introducing pre-pack sales and creditors’ committees
The European Council has agreed on an EU directive to harmonize insolvency law, reducing complexity for foreign investors. Key provisions include a pre-pack mechanism, automatic transfer of essential contracts, and harmonized creditors' committees. The Council will negotiate with the European Parliament to finalize the directive once the Parliament sets its position.