The European Council agreed a general approach on a directive to harmonise selected elements of European Union (EU) insolvency law, aiming to reduce divergences between member states that can complicate cross-border investment decisions. The position includes new EU-wide requirements on pre-pack sales and, in defined circumstances, the establishment of creditors' committees. Under the Council’s approach, a pre-pack mechanism would be available in all member states, allowing the sale of a debtor’s business (or part of it) to be prepared and negotiated before formal insolvency proceedings open, with execution shortly after proceedings begin. The framework would also allow certain executory contracts that are essential for business continuation to transfer automatically from the debtor to the buyer without the counterparty’s consent, alongside safeguards intended to protect freedom of contract. For creditors’ committees, the directive would require their set-up in certain cases, harmonising core features such as composition, rights and duties, and the personal liability of members, while allowing member states to limit mandatory establishment to large enterprises. On the basis of this position, the Council will be able to start negotiations with the European Parliament once the Parliament has adopted its position, with the aim of agreeing a final text.
European Council 2025-05-23
European Council agrees negotiating position on EU insolvency law directive introducing pre-pack sales and creditors' committees
The European Council has agreed on a directive to harmonise certain aspects of EU insolvency law, aiming to reduce cross-border investment complexities. The directive introduces EU-wide requirements for pre-pack sales and mandates creditors' committees in specific cases, standardising their composition and duties. This agreement allows the Council to begin negotiations with the European Parliament to finalise the text.