Insolvency Reform


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Insolvency Reform

AFME is working with its members to make a positive contribution to the European insolvency reform debate.

Overview

In February 2016, AFME published a new report in cooperation with Frontier Economics and Weil Gotshal & Manges LLP, on the 'Potential economic gains from reforming insolvency law in Europe'. The report shows that improvements in insolvency frameworks across the EU could increase GDP by between €41 and €78 billion (or between 0.3% and 0.55% of EU28 GDP) over the long-term. With the Commission due to propose a legislative initiative on business insolvency later this year, we hope that this report will make a positive contribution to the policy debate.

Read the report in English, French, German









Key findings of the report:

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  • Several EU Member States are already reforming their national insolvency rules, but there remains the opportunity for targeted and coordinated reform.
  • Further improvements in insolvency frameworks across the EU could increase GDP by between €41 and €78 billion (or between 0.3% and 0.55% of EU28 GDP).
  • Much of the absolute gains from insolvency reform could flow to Italy, Spain and France. Countries such as Greece, Hungary and Romania stand to gain most in relative terms.
  • A number of additional channels could increase the economic impact of insolvency reform in Europe, including: improved access to finance for companies; greater levels of entrepreneurship and company formation; and progress in addressing Europe’s high level of non-performing loans.

Recommendations

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  • A Chapter 11-type stay of proceedings to enable quick and effective restructuring;
  • Granting super-priority status to new financing to provide working capital to a distressed company;
  • Giving creditors need stronger rights to propose viable restructuring plans; and
  • Requiring national insolvency agencies to publicly report on outcomes.
Key Documents
Article

Read Paul McGhee's Euractiv column on A ‘Chapter 11’ Law for Europe’s entrepreneurs

Q&A

Q&A on reforming European insolvency law

Contact

Gary Simmons

Managing Director