Changes from report parliamentary committee draft to plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a directive of the European Parliament and of the Council harmonising certain aspects of insolvency law

Changed(COM(2022)0702 – C100410/2022C90410/2022 – 2022/0408(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2022)0702),

Changed– having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C100410/2022),(C90410/2022),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to Rule 60 of its Rules of Procedure,

– having regard to the opinion of the Committee on Economic and Monetary Affairs,

Changed– having regard to the report of the Committee on Legal Affairs (A100000/2025),(A10-0126/2025),

▸4 unchanged paragraphs

1. Adopts its position at first reading hereinafter set out;

2. Approves its statement annexed to this resolution;

3. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

4. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

RemovedRecital 5 a (new): (5a) The minimum standards provided for in this Directive aim to approximate the insolvency laws of the Member States, taking into account, in particular, the following objectives: to maximise legal certainty as to the value of companies; to improve the efficiency of insolvency proceedings in terms of both costs and duration; to improve the predictability and fair distribution of value among creditors; to preserve the activity and viability of companies.

AddedRecital 1: (1) The objective of this Directive is to contribute to the proper functioning of the internal market and the Capital Markets Union and remove obstacles to the exercise of fundamental freedoms, such as the free movement of capital and freedom of establishment, which result from differences between national laws and procedures in the area of insolvency.

AddedRecital 2: (2) The wide differences in substantive insolvency laws acknowledged by Regulation (EU) 2015/848 of the European Parliament and of the Council32 and the stark divergence in the quality of domestic insolvency procedures as measured by the World Bank in its Doing Business studies create barriers to the internal market by reducing the attractiveness of cross-border investments, thus impacting the cross-border movement of capital within the Union and to and from third countries. Those differences also mean that harmonising certain aspects of insolvency law could entail changes in some Member States.

AddedRecital 3: (3) Insolvency proceedings ensure the orderly winding up or restructuring of companies or entrepreneurs in financial and economic distress. These proceedings are key in financial investments, as they determine the final recovery value of such investments. Diverging rules among Member States have contributed to increasing legal uncertainty and unpredictability about the value of companies and the outcome of insolvency proceedings, so raising barriers especially for cross-border investments in the internal market. Large divergences in recovery value and time required to complete insolvency proceedings across the Union have negative repercussions on cost predictability for creditors and investors in cross-border situations in the internal market

AddedRecital 4: (4) The integration of the internal market in the area of insolvency laws pursued by this Directive is a key tool for a more efficient functioning of the capital markets in the European Union, including greater access to corporate debt financing. Therefore, it is necessary to set out minimum requirements in targeted areas of national insolvency proceedings, which have a significant impact on the efficiency and length of such proceedings, especially on cross-border insolvency proceedings.

AddedRecital 4 a (new): (4a) The harmonisation of insolvency proceedings is associated with lower costs of credit, increased access to credit and improved creditor recovery and it could also serve as an effective protection for workers. At the same time, one of the goals when completing the Capital Market Union is to stimulate more equity financing.

AddedRecital 5 a (new): (5a) The minimum standards provided for in this Directive aim to approximate the insolvency laws of the Member States, taking into account, in particular, the following objectives: to maximise legal certainty as to the value of companies; to improve the efficiency of insolvency proceedings in terms of both costs and duration; to improve the predictability and fair distribution of value among creditors; and to preserve the operations and viability of companies.

Recital 6: (6) The scope of the legal acts that could be challenged under the avoidance actions rules should be interpreted broadly, in order to cover any human behaviour with legal effects that is detrimental to the general body of creditors. The principle of equal treatment of creditors implies that legal acts should also include omissions, as it makes no significant difference if creditors suffer a detriment as a consequence of an action or of the passivity of the party concerned. For instance, it makes no difference whether a debtor actively waives a claim against his or her obligor or whether he or she remains passive and accepts the claim to become time-barred. Further examples of omissions that may be subject to avoidance actions include the omission to challenge a disadvantageous judgement or other decisions of courts or public authorities or the omission to register an intellectual property right. For the same reason, avoidance rules should not be restricted to legal acts performed by the debtor, but should also include legal acts performed by the debtor’ s counterparty or by a third party. On the other hand, only legal acts should be subject to avoidance rules which are detrimental to the general body of creditors.

