Cross-border insolvency proposals backed by European Parliament
The European Commission’s proposals to extend cross-border insolvencies to rescue proceedings have received backing from the European Parliament, with 580 votes in support.
The proposed changes received only 69 votes in opposition and 19 abstentions.
As the proposal has been approved by one of the European Union’s two co-legislators, the focus will shift to the member states in the Council to reach an agreement on the draft law, along with the European Parliament, for it to enter the EU’s statute book.
The proposal suggested the removal of out-of-court proceedings from the scope of the EU legislation, and would introduce a three-month “look-back” period to allow companies to exercise their right to free movement subject to the laws of the originating member state.
Viviane Reding, justice commissioner for the EU, said: “Europe needs modern rules on cross-border insolvency to help service our economic engine. The first option for viable business should be to stay afloat rather than liquidating.”
Should the new laws come into force, they are set to modernise the existing rules in order to support the restructuring of businesses in difficulties and serve creditors’ interest, making them more likely to get back their money.
The revision of the EU Insolvency Regulation also seeks to increase legal certainly by providing clear rules in determining jurisdiction, and ensuring cooperation between different proceedings if a debtor faces insolvency proceedings in several member states.
Reding added: “I want to thank the Members of the European Parliament, and particularly its rapporteur, Klaus-Heiner Lehne for their support.
“I will continue working closely with the European Parliament and Ministers in the Council so that the modernised insolvency rules are adopted swiftly. Businesses are waiting and we have no time to lose.”
The Law Society of England and Wales, which last week criticised the proposed rule changes, declined to comment.
Engineering giant restructuring programme slows
Global engineering firm ThyssenKrupp AG has called for patience as its restructuring program loses momentum.
Speaking at the company’s annual general meeting on 17 January, company chief executive Heinrich Hiesinger told investors that the restructuring plan needs more time.
Hiesinger said ThyssenKrupp is “in the middle of its biggest restructuring since the merger in 1999.
“ThyssenKrupp was no longer competitive in many of its businesses and functions. So in May 2011 we launched our Strategic Way Forward and said clearly: These fundamental changes, which affect all parts of the company, will take time.
“A good two and a half years later we have already achieved a great deal on the path of renewal and can point to measurable successes.”
The Germany-based company has in recent years attempted to move away from the steel market in order to focus on its elevator, industrial plant and automotive part businesses.
ThyssenKrupp’s Steel Americas business, for which a sale has only been partially completed, was referred to as “a lead weight for the group” by Hiesinger.
However, the chief executive was keen to highlight the positive impact of the restructuring plan.
Hiesinger said: “We are on the right path and have achieved measurable successes.
“With the exception of Steel Americas, all our business areas reported an operating profit last year.
Our free cash flow was positive again for the first time in six years. We reduced our debt by 800 million euros.
“These are tangible, measurable successes of the change process.”
Romanian airline to restructure network
As part of its insolvency proceedings, Romanian airline Carpatair is to undergo a network restructuring.
The airline, which started offering flights to London Luton airport in December 2013, announced it would be restructuring under the insolvency protection and would cut unprofitable routes from its network.
As report by Mediafax, Carpatair has pointed to legal bills of €30m from an investigation by the European Commission into alleged “uncompetitive practises” at Timisoara airport for its entrance in to insolvency.
Carpatair, which is owned by private Swiss shareholders, will continue to be managed by the present management team, under the supervision of an appointed insolvency administrator.