Changes from report parliamentary committee draft to plenary report

Change 49

RemovedArticle 19 – paragraph 2: (deleted)

AddedArticle 19 a (new): Article 19a / Rights of workers / The pre-pack proceedings are without prejudice to Union and national law on the rights of workers in insolvency proceedings, including the involvement of workers’ representatives and appropriate measures to inform and consult workers’ representatives. / While applying this Title, Member States shall ensure that the impact on workers is taken into account as much as possible, with a view to preserving employment.

RemovedArticle 22 – paragraph 1 – subparagraph 1: Member States shall provide that, upon request of the debtor, the court appoints a monitor. The monitor shall be independent from 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.

AddedArticle 20 – paragraph 2: 2. For the purposes of Article 5(1) of Council Directive 2001/23/EC40, the liquidation phase shall be considered to be bankruptcy or insolvency proceedings instituted with a view to the liquidation of the assets of the transferor under the supervision of a competent public authority, provided that the liquidation of the debtor’s business as a going concern satisfies to the greatest extent possible the claims of the creditors.

AddedArticle 22 – paragraph 1 – subparagraph 1: Member States shall provide that, upon request of the debtor, the court appoints a monitor. The monitor shall 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.

AddedArticle 22 – paragraph 2 – subparagraph 1 – point a a (new): (aa) where appropriate, has recourse to an independent valuation in order to comply with requirements related to obtaining market value;

AddedArticle 22 – paragraph 2 – subparagraph 1 – point b: (b) formally declares and demonstrates that the sale process is competitive, transparent, fair and meets market standards;

AddedArticle 22 – paragraph 2 – subparagraph 1 – point d: (d) formally declares and demonstrates that the best bid does not constitute a manifest breach of the best-interest-of-creditors test.

Article 22 – paragraph 2 – subparagraph 2: Actions by the monitor listed in the first subparagraph shall be done in writing and shall be made available in digital format and in a timely manner only to the parties involved in the preparation phase. Beyond that, the monitor shall maintain the confidentiality of all information obtained in connection with the preparation phase.

Article 23 – paragraph -1 (new): Member States shall ensure that, in the course of the preparation phase, the debtor remains in control of its assets and the day-to-day operation of the business.

Change 50

ChangedArticle 23 – paragraph 1: Member States shall ensure that during the preparation phase, where the debtor is in a situation oflikely likelihoodto ofbecome insolvencyinsolvent or is insolvent in accordance with national law, the debtor can benefit from a stay of individual enforcement actions in accordance with Articles 6 and 7 of Directive (EU) 2019/1023, where it facilitatesis theessential seamlessfor andthe effectivesuccessful roll-out of the pre-pack proceedings. The monitor and the correspondentcorresponding creditor shall be heard by the court prior to the decision on the stay of individual enforcement actions.

Change 51

AddedArticle 24 – paragraph 2: 2. Without prejudice to Article 32(2), where the sale process only produces one binding offer, that offer shall be deemed to reflect the business market price, unless it can be demonstrated otherwise.

AddedArticle 24 – paragraph 3: 3. Member States may depart from paragraph 1 only where the court runs a public auction in the liquidation phase in accordance with Article 26(2). In this case, Article 22(2), point (b) shall not apply.

AddedArticle 24 – paragraph 3 a (new): 3a. Member States shall ensure that it is possible, in the course of the preparation phase, to obtain the services of an independent valuation practitioner as a means of gauging a fair market price.

Article 25 – paragraph 1: Member States shall ensure that, when the liquidation phase is opened, the court appoints the monitor referred to in Article 22 as insolvency practitioner unless the monitor resigns or is unable to perform the required functions, such as in cases of serious illness or death.

Change 52

RemovedArticle 27 – paragraph 1 – subparagraph 1: Member States shall ensure that the acquirer of the debtor’s business or part thereof is assigned the executory contracts which are necessary for the continuation of the debtor’s business and the suspension of which would lead to a business standstill. The assignment shall not require the consent of the debtor’s counterparty or counterparties unless the court considers that such consent is necessary in order to protect the interests of the debtor's counterparties.

AddedArticle 26 – paragraph 2: 2. By way of derogation from paragraph 1, Member States shall ensure that the court can run a public auction where one or more creditors’ groups demonstrate a credible suspicion of abuse. The offer selected by the monitor shall be used as the initial bid in the public auction. Member States shall ensure that the protections granted to the initial bidder in the preparation phase, such as expense reimbursement or break-up fees, are commensurate and proportionate, and do not deter potentially interested parties from bidding in the liquidation phase.

AddedArticle 27 – paragraph 1 – subparagraph 1 a (new): By way of derogation from the first subparagraph, Member States may provide that consent of the debtor’s counterparty or counterparties is required in so far as is necessary, depending on the type of contract, the legal status of the parties or the interests of the business.

