· The European Insolvency Practitioners Association (EIP) shares the keys that Member States need to follow to alleviate the economic impact from the pandemic.
BRUSSELS, May 20, 2021 /PRNewswire/ -- The health crisis caused by COVID-19 has also brought about an economic crisis particularly concentrated around the tourism, hospitality, and retail sectors.
Despite the economic measures taken by institutions in Europe more specific measures regarding insolvency should be taken in the region. Although the European Commission, proposed on a first stage the Solvency Support Instrument - a mechanism with the aim of supporting otherwise viable companies in the Union that face solvency difficulties because of the coronavirus crisis.
Thus, the European Insolvency Practitioners Association has published a position paper about the state of insolvency in Europe. This document analyses the current context and also proposes some measures to alleviate the situation of the European Fabric.
1. Towards harmonisation in the insolvency sector in Europe
The great consensus and similarity among legislation in European countries will help make processes faster and more agile when acting in companies that have solvency issues, fundamentally for cross-border procedures.
2. Strengthening the transposition of the European Directive
For this purpose, the European Directive was approved on preventive restructuring and second chance frameworks, to level up the legislation in all countries of the European Union. We are calling on all European countries to push this transposition through as quickly as possible to help companies that currently need it.
3. Implementation of similar mechanisms to the Solvency Support Instrument
The European Council negotiations emptied the Solvency Support Instrument (SSI), and it seems destined to be wiped out. Consequently, the EIP is urging to set up a similar specific fund to act as an initial safety net for viable companies that are currently experiencing a transitory insolvency situation.
4. Creation of an Insolvency Practitioner licence in the EU
The Association proposes to create a certificate that proves skills training and application of a code of Good Practice for the "insolvency practitioner" to ensure their work, uniformly, throughout Europe.
5. Evaluation of reports on the operating account and the financial structure of the companies in pre-insolvency proceedings
EIP proposes an assessment by "insolvency practitioners", in greater depth than the economic reports and the financial structure of companies that are in insolvency proceedings, to determine the financial feasibility of these companies.