Change 2

ChangedRecital 8: (8) In the context of avoidance actions, a distinction should be made between legal acts where the claim of the counterparty was due and enforceable and has been satisfied in the owed manner (congruent coverages) and those where performance was not entirely in accordance with the creditor’s claim (incongruent coverage). Incongruent coverages include, in particular, premature payments, the satisfaction with unusual means of payments, the subsequent collateralisation of a so far unsecured claim which was not already agreed upon in the original debt agreement, granting an extraordinary termination right or other amendments not provided for in the underlying contract, the waiver of legal defences or objections or the acknowledgement of disputable debts. In the case of congruent coverages, the avoidance ground of preferences can only be invoked if the creditor of the void, voidable or unenforceable legal act knewthat knew, at the time of the transactiontransaction, that the debtor was insolvent.

Change 3

ChangedRecital 9: (9) Certain congruent coverages, namely legal acts that are performed directly against fair consideration to the benefit of the debtor’s assets,asset, should be exempted from the scope of void, voidable and unenforceable legal acts. Those legal acts aim at supporting the ordinary daily activity of the debtor’s business. Legal acts falling under this exceptionexemption should have a contractual basis, and require the direct exchange of the mutual performances, but not necessarily a simultaneous exchange of performances, as, in some cases, unavoidable delays may result from practical circumstances. However, this exemption should not cover the granting of credit. Furthermore, performance and counter-performance in those legal acts should have an equivalence in value. At the same time, the counter-performance should benefit the debtor and not a third party. This exemption should cover, in particular, prompt payment of commodities, wages, or service fees, in particular for legal or economic advisors; cash or card payment of goods necessary for the debtor’s daily activity; delivery of goods, products, or services against payment by return; creation of a security right against disbursement of the loan; prompt payment of public fees against consideration (e.g. admittance to public grounds or institutions). In addition, it should also cover, where relevant, contribution payments to social security authorities and entering into netting arrangements.

Change 4

ChangedRecital 10: (10) New financing or interim financing provided during a restructuring attempt, including in the course of a preventive insolvency procedure under Title II of Directive (EU) 2019/1023 of the European Parliament and of the Council33 ,Council33, should be protected in subsequent insolvency proceedings. Consequently, avoidance actions on the ground of preferences should not be permitted against payments to or collateralisation in favour of the providers of such new- or interim financing, if those payments or collateralisations are performed in accordance with the claims of the providers. Such payments or collateralisation should be considered, therefore, as legal acts performed directly against fair consideration to the benefit of the insolvency estate.

Recital 11: (11) The main consequence of a legal act being void, voidable or unenforceable in avoidance proceedings is the obligation for the party benefiting from the void, voidable or unenforceable legal act to compensate the insolvency estate for the detriment caused by such legal act. Compensation should include emoluments, where relevant, and interest, in accordance with the applicable civil law. The compensation implies the payment of a sum equivalent to the value of the performance received if it cannot be returned in natura to the insolvency estate. It should be possible to bring avoidance actions against individual successors of the debtor if they acquired the asset against no or manifestly inadequate consideration or if they acquired the asset while knowing the circumstances on which the avoidance actions are based.

Change 5

ChangedRecital 12: (12) Parties who are closely related to the debtor, such as relatives in case the debtor is a natural person or actors fulfilling decisive roles in relation to a debtor that is a legal entity, usually enjoy an information advantage with regard to the financial situation of the debtor. In order to prevent abusive behaviours, additional safeguards should be established. Consequently, in the context of avoidance actions, legal presumptions about the knowledge of the circumstances on which the conditions for avoidance were based should be introduced when the other party involved in the void, voidable orand unenforceable legal act is a party closely related to the debtor. These presumptions should be rebuttable and should aim at reversing the burden of proof to the benefit of the insolvency estate.

