Views sought on EU’s insolvency proposals
The Government has opened a consultation process ahead of a proposed EU directive aimed at harmonising some aspects of insolvency laws across the EU.
The process is being organised by the Department of Enterprise, Trade and Employment, the Department of Justice, and the Department of Finance.
It follows the publication on 7 December of the , which will be discussed by the EU Council and the European Parliament.
The departments say that the proposal would affect Irish company-insolvency law, personal-insolvency law, and bankruptcy law.
Efficiency
The proposed directive is aimed at making insolvency rules in the EU more efficient and effective, with a view to facilitating more cross-border investment.
The areas it targets for harmonisation include:
- The recovery of assets from the liquidated insolvency estate,
- The efficiency of procedures, and
- The predictable and fair distribution of recovered value among creditors.
The proposals provide for:
- A minimum set of harmonized conditions for exercising avoidance actions,
- Strengthening asset traceability through improved access by insolvency practitioners to beneficial-ownership registers and asset registers – including in a cross-border setting,
- Provisions to introduce so-called 'pre-pack' liquidation procedures,
- Provisions on a duty of directors to file for insolvency in a timely way to avoid potential asset-value losses for creditors,
- Simplified liquidation procedure for insolvent micro-enterprises,
- Requirements for improving the representation of creditors' interests in the proceedings, through creditors' committees,
- Enhanced transparency on the key features of national insolvency regimes.
Wider definition of 'entrepreneur'
As well as insolvent legal entities, the proposal also applies to an insolvent 'entrepreneur', defined as 'a natural person exercising a trade, business, craft or profession'.
The Government departments describe this as "a wide definition, going beyond the usual meaning of the term 'entrepreneur'," adding that it can include self-employed tradespeople, professionals, or farmers.
Submissions should be emailed to the Department of Enterprise, Trade and Employment at companylawconsultation@enterprise.gov.ie.
If the subject of the submission relates to personal insolvency and bankruptcy, however, it may alternatively be sent to the Department of Justice at EUInsolvencyProposalConsultation@justice.ie.
The deadline for submissions is close of business on 24 February 2023.