Coping with Business Failure and Bankruptcy in the European Union. A Case Study on the Failure of Market Integration

Abstract

One of the primary objectives underlying the EU was the creation of a fully integrated European single market. Initiatives regarding European integration and the furthering of the Internal Market have been more prolific in policy areas characterised by high level of transnational transactional exchanges. Initially the creation of the Single Market required the abolition of domestic rules acting as barriers to cross-border economic exchange. As the single market developed, so did cross-border dealings between companies, their shareholders and creditors. A second phase moved from abolition of barriers to harmonisation of commercial law standards to improve integration. Corporate insolvency law was seen as a fundamental part of the European economic system and therefore was brought to the fore through harmonisation initiatives. In the current crisis addressing business failure on a pan-European level is vital to the concerns of stakeholders and to wealth preservation in the EU.The paper tackles the theoretical and practical issues of the current corporate insolvency and rescue laws at European level. It addresses the difficulties facing harmonisation initiatives stemming from the fundamental distinctions that exist between domestic legal frameworks, in particular regarding the rules on business failure. The paper considers the implications of the variations that can be found in the different Member States for the harmonisation of insolvency laws at EU level. The article evaluates the adequacy of the existing European rules and analyses the current changes occurring within the EU. It especially looks at the European insolvency legal framework, notably the 2000 European Insolvency Regulation and the scope of the reform currently occurring.