Recital 13: (13) Improving the means available for insolvency practitioners to identify and trace assets belonging to the insolvency estate, including those subject to avoidance actions, is essential for the maximisation of the value of that estate. When performing their duties, insolvency practitioners may, already now, access information held in public data registers, partly set up by Union law and interconnected at European level, such as the Business Registers Interconnection System (BRIS), the system of Insolvency Registers Interconnection (IRI) or the Beneficial Ownership Registers Interconnection System (BORIS). Accessing the information held in public databases, however, is often not satisfactory to identify and trace important assets that are or should be in the perimeter of the insolvency estate. In particular, insolvency practitioners face practical difficulties when they try to access asset registers situated in a Member State other than that in which they have been appointed.

Recital 15: (15) Prompt direct access to bank account registers is often indispensable for the maximisation of the value of the insolvency estate. Therefore, rules should be laid down granting direct access to information held in bank account registers for the designated courts or authorities of the Member States. Where a Member State provides access to bank account information through a central electronic data retrieval system, that Member State should ensure that the authority operating the retrieval system reports search results in an immediate and unfiltered way to the designated courts or administrative authorities.

Change 6

ChangedRecital 16: (16) In order to respect the right to the protection of personal data and the right to privacy, direct and immediate access to bank account registers should be granted to courts or administrative authorities that are designated by the Member States for that purpose. Insolvency practitioners should therefore be allowed to access information held in the bank account registers indirectly by requesting the designated courts or administrative authorities in their Member State to access the bank account registers and perform the searches. Member States should be able to designate different courts or administrative authorities for the purpose of accessing bank account registers domestically or cross-borderacross borders through the bank account registers interconnection system (BARIS) referred to in Directive (EU) 2024/1640 of the European Parliament and of the Council1a. Member States should be also able to provide that courts or authorities other than the courts or administrative authorities designated under this Directive verify the conditions for accessing and searching bank account information. Access to bank account information should be granted only on a case-by-case basis, where relevant to specific insolvency proceedings for the purpose of identifying and tracing assets belonging to the insolvency estate, as well as assets subject to avoidance actions. However, Member States should be able to adopt or maintain national rules that allow insolvency practitioners to directly access and sear…search thei…

Change 7

ChangedRecital 17: (17) Directive (EU) 2024/1640 providesof thatthe European Parliament and of the Council34 provides that centralised automated mechanisms, such as central registers or central electronic data retrieval systems, are interconnected via BARIS, which is to be developed and operated by the Commission. Considering the growing importance of insolvency cases with cross-border implications and the importance of relevant financial information for the purposes of maximising the value of the insolvency estate in insolvency proceedings, the designated courts or administrative authorities should be able to access and search the bank account registers of other Member States directly through BARIS. / (deleted)34 OJ L, 2024/1640, 19.6.2024, ELI: http://data.europa.eu/eli/dir/2024/1640/oj.

Change 8

ChangedRecital 17 a (new): (17a) Access by the courts or administrative authorities designated under this Directive to bank account information across borders through BARIS is based on the mutual trust among Member States derived from their respect of fundamental rights and of the principles recognised by Article 6 of the Treaty on European Union (TEU) and by the Charter of Fundamental Rights of the European Union (‘the(the Charter’),‘Charter’), as well as the fundamental rights and principles provided for in international law and international agreements to which the Union or all the Member States are party, including the European Convention for the Protection of Human Rights and Fundamental Freedoms, and in Member States’ constitutions, in their respective fields of application. The power to access and search bank account information through BARIS pursuant to this Directive should be exercised in compliance with Union and national rules, as well as national procedural safeguards on the protection of personal data.

Change 9

ChangedRecital 19: (19) Directive (EU) 2024/1640 ensures that persons with a legitimate interest are granted access to beneficial ownership informationinformation, in accordance with data protection rules. For the purpose of tracing assets in the context of ongoing insolvency proceedingsproceedings, insolvency practitioners should be granted access in a timely manner to specific categories of beneficial ownership information, such as on the name, month and year of birth and the country of residence and nationality of the beneficial owner, as well as the nature and extent of beneficial interest held. At the same time, the scope of data directly accessible by the insolvency practitioners could be broader than the scope of data accessible by other parties having a legitimate interest. / (deleted)

