The EU Council has given its final stamp to a new EU law harmonising key aspects of insolvency rules across the EU, reducing the complexity of different national insolvency rules.
The new EU-wide rules will maximise the value which creditors can recover from insolvent companies and will increase the efficiency of the insolvency proceedings.
This is seen as an important step towards more efficient and integrated European capital markets that are crucial to the EU’s competitiveness.
The EU common rules for insolvency proceedings include measures for:
- Avoidance action: challenge transactions made by the debtor before the start of the bankruptcy procedure, thus protecting the insolvency estate against the illegitimate removal of assets.
- Tracing assets: allow authorities, at the request of insolvency practitioners, to search bank account registers across the EU to identify assets of insolvent companies.
- Pre-pack proceedings: enable the sale of a company in financial difficulty to be negotiated before the opening of formal proceedings and executed shortly after, while maintaining contracts which are essential for the continuation of the business.
- Directors’ duties: require directors to file for insolvency within three months of financial distress, helping maximise recovery for creditors while allowing flexibility if alternative measures protect creditors equally.
- Creditors’ committees: strengthen the involvement of individual creditors in the proceedings.
- Transparency: require each country to publish clear factsheets on its insolvency laws, which will be made available on the EU’s e-Justice portal.
The EU’s member states will now have two years and nine months to transpose the directive into national law.
Directive harmonising certain aspects of insolvency law, 5 December 2025, final compromise text
