Next stage of European insolvency law harmonisation has come into force
Berlin, Germany, 19th June 2026
On 10 March 2026, the European Parliament approved the EU Directive on the harmonisation of certain aspects of insolvency law by a majority vote; the Council gave its approval on 30 March 2026, and EU Directive 2026/799 was published in the Official Journal of the European Union on 1 April 2026. The aim of the Directive, which finally entered into force on 21 April 2026, is to ensure that insolvency proceedings are conducted more efficiently across Europe, that assets can be traced and realised more easily, and that the proceeds generated during the proceedings are distributed fairly amongst creditors.
Key provisions
All provisions relevant to creditors from the original draft are included in the version now adopted:
Micro-enterprises (Article 4(5))
Instead of the detailed provisions originally envisaged, the Directive now contains only a single paragraph in Article 4, which reserves the right for Member States to retain or introduce simplified liquidation proceedings for micro-enterprises.
Insolvency avoidance actions (Articles 6–13)
The provisions on insolvency avoidance actions are modelled on the existing legal framework in countries with a strong tradition of such actions, such as Germany and Austria. This will put an end to the fundamental restrictions – some of which are considerable, such as those applicable to enforcement measures in the Netherlands, the Czech Republic and Spain. However, Member States retain considerable discretion in the detailed implementation of their respective laws on avoidance.
Asset Tracing (Articles 14–20)
The facilitated access to bank account and asset registers to be established by Member States can significantly improve the Europe-wide tracing of debtors’ assets and thus strengthen creditors’ actual chances of realising their claims.
Pre-pack mechanism (Articles 21–39)
The concept of the pre-pack procedure, which also features in the Directive and originates from the Netherlands, is intended to allow the sale of a company to be negotiated with a potential purchaser even before insolvency proceedings are opened, so as to enable the takeover to take place immediately after the proceedings are opened.
Creditors may be particularly affected by the de facto obligation to enter into contracts: Contracts essential to the continuation of the business are generally to be transferred to the purchaser without the consent of the affected contracting party being a prerequisite.
Duties of directors (Articles 40–43)
The adopted text does not establish a uniform obligation to file for insolvency, as exists in Germany, for example, but rather a flexible minimum standard. Although directors are generally required to take action within a maximum of three months in the event of insolvency, Member States are free to define the concept of insolvency, the threshold and even alternatives to filing a petition – such as notifications to the register or other measures to protect creditors – themselves.
Creditors’ committees (Articles 44–50)
The provisions on creditors’ committees are modelled on German law. Under these provisions, creditors are to be granted a greater say in the proceedings through the possibility of forming such committees. At the same time, this enables insolvency practitioners to reduce their liability risk by involving potential future claimants in decisions relevant to liability during the proceedings.
Transposition into national law
The step that will ultimately determine the respective national insolvency practice is still pending in the Member States: As a directive, the legal act must be transposed into national law by 22 January 2029. Only then will the new provisions take effect in the individual Member States.
The EARN members will be keeping a close eye on developments.
Read on here for a more detailed analysis from a German perspective
Author: Lutz Paschen, PASCHEN Rechtsanwälte, Berlin, Germany