Change 10

ChangedRecital 20: (20) To ensure that assets can be efficiently traced in the context of cross-border insolvency proceedings, insolvency practitioners appointed in a Member State should be granted expeditious access to national registers and databases, even when these registers and databases are located in a Member State other than that in which the insolvency practitioner was appointed. Access should be provided without the involvement of any intermediary court or authority, allowing insolvency practitioners to communicate directly with the entities operating or maintaining the national registers or databases concerned. Member States should provide that insolvency practitioners can directly search datasets contained in such registers or databases. Therefore, the access conditions applying to foreign insolvency practitioners should not be more cumbersome than those applying to domestic insolvency practitioners. Therefore, the Member States cannotshould denyensure that access to national registers and databases is not denied solely on the basis that the applicant is aaninsolvency foreignpractitioner insolvencyestablished practitioner.in another Member State.

Recital 20 a (new): (20a) In order to establish an effective and consistent system for the enforcement of debts against the assets of debtors, it is essential to prevent debtors from concealing their assets, including through the acquisition of financial instruments, such as securities. The differences between national settlement systems, as well as the varying types and characteristics of financial instruments, can give rise to difficulties in accessing records and in identifying the ultimate beneficial owner of a financial instrument. Therefore, irrespective of the kind of existing register, database or other source of information a Member State uses, it is necessary for Member States to have in place the framework to facilitate the tracing and identification of the owners of financial instruments by making those national registers and databases accessible upon request under this Directive.

Change 11

RemovedRecital 26: (26) If a Member State opts to require high standards in the preparation phase, the monitor (subsequently to be appointed as insolvency practitioner in the liquidation phase, unless the monitor resigns or is unable to perform the required functions) should be responsible for ensuring that the sale process is competitive, transparent, fair and meets market standards. Complying with market standards in this context should require that the process is compatible with the standard rules and practice on mergers and acquisitions in the Member State concerned, which includes an invitation to potentially interested parties to participate in the sale process, disclosing the same information to potential buyers, enabling the exercise of due diligence by interested acquirers, and obtaining the offers from the interested parties through a structured process.

AddedRecital 22: (22) It is generally assumed that more value can be recovered in liquidation by selling the business (or part thereof) as a going concern rather than by piecemeal liquidation. In order to promote going-concern sales in liquidation, national insolvency regimes should include a pre-pack proceeding, where the debtor in financial distress, with the help of a “monitor”, seeks possible interested acquirers and prepares the sale of the business as a going concern before the formal opening of insolvency proceedings, so that the assets can be quickly realised shortly after the opening of the formal insolvency proceedings. In order to guarantee that the sale process is prepared in a fair way, the monitor should be independent of the debtor, the debtor’s shareholders, the creditors and any other party having a legal or economic interest in the debtor or the debtor’s business. The pre-pack proceedings should consist of two phases, namely a preparation phase and a liquidation phase. Those phases should respect the principles applicable to judicial proceedings in each Member State.

RemovedRecital 27 a (new): (27a) Monitors should take their actions in writing and should make them available in digital format and in a timely manner only to the parties involved in the preparation phase in order to ensure the necessary confidentiality of all information obtained in connection with the preparation phase.

AddedRecital 22 a (new): (22a) The introduction of pre-pack proceedings should not lead to restrictions in the scope of action of insolvency practitioners in the context of regular insolvency proceedings. Such insolvency practitioners should continue to be authorised to seek a sale of the business.

RemovedRecital 28: (28) The opening of insolvency proceedings should not result in the early termination of contracts under which the parties still have obligations to perform (executory contracts), which are necessary for the continuation of business operations. Such termination would unduly jeopardise the value of the business, or part thereof, to be sold in the pre-pack proceedings. It should, therefore, be ensured that those contracts are assigned to the acquirer of the business of the debtor or part thereof, even without the consent of the counterparty of the debtor to those contracts unless the court considers that consent is necessary to protect the interests of the debtor’s counterparties . Nonetheless, there are situations where the assignment of the executory contracts cannot be reasonably expected, such as when the acquirer is a competitor of the counterparty of the contract. Similarly, the court may come to the conclusion in an individual assessment of an executory contract that its termination would serve the interests of the business of the debtor better than its assignment, such as when the assignment of the contract would result in a disproportionate burden for the business. The court should not be allowed, however, to terminate executory contracts relating to licenses of intellectual and industrial property rights or credit or financial services contracts as they are usually key components of the operations of the business being sold.

