Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

EU mulls more unified insolvency laws as wave of bankruptcies approaches

Economic IndicatorsApr 16, 2021 07:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: The euro sign is photographed in front of the former head quarter of the European Central Bank in Frankfurt

By Jan Strupczewski

BRUSSELS (Reuters) - Euro zone finance ministers are discussing on Friday how to improve and possibly unify insolvency laws across the 19-nation bloc, to better prepare for a wave of bankruptcies expected when companies are weaned off government emergency pandemic support.

The expected surge in EU corporate bankruptcies will have a knock-on effect on the number of bad loans banks have to handle as the post-pandemic economic recovery starts to take hold and governments begin withdrawing state schemes that are now keeping many non-viable companies on life support.

But insolvency laws differ from country to country, making it more difficult for the euro zone to deal with the problem. The issue threatens to hamper economic growth as assets of insolvent companies are frozen during lengthy legal processes rather being quickly re-deployed in the economy.

"National insolvency regimes across the EU differ in their design and in their practical implementation," the European Commission said in a paper for the ministers' discussions.

"(They) embody choices made regarding the appropriate balance between creditor and debtor interests ... the priority enjoyed by employees, public utilities and tax authorities in the process," the paper said.

It said euro zone countries should, for instance, agree on a definition of insolvency and when a company should be obliged to undergo formal insolvency proceedings.

It would also help if there was a common view on actions to replenish the insolvency estate in case of fraud, on asset tracing, the ranking of claims, including the position of secured creditors in insolvency and on court capacity, it said.

"The Commission will consider either proposing a legislative instrument for minimum harmonisation of certain targeted elements of corporate insolvency laws, or coming forward with a non-legislative initiative to increase convergence," it said.

Unifying these laws would involve justice ministries, adding an additional layer of difficulty, a senior euro zone official said. "It may be realistic that we will have to look for non- legislative steps to promote convergence," the official said.

Such non-legislative steps would involve making sure that judicial systems in every country have proper resources and that backlogs of cases in courts are tolerable. Setting EU benchmarks to reach could help, the official said.

EU mulls more unified insolvency laws as wave of bankruptcies approaches
 

Related Articles

U.S. job openings vault to record high in March
U.S. job openings vault to record high in March By Reuters - May 11, 2021 3

By Lucia Mutikani WASHINGTON (Reuters) - U.S. job openings surged to a record high in March while hiring lagged, further evidence that a shortage of workers was hampering job...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email