To promote a more entrepreneurial spirit, a pan-European framework for early restructuring of businesses could offer a true second chance for entrepreneurs.
There are four distinct areas where harmonising national insolvency frameworks can improve the functioning of the single market and the stability of the euro area: early restructuring of businesses, bank resolution, cross-border insolvency and management of NPLs (non-performing loans). All four areas rely on common features of local insolvency frameworks, which can affect their legal certainty and functioning. To promote a more entrepreneurial spirit, a pan-European framework for early restructuring of businesses could offer a true second chance for entrepreneurs. To benefit from a capital markets union, insolvency frameworks would also need to remove sources of cost unpredictability in cross-border insolvency procedures, which are often hidden in national insolvency laws or not sufficiently dealt with in the current EU framework. This report makes a contribution to define areas for further action. Moreover, measures aimed at harmonising insolvency laws can produce positive impacts on the banking union, especially with the harmonisation of hierarchies of claims for the functioning of the resolution mechanism. Finally, the diffusion of best practices in credit recovery procedures can help to improve the management of NPLs via fostering liquidity in secondary markets.
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