AFME is working with its members to make a positive contribution to the European insolvency reform debate.
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 or German
Key findings of the report include:
- 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.
- 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.
Read Paul McGhee's Euractiv column on A ‘Chapter 11’ Law for Europe’s entrepreneurs