AddedArticle 27 – paragraph 2 – subparagraph 1 – introductory part: 2. Member States shall ensure that the court may decide to terminate the executory contracts referred to in paragraph 1, first subparagraph, subject to a notice period of at least three months prior to the assignment, provided that one of the following conditions applies:

Article 27 – paragraph 2 – subparagraph 2: Point (a) of the first subparagraph shall not apply to executory contracts relating to licenses of intellectual and industrial property rights or to credit or financial services contracts.

Article 28 – paragraph 1: Member States shall ensure that the acquirer acquires the debtor’s business or part thereof free of debts and liabilities, unless the acquirer expressly consents to bear, solely or jointly with the debtor, the debts and the liabilities of the business or part thereof.

Change 53

ChangedArticle 31 – paragraph 1: Member States shall ensure that the monitor and the insolvency practitioner are liable for the damages that their intentional or grossly negligent failure to comply with their obligations under this Title causes to creditors and third parties affected by the pre-pack proceedings.

Change 54

AddedArticle 32 – paragraph 1 – subparagraph 2: Member States shall provide that where it is proved that the disclosure duty referred to in the first subparagraph, point (a), was breached, the court revokes the benefits referred to in Article 28.

AddedArticle 32 – paragraph 2: 2. Where the offer made by a party closely related to the debtor is the only existing offer, Member States shall introduce additional safeguards for the authorisation and execution of the sale of the debtor’s business or part thereof. These safeguards shall at least include the requirement to obtain a market valuation of the business and the duty for the monitor and the insolvency practitioner to reject the offer from the party closely related to the debtor if the offer does not satisfy the best-interest-of-creditors test.

Article 33 – paragraph 1 – point a: (a) the debtor, the monitor or the insolvency practitioner takes the necessary steps to obtain interim financing at the lowest possible cost;

Change 55

ChangedArticle 34 – paragraph 1 a-1 (new): 1a.-1. Member States shall ensure that, prior to the authorisation of the sale of the debtor’s business or part thereof, the insolvency practitioner provides the court with a report on a favourable best-interest-of-creditors test.

Change 56

ChangedArticle 36 – paragraph 1: 1. Member States shall ensure that, where a company becomes insolvent in accordancelegal withentity nationalbecomes law,insolvent, its directors have the duty to submit a request for the opening of insolvency proceedings with the court no later than 3 months after the directors became aware or can reasonably be expected to have become aware that the legal entity is insolvent.insolvent in accordance with national law. Preventive restructuring proceedings are be excluded from that obligation.

Change 57

RemovedArticle 37 – paragraph 1: 1. Member States shall ensure that the insolvent company’s directors are liable for damages incurred by creditors as a result of their failure to comply with the obligation laid down in Article 36.

AddedArticle 36 – paragraph 1 a (new): 1a. By way of derogation from paragraph 1, Member States may provide that the duty referred to therein does not apply to directors who are natural persons and are personally liable for all of the company’s debts where: / (a) the directors inform the public of the company’s insolvency through a notification in a public register, at the latest within the deadline referred to in paragraph 1, in order to ensure that the creditors are able to request the opening of insolvency proceedings; or / (b) the directors take measures that are designed to avoid damage to the creditors of the insolvent company, provided that such measures were reasonably likely to avoid such damage or secure a better outcome for creditors.

AddedArticle 37 – paragraph 1: 1. Member States shall ensure that the insolvent legal entity’s directors are liable for damages incurred by creditors as a result of their failure to comply with the duty laid down in Article 36.

AddedArticle 37 – paragraph 2 a (new): If Member States have exercised the option provided for in Article 36(1a), they shall ensure that directors who take measures as referred to therein are liable, in accordance with national law, for damage caused to creditors that would not otherwise have been caused had the opening of insolvency proceedings been requested in accordance with Article 36(1).

AddedArticle 37 – paragraph 2 b (new): Member States may provide that such liability is excluded where and to the extent that the directors can demonstrate, on the basis of objective circumstances, that the measures taken could reasonably be expected to avoid damage to creditors, provided that such measures were reasonably likely to avoid such damage or secure a better outcome for creditors.

Title VI: deleted

Change 58

RemovedArticle 59 – paragraph 1: 1. Member States shall ensure that the members of the creditors’ committee are appointed either at the general meeting of creditors or by decision of the court, within 30 days from the date of the opening of the insolvency proceedings.

AddedArticle 58 – paragraph 3: 3. Member States may exclude in national law the possibility to establish a creditors’ committee in insolvency proceedings, when, due to the nature and scope of the debtor’s business, the overall costs of the involvement of such a committee are not justified in view of the low economic relevance of the insolvency estate, of the low number of creditors or the circumstance that the debtor is a microenterprise.