AddedRecital 24: (24) The pre-pack proceedings should ensure that the monitor submits for authorisation to the court or competent authority the best bid obtained during the preparation phase. It should be possible to require the monitor to assess and state whether the piecemeal liquidation would not recover manifestly more value for creditors than the market price obtained through the sale of the business (or part thereof) as a going concern. The going-concern value is, as a rule, higher than the piecemeal liquidation value because it is based on the assumption that the business continues its activity with the minimum of disruption, has the confidence of financial creditors, shareholders and clients and continues to generate revenues. Therefore, the monitor’s declaration should not require a valuation being made in every case. National law might require the monitor to take into account elements other than price, including the public interest or ensuring the viability of a business. However, an increased scrutiny should be required from the monitor or the insolvency practitioner in cases where the only existing offer is made by a party who is closely related to the debtor. In such situations, a valuation should be required and the monitor or the insolvency practitioner should reject the offer if it does not satisfy the best-interest-of-creditors test.

RemovedRecital 32: (32) Directors oversee the management of the affairs of a company and have the best overview of its financial situation. Directors are therefore among the first to realise whether a company is insolvent. A late filing for insolvency by directors may lead to lower recovery values for creditors Member States should therefore introduce an obligation on directors to submit a request for the opening of insolvency proceedings within a specified time-period. Member States should define the notion of “director”.

AddedRecital 25: (25) In order to guarantee that the business is sold at the best market value during the pre-pack proceedings, Member States should ensure high standards of competitiveness, transparency and fairness of the sale process conducted in the preparation phase. The court should be able to decide to run a brief public auction after the opening of the liquidation phase of the proceedings if there are credible suspicions of abuse in the preparatory phase.

RemovedRecital 32 a (new): (32a) Member States should set a deadline for the duty to submit a request for the opening of insolvency proceedings that is no longer than three months after the directors have become aware that the company is insolvent. If the company regains its solvency before that deadline, Member States should be able to provide that a new period starts if the company becomes insolvent again thereafter.

AddedRecital 25 a (new): (25a) In order to give full effect to the objective of insolvency proceedings, namely the collective realisation of claims against the debtor, it is necessary that all creditors holding claims against the insolvent debtor participate in the proceedings. By so participating, it should be possible for such claims to be duly recorded, examined and satisfied in accordance with the applicable insolvency framework.

AddedRecital 26: (26) In the preparation phase, the monitor (subsequently to be appointed as insolvency practitioner in the liquidation phase, unless the monitor resigns or is unable to perform the required functions) should be responsible for ensuring that the sale process is competitive, transparent, fair and meets market standards. Complying with market standards in this context should require that the process is compatible with the standard rules and practice on mergers and acquisitions in the Member State concerned, which includes an invitation to potentially interested parties to participate in the sale process, disclosing the same information to potential buyers, enabling the exercise of due diligence by interested acquirers, and obtaining the offers from the interested parties through a structured process.

AddedRecital 27: (27) If the court or the administrative authority runs a public auction after the opening of the liquidation phase, the offer selected by the monitor during the preparation phase should be used as an initial bid (‘stalking horse bid’) during the auction. The debtor should be able to offer incentives to the ‘stalking horse bidder’ by agreeing, in particular, to expense reimbursements or break-up fees in the case a better offer is selected through the public auction. Member States should, nevertheless, ensure that such incentives given by the debtors to the ‘stalking horse bidders’ during the preparation phase are commensurate and do not deter other potentially interested bidders from participating in the public auction in the liquidation phase.

AddedRecital 27 a (new): (27a) Monitors should take their actions in writing and should make them available, in digital format and in a timely manner, only to the parties involved in the preparation phase in order to secure the necessary confidentiality of all information obtained in connection with the preparation phase.

