At the same time, business policy must aim to rehabilitate ‘honest’ business people so as to give them a second chance – while providing proper safeguards for shareholders and customers. These were the main conclusions of a roundtable recently hosted by Sajjad Karim, MEP and organised by ACCA and UEAPME at the European Parliament.
Ten years on from its introduction, considerable changes in the economic and political environment, including the recent financial crisis, galloping globalisation and businesses relocations, mean that we need to take a fresh look at the EC Regulation on Insolvency Proceedings. The European Commission is seeking to improve the current framework so that it leads to greater efficiencies in insolvency proceedings.
In parallel, the EU executive has just launched a consultation towards an Entrepreneurship 2020 Action Plan which will seek to improve the framework conditions for entrepreneurs' business activities, and support for would-be and new entrepreneurs when starting up new businesses.
In this context, UEAPME, the voice of small businesses in Europe, and ACCA (the Association of Chartered Certified Accountants) organised in the European Parliament, Brussels, a roundtable hosted by Sajjad Karim, MEP and moderated by John Davies, head of technical at ACCA. It aimed to exchange views and practical experiences on the strengths and weaknesses of the Regulation and on the prospects for encouraging a new rescue culture in Europe.The roundtable also addressed how can insolvency law can best address the needs of SMEs.
The distinguished line-up of speakers comprised of Paraskevi Michou, Director of the Civil Justice Directorate at DG Justice, Joanna Drake, Director of SMEs and Entrepreneurship at DG ENTREPRISE, Robert van Galen, board member of INSOL EUROPE, Giulia Pusterla, CNDCEC Board member , Catherine Burton, Lawyer at DLA Piper and R3, Olivier Delaere, Coordinator at 'Tussenstap' npo and Luc Hendrickx, Director Enterprise Policy and External Relations at UEAPME.
Paraskevi Michou, Director of the Civil Justice Directorate at DG Justice, said: 'Insolvency is an important issue for the European economy. About 50% of enterprises do not survive the first five years of their existence. In 2010, a total of 220,000 businesses went into liquidation in the EU, and the job losses related to insolvencies that same year are estimated to be 1,730 million. After 10 years of application of the Insolvency Regulation, the Commission believes the Regulation needs a facelift to better fit the needs of the single market in the 21st century in which the SMEs play a key role. The European insolvency rules must contribute to the rescue culture and encourage entrepreneurship.'
The debate revealed the current regime works reasonably well to coordinate cross-border insolvency proceedings. However it did highlight several issues that need to be addressed, such as the continuing issue of identifying the member state whose law should be applied to cross-border proceedings and the special position of the insolvency of groups of companies.