Brussels Mulls Over Imitating United States’ Chapter 11 Bankruptcy Law

by San Antonio Attorney

Brussels, Belgium intends to undertake into the bankruptcy rules of pan-European, saying they need a similar version of the United States Chapter 11 bankruptcy proceeding to maximize the entrepreneurial potential in the continent.

The European Commission said they would like to offer distressed businesses a respite from creditors and prevent value from being damaged by companies that are failing.

Valdis Dombrovskis, the commission’s vice-president, has said that insolvency must not necessarily end up in shuttering a company and liquidating its assets.  He also said that a viable business should be granted another chance.

The European Commission revealed the plan as part of a scheme meant to make the  legal systems affable to businessmen, in the midst of fears that some nations make it very hard to recover from an unsuccessful venture and start other projects.

EU Justice Commissioner Vera Jourova said that Brussels had witnessed clear proof of needless wealth demolition.  About 1.7 million people lose their jobs every year because 200,000 companies go bankrupt.

Brussels has for a long time been mulling over how Europe might imitate the advantages of the United States’ Chapter 11 bankruptcy laws.  In addition, the plans are inspired by laws in certain European Union countries that help early business reorganization, just like the schemes of arrangement of the United Kingdom.

In the EU’s proposals, a company would be able to deflect liquidation mandates from its creditors as it works out a voluntary restructuring of debt.  At first, the protection would be effective for 4 months, but courts could decide to prolong it.

Moreover, the new laws would also stop a small minority of nonconforming creditors from hampering restructuring deals, with protections to make sure the valid interests of nonconforming creditors were defended.

Brussels has been wary concerning a sudden change into insolvency law, considering that Europe has a different mix of national processes.

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