AddedArticle 59 – paragraph 1: 1. Where a creditors’ committee is established pursuant to Article 58, Member States shall ensure that the members of the creditors’ committee are appointed either at the general meeting of creditors or by decision of the court, within 30 days from the date of the opening of the insolvency proceedings.

Article 59 – paragraph 2: 2. Where the members of the creditors’ committee are appointed at the general meeting of creditors, Member States shall ensure that the court certifies the appointment within 5 working days from the date of the communication of the appointment to the court.

Change 59

AddedArticle 59 – paragraph 3 – subparagraph 1 a (new): When workers are among the creditors, Member States shall ensure that the creditors’ committee can include members who are workers or their representatives. Individuals who are not themselves creditors may also be appointed as members of the creditors’ committee only if they represent the interests of a group of creditors.

▸5 unchanged paragraphs

Article 60 – paragraph 1 – subparagraph 1: Member States shall ensure that members of the creditors’ committee represent solely the interests of the whole body of creditors, in a fair and unbiased way and act independently of the insolvency practitioner.

Article 60 – paragraph 1 – subparagraph 2: deleted

Article 60 – paragraph 2 a (new): 2a. Member States shall ensure that the members of the creditors’ committee act in good faith when carrying out the functions of the committee.

Article 61: deleted / (deleted) / (deleted)

Article 62 – paragraph 2: 2. Grounds for removal shall at least include fraudulent or grossly negligent conduct, conflicts of interest, wilful misconduct, or breach of fiduciary duties with respect to the creditors’ interests.

Change 60

ChangedArticle 63 – paragraph 2 – point -a (new): (-a) the scope of the creditors'creditors’ committee'scommittee’s duties;

Article 64 – paragraph 1 – subparagraph 1: Member States shall ensure that the creditors’ committee’s function is to ensure that in the conduct of the insolvency proceedings the interests of the whole body of creditors are protected.

Change 61

ChangedArticle 64 – paragraph 1 – subparagraph 2 – point e: deleted(e) the power to share relevant and necessary information to represented creditors and to receive information from them;

Article 64 – paragraph 1 – subparagraph 2 – point f a (new): (fa) the power to appoint a secretary;

Change 62

ChangedArticle 64 – paragraph 1 – subparagraph 2 a (new): Member States shall ensure that creditors, members of the creditors’ committee and any professionals employed by the creditors’ committee maintain the confidentiality of all information obtained in connection with the committee’s activities.

Article 66 – paragraph 1: Members of a creditors’ committee are exempt from individual liability for their actions in their capacity as members of the committee unless they have committed an intentional or grossly negligent violation of duties with respect to the creditors’ interests.

Change 63

ChangedArticle 66 – paragraph 1 a1a (new): Expenses for liability insurance covering the liability of members of the creditors’ committee shall be borne by the insolvency estate in accordance with Article 65(2).

Article 68 – paragraph 1: 1. Member States shall provide, within the framework of the European e-Justice Portal, a key information factsheet on essential elements of national law on insolvency proceedings.

Change 64

RemovedArticle 70 – paragraph 1: By ... [3 years after the deadline for transposition of this Directive], the Commission shall present to the European Parliament, the Council and the European Economic and Social Committee a report on the application and impact of this Directive.

AddedArticle 69 a (new): Article 69a / Supporting measures / To address the difficulties of SMEs and microenterprises in particular, and their need for additional supporting measures in the event of insolvency and financial distress, the Commission shall support the exchange of best practices between Member States and provide guidance on that basis and on the basis of exchanges with SME representatives.

AddedArticle 70 – paragraph 1: By [3 years after the deadline for transposition of this Directive] and every 5 years thereafter, the Commission shall present to the European Parliament, the Council and the European Economic and Social Committee a report on the application, impact and its effectiveness in reaching the objectives of this Directive. The report may be accompanied, if appropriate, by a legislative proposal.

Article 71 – paragraph 1 – subparagraph 1: Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by ... [12 months from entry into force] at the latest. They shall forthwith communicate to the Commission the text of those provisions.

Change 65

ChangedAnnex I – subheading 1:title: National registers and databases referred to in Article 18

Annex I – point 3: 3. Movable property registers including registers of vehicles, ships and aircrafts, where property rights are registered in such registers;

Change 66

ChangedAnnex I – point 6: 6. Registers or databases containing information on the ownership of securities, such as central securities depositoriesdepositories, as defined in Article 2(1), point (1),2 of Regulation (EU) No 909/2014;

Annex I – point 9: deleted

Annex I – point 11: deleted