EU Insolvency Rules Harmonized: What Does This Mean for Your Business?

Key Changes:

The Pre-pack: Faster Restart in Case of Financial Problems

One of the main innovations is that all EU member states will make the so-called ‘pre-pack mechanism’ available. What does this mean in practice?

How does a pre-pack work?

With a pre-pack mechanism, the sale of the debtor’s business (or part of it) is prepared and negotiated before the formal insolvency procedure is opened. The aim is to speed up the sale process and maximize the value obtained from the sale.

In simple terms: if your company faces financial difficulties, you can already look for a buyer and negotiate a restart before officially going bankrupt. This allows the sale to be executed and the proceeds obtained shortly after the formal insolvency procedure begins.

Practical advantages for entrepreneurs:

• Time savings: Instead of waiting months while your company’s value declines, you can act quickly.
• Limiting loss of value: Customers, suppliers, and staff receive clarity faster, reducing value loss.
• Retention of contracts: Executory contracts, i.e., contracts essential for the continuation of the business, can automatically be transferred from the debtor to the buyer without the counterparty’s consent. This means important customer or supplier agreements can remain in place during a restart.

Creditors’ Committees: Better Protection of Your Interests

Under certain circumstances, creditors’ committees must be established in all member states. This is especially relevant if you do business with larger companies facing financial difficulties.

What does a creditors’ committee do?

The creditors’ committee strengthens the position of creditors in the insolvency procedure. It ensures the involvement of individual creditors who might otherwise not participate, for example, due to limited resources or geographical distance.

For your company, this means: if a client or business partner in another EU country goes bankrupt, you get a voice in the procedure via this committee—even if you are a smaller creditor or located far away.

Harmonized rules

The law harmonizes certain features of the creditors’ committee across member states, such as composition, rights and obligations, and the personal liability of its members. This ensures you have comparable rights in every EU country.

Timeline: When Will These Rules Apply?

The intention is to publish a directive in autumn 2025, after which these rules will be implemented in all EU member states.

What does this mean for your planning?

• Autumn 2025: Expected approval of the final directive
• Afterwards: Member states will have time to transpose the rules into national law (usually 1-2 years)
• 2026-2027: Likely entry into force in most countries
• Action now: Start mapping your cross-border risks and opportunities. Discuss with your adviser how these changes may affect your international strategy.

Conclusion: Opportunities for Cross-Border Growth

By bringing national insolvency regimes closer together, the European Union will become more attractive to foreign and cross-border investors.

The harmonization of EU insolvency rules is not just a dry legal matter, but a concrete improvement for anyone doing international business. The goal is to achieve coherent insolvency law throughout Europe—making the European market more accessible and safer for your company.

Do you have questions about how these developments affect your specific situation? Contact your PKF BOFIDI Legal contact person or email us at info@pkfbofidilegal.com. We are happy to help.

This article was written by Pieter-Jan Van Mierlo.