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Decision Phase for the New EU Initiative: Format, Content and Progress
The final scheduled meeting of the EC Experts’ Group on Restructuring and Insolvency took place online on 28 January 2022. In the lead up to the last two meetings that preceded this event, taking place towards the end of 2021, two key documents were released giving an insight into a possible format for a draft text and some indication as to its contents and likely progress.

The first was the Commission Work Programme 2022, adopted on 19 October 2021, which contained over 40 policy initiatives for 2022, focusing on green, digital and post-pandemic resilience issues. It also mentioned the need for fully developed European capital markets to aid recovery from the pandemic, thus requiring massive investment beyond that delivered by public money and traditional bank lending. In this light, action in respect of insolvency is seen as a priority in order to enhance convergence, remove discrepancies, increase efficiency and facilitate cross-border investment. As such, the deepening of the Capital Markets Union (CMU) will feature a harmonisation initiative for 2022 Q3, slightly later than originally anticipated in Q2, the reason being to avoid a legislative logjam and create more of an opportunity to further finetune the proposals.

The second document was a new Communication on the second CMU Action Plan, first announced on 24 September 2020, on 25 November 2021. The action plan builds on the ambition to integrate national markets into a real and effective single market to facilitate cross-border investment. Action 11 in the document sets out the insolvency initiative as one of its key features, the reasoning being to help make the outcome of cross-border investment more predictable. In providing an update on progress on the action plan, the Communication refers to various legislative texts to be formulated for delivery soon as part of the proposed initiative.

Neither document refers expressly to a precise form for the insolvency initiative, which has been the subject of some debate throughout the deliberations of the Experts’ Group. Given the wide-ranging nature of the topics discussed, ranging from substantive to procedural law as well as capacity building issues, various vehicles, ranging from a Recommendation form to a formal Directive text, have already been suggested. In some cases, preferences have been expressed for a particular text form as being more appropriate for certain proposals. The option has also been canvassed for the separation of topics into different texts, if more than one is proposed.

At the 28 January 2022, a number of topics were on the agenda in the shape of sufficiently advanced recommendations and model frameworks for possible harmonisation. In the way the agenda was presented, it seems as if the discussion points anticipate a possible shortlist for the contents of a draft text or texts. The Commission has indicated that it will now prepare a first draft by March for consideration in the first stage of the decision-making process, after which a final version of the text will be agreed before it then embarks on the legislative process. To comfort its eventual decisions, two qualitative surveys have been commissioned that are currently in progress. These have also addressed many of the same issues that appear on the final agenda.

It will not be an easy ride. Throughout, the Experts’ Group has been conscious of the likely objections, whether to convergence or harmonisation or indeed in relation to every topic under discussion. If the text progresses, it will owe much to the calibre of the contributions to the discussions, drafting and deliberations. Many of these came from INSOL Europe members with undoubted expertise and experience derived from practice and academia. Nonetheless, this initiative to harmonise insolvency law is ambitious and much goodwill and good faith may prove necessary to see it through to a successful conclusion.

On behalf of the INSOL Europe EU Study Group led by Barry Cahir, Beauchamps:
INSOL Europe’s Technical Officer Myriam Mailly and Research Co-ordinator Paul Omar
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