AddedRecital 28: (28) The opening of insolvency proceedings should not result in the early termination of contracts under which the parties still have obligations to perform (executory contracts), which are necessary for the continuation of business operations. Such termination would unduly jeopardise the value of the business, or part thereof, to be sold in the pre-pack proceedings. It should, therefore, be ensured that those contracts are assigned to the acquirer of the business of the debtor or part thereof, even without the consent of the counterparty of the debtor to those contracts, unless the court considers that consent is necessary to protect the interests of the debtor’s counterparties. Nonetheless, there are situations where the assignment of the executory contracts cannot be allowed, such as when the acquirer is a competitor of the counterparty of the contract. Similarly, the court may come to the conclusion in an individual assessment of an executory contract that its termination would serve the interests of the business of the debtor better than its assignment, such as when the assignment of the contract would result in a disproportionate burden for the business. The court should not be allowed, however, to terminate executory contracts relating to licenses of intellectual and industrial property rights, as well as for credit or financial services contracts, as they are usually key components of the operations of the business being sold.

AddedRecital 29: (29) The possibility to enforce pre-emption rights in the course of the sale process would distort competition in the pre-pack proceedings. That consideration cannot prevent a court from reserving a right of pre-emption for an undertaking participating in an essential strategic interest. Potential bidders might abstain from bidding because of rights that would discard their offers at the holder’s discretion, irrespective of the time and resources invested and the economic value of the offer. In order to ensure that the winning offer reflects the best available price on the market, pre-emption rights should not be conceded to bidders, nor should such rights be enforced in the course of the bidding process. Holders of pre-emption rights that were granted prior to the commencement of the pre-pack proceedings, instead of invoking their option, should be invited to participate in the bidding.

AddedRecital 32: (32) Directors oversee the management of the affairs of a legal entity and have the best overview of its financial situation. Directors are therefore among the first to realise whether a legal entity is insolvent. A late filing for insolvency by directors may lead to lower recovery values for creditors Member States should therefore introduce an obligation on directors to submit a request for the opening of insolvency proceedings within a specified time-period. Member States should also define the notion of “director”.

AddedRecital 32 a (new): (32a) Member States should set a deadline for the duty to submit a request for the opening of insolvency proceedings. That deadline should be no later than three months from the date on which the directors became aware that the company was insolvent. If the company regains its solvency before that deadline, Member States should be able to provide that a new period starts if the company becomes insolvent again thereafter.

AddedRecital 33: (33) To ensure that directors do not act in their self-interest by delaying the submission of a request for the opening of insolvency proceedings, despite signs of insolvency, Member States should lay down provisions making directors civilly liable for a breach of the duty to submit such a request. In that case directors should compensate creditors for the damages resulting from the deterioration in the recovery value of the legal entity compared to the situation where the request would have been submitted on time. Member States should be able to adopt or maintain national rules on civil liability of directors related to the filing for insolvency that are stricter than those laid down by this Directive. In some cases, the signs of insolvency can be circumstantial and temporary and skilled directors should be given the opportunity to explore restructuring measures that could reasonably lead to the same outcome for creditors. Therefore, Member States should be permitted to provide for a derogation from the obligation to commence insolvency procedures while ensuring that the rights of the creditors are equally protected. Where there is no duty to request the opening of insolvency proceedings, Member States should be able to take other, equivalent measures, such as making directors personally liable.

AddedRecital 33 a (new): (33a) In order to promote an efficient and inclusive insolvency framework that supports entrepreneurship and economic renewal, Member States should be able to maintain or introduce simplified winding-up proceedings for microenterprises, while upholding the high standards of transparency and fairness provided for in this Directive and under other relevant instruments. Given the limited resources typically available to such businesses, it is essential that the Member States ensure that those proceedings are accessible even in cases where the debtor has no assets or where the available assets are insufficient to cover the procedural costs or the cost for the involvement of an insolvency practitioner. Such an approach would help avoid situations where honest but insolvent entrepreneurs are trapped in inactivity due to inaccessible formal procedures, thereby enabling a fresh start and contributing to a fairer and more resilient internal market.

▸5 unchanged paragraphs

Recital 34: deleted

Recital 35: deleted

Recital 36: deleted

Recital 37: deleted

Recital 38: deleted