The European Commission (EC) is seeking to modernise European insolvency law in a bid to “fuel the economy”.
A public consultation has been launched with a view to updating the current Insolvency Regulation which came into force in 2000.
The current rules govern how the bankruptcies of both companies and individuals should be coordinated between several EU countries.
However, the EC believes ‘considerable changes’ in the economic and political environment over the past 12 years require a ‘fresh look’ at the regulation.
According to the EC some 220,000 businesses were liquidated in 2010 – about 600 every day.
“A modern insolvency law is essential for financial stability and for the efficiency of the financial system,” said EU justice commissioner Viviane Reding.
“It is an essential part of a modern single market and encourages entrepreneurs to take risks.
“And, if necessary, it provides an orderly way for businesses to close down.
“A modern insolvency law will help fuel the economy as it will help giving economically solid businesses, which are in short term financial difficulties, a second chance.”
The EC is consulting businesses, lawyers, insolvency practitioners, creditors, academics and the general public as part of the consultation.
Commenting about the proposed regulation the UK’s Insolvency Service (IS) said: “The IS is currently in communication with the EC as it begins its review of the regulation.
“The service plans to work closely with both the commission and UK stakeholders throughout the review process.”
The consultation is open until June 21.