On insolvency law in Europe
Hi Jose Paul,
I do believe that the reason is environmental. Of course part of it is legislation but the other (bigger) part is cultural and financial.
Just a couple of weeks ago there has been some news from EU commissioner Věra Jourová which is looking after the legislation part. In her speech at the 5th European insolvency and restructuring Congress she clearly stated:
We should provide a framework that allows entrepreneurs to get back on their feet quickly and to resume their business activities. They should not be afraid to try novel ideas because of possible bankruptcy. On the contrary, we need to build a “second-chance culture” in the EU.
So it is clear that there is a will in Europe to get closer to what Chapter 11 allows in US. And in 2014 EU commission has indeed worked on the issue and adopted a recommendation to all member states (long doc). However as you may know what the EU commission “recommends” is not immediately implemented by all member states (if ever is). The commissioner seems to be well aware of this when she points out that:
The situation on the ground shows that we need more than recommendations if we want our EU economy to be on a growth path, boosting investments and jobs. Today, investors have to be acquainted with 28 different insolvency regimes in the EU. It is undoubtedly an off-putting and costly experience!
It is high time to move into a second step and have a common EU legislative framework that focuses on restructuring companies instead of wiping them off.
Having a key set of common principles on insolvency and restructuring procedures would make investors comfortable about investing across borders and would allow for timely restructuring of viable companies in financial trouble.
This would also bring EU economies closer together and portray them as a single investment opportunity for foreign investors.
A key objective of the Single and Capital Markets’ Union strategies is to support SMEs, start-ups and young entrepreneurs. Modern insolvency laws can help them access funding and improve investment conditions in Europe.
So yes, there is some movement on the legislation part but so much more needs to be done in all 28 members state. I hope that this will be fast.
In the meantime come to Finland, the legislation is similar to the American Chapter 11 here ;)
Helsinki, 23rd June 2016