The European Parliament approved today (28 March 2019) in first reading the compromise text reached in the trilogue negotiations for the Directive establishing common rules for the restructuring processes for companies in financial troubled waters. An important element of the new Directive is the introduction of an obligation for member states to develop and ensure access to early warning tools for companies in financial difficulties.
Figures from the European Commission show that every year more than 200.000 companies enter into insolvency procedures and half of all businesses do not survive the first five years.
The Early Warning Europe project supports the implementation of early warning mechanisms in four member states (Greece, Italy, Poland and Spain) to provide free and impartial guidance to entrepreneurs in difficulties and second starters. Partners also promote knowledge-sharing across Europe to facilitate the establishment of early warning mechanisms based on the experiences gained in the project. The consortium welcomes the Parliament’s approval of the provisions aimed at the prevention of insolvency as defined in Article 3.
Arnaldo Abruzzini, CEO of EUROCHAMBRES said: “The Early Warning Europe project and the freshly adopted Directive are two sides of the same coin. The Directive is providing a legal framework which will oblige Member States to actively engage in the prevention of bankruptcy and financial distress of debtors. The tools developed under the project will provide a first answer to fulfill the new obligations created by the Directive.”
Veronique Willems, Secretary-General of SMEunited, added that: “The Directive which was approved today is an important step ahead. Firstly, it will help companies to talk more candidly about any difficulties they might encounter at any stage of the company life-cycle. It helps establishing a culture which does not penalise failure. Secondly, the establishment of effective preventive restructuring and second chance frameworks will particularly benefit SMEs, as entrepreneurs cannot be experts in every field of management, such as legal affairs, accounting, HR, etc .”
Patrick Gibbels, Secretary-General of ESBA: “We are pleased with today’s adoption of the Directive as it is an important legislative step which hopefully will facilitate a cultural change. In Europe we seriously lag behind the US when it comes to entrepreneurial culture and how we perceive risk and failure. By focusing on preventative measures, avoiding bankruptcy on the one hand and second chances for honest entrepreneurs on the other hand, we can create an environment where entrepreneurialism and healthy risk-taking are promoted, rather than discouraged. The Early Warning Europe programme we are all involved in is a great mechanism which ultimately all Member States should implement.”