The European Council, under the Danish Presidency, and European Parliament negotiators reached a provisional agreement on an EU directive to harmonise selected aspects of insolvency law, with the stated aim of reducing regulatory fragmentation for cross-border investors and improving creditor recoveries and the efficiency of insolvency proceedings. The agreed text would set EU-wide minimum standards for avoidance actions to challenge certain pre-insolvency transactions that reduce value for creditors. It would also require member states to designate courts or administrative authorities that, at an insolvency practitioner’s request, can access and search national centralised bank account registers and other member states’ bank account registers via the bank account register interconnection system (BARIS), subject to conditions and monitoring requirements; insolvency practitioners would additionally gain access to beneficial ownership registers and certain national registers and databases. A pre-pack proceeding would become available in all member states, enabling a business sale prepared before formal opening of insolvency, including automatic transfer of essential executory contracts to the buyer without counterparty consent, alongside safeguards for freedom of contract and preservation of individual and collective workers’ rights. The directive would align directors’ duties to file for insolvency, requiring a filing request within three months of becoming aware the company is in financial distress, with an option for member states to suspend the obligation where equivalent creditor protection is ensured through other measures. Under certain circumstances, creditors’ committees would be required and their composition, working methods and members’ personal liability characteristics would be harmonised, with member states allowed to limit the requirement to large enterprises; member states would also have to publish an insolvency-law factsheet on the EU e-Justice Portal in English, French, German and the original language. The provisional agreement still requires confirmation by both institutions and formal adoption, after which member states would have two years and nine months to transpose the directive into national law.
European Council 2025-11-19
European Council and European Parliament reach provisional agreement on directive harmonising key aspects of EU insolvency law
The European Council and European Parliament negotiators reached a provisional agreement on an EU directive to harmonise insolvency law, aiming to reduce regulatory fragmentation and improve creditor recoveries. The directive sets EU-wide standards for avoidance actions, mandates access to bank account and beneficial ownership registers, and introduces pre-pack proceedings. It aligns directors' duties to file for insolvency and requires creditors' committees under certain conditions, with member states needing to publish an insolvency-law factsheet on the EU e-Justice Portal.