Latest News / Top-Topic
New EU Insolvency Directive to come into force in April 2026
The (next) reform of European insolvency law has been finalised at EU level. On 10 March 2026, the European Parliament approved the Directive on harmonising certain aspects of insolvency law by a majority vote; the Council gave its approval on 30 March 2026, and EU Directive 2026/799 was published in the Official Journal of the European Union on 1 April 2026. This directive, which is set to enter into force in April 2026 and whose adoption was actually planned for the Parliament’s previous legislative term (see Draft EU Directive on the Harmonisation of Insolvency Law) aims, according to its drafters, to make insolvency proceedings more efficient across Europe, better secure assets and distribute the proceeds fairly amongst creditors.
Key provisions of the EU Insolvency Directive 2026/799
The key points relevant to creditors from the earlier draft are all also included in the version now adopted by the Parliament and the Council on the harmonisation of certain aspects of insolvency law:
Insolvency avoidance (Articles 6–13)
From a creditor’s perspective, the provisions on avoidance of insolvency transactions can hardly be regarded as progress. In substance, the provisions bring nothing new for Germany, as the minimum standards already correspond to the current legal situation (§§ 129 ff. InsO). This does not entail any additional protection for creditors. On the contrary: insolvency avoidance, often portrayed merely as an instrument for ‘increasing the estate’, means above all for bona fide creditors that payments received for services rendered are almost always withdrawn from them and transferred to the general insolvency estate. This regularly benefits only those creditors who have not previously made a concerted effort to enforce their claims, and even then only in the form of a mostly ‘microscopic’ increase in their share of the proceeds. The main beneficiary is always the insolvency administrator, whose remuneration increases in line with the size of the estate.
Furthermore, the Directive sets out only minimum standards, which are significantly less stringent than existing German law, thereby leaving Member States considerable scope to make their avoidance rules far less drastic than is already the norm in Germany. From a German perspective, the main risk is therefore that creditors in other jurisdictions will continue to benefit from a reduced risk of avoidance, which distorts European competition.
Asset Tracing (Articles 14–20)
The improvements to cross-border asset tracing confirmed in the adopted text are, from a creditor’s perspective, among the few reform points that are genuinely convincing. Easier access to bank account and asset registers can significantly improve the Europe-wide tracing of debtor assets and thus strengthen creditors’ actual chances of realisation. Unlike many other elements of the reform, this point creates genuine practical added value and is therefore to be expressly welcomed.
Pre-pack mechanism (Articles 21–39)
The idea of the pre-pack procedure, which originates from the Netherlands and has been confirmed, remains the most contentious element of the reform from the perspective of creditors. Such a procedure is intended to allow the sale of a company to be negotiated with a potential purchaser even before the opening of insolvency proceedings, so as to enable the takeover immediately after the proceedings are opened. Despite stricter requirements regarding competition and transparency, the proposed procedure remains heavily transaction-oriented, with priority given above all to rapid saleability and deal certainty, thereby making critical oversight by creditors vastly more difficult.
Particularly problematic in this regard is the continuing de facto obligation to enter into contracts: contracts essential for the continuation of the business are to be transferred to the purchaser as a matter of course, without the consent of the affected contracting party being a prerequisite. This poses a considerable risk for suppliers and other contractual partners. Together with the debt-free acquisition guaranteed under the regulations and the fact that acquisition by persons closely associated with the debtor is expressly permitted, the pre-pack therefore appears, even in its adopted form, less like an instrument for creditor protection and more like a procedure-driven sales model designed to benefit insolvency practice. Particularly in family-related acquisition scenarios, there remains a risk that personal relationships, information advantages and informal prior coordination will lead to de facto favouritism, thereby securing a pre-arranged takeover at the expense of open market price competition.
Duties of directors (Articles 40–43)
The adopted text does not establish a uniform obligation to file for insolvency based on the German model (Section 15a InsO; Section 42(2) BGB), but only a flexible minimum standard. Whilst directors are generally required to take action within a maximum of three months in the event of insolvency; Member States may, however, determine the definition of insolvency, the threshold and even alternatives to filing for insolvency – such as notifications to the register or other creditor protection measures – themselves. From a German perspective, the added value is thus limited to the fact that in Member States where there was previously no obligation to file for insolvency at all, at least a minimum level of legal protection for financial standards of business partners is established.
Creditors’ committees (Articles 44–50)
From a German perspective, the ‘new’ provisions on creditors’ committees are not a relevant area of reform. They bear a distinct German stamp and largely correspond to the existing legal situation. In practical terms, therefore, this is more a matter of formal harmonisation than a tangible strengthening of the creditors’ position.
Micro-enterprises (Article 4(5))
Instead of detailed provisions, the Directive now contains only a single paragraph in Article 4, which reserves the right for Member States to retain or introduce such simplified liquidation procedures for micro-enterprises. From a creditor’s perspective, a simplified approach should not be rejected in principle, as cost-saving procedures can make sense where the estate is very small. However, the situation becomes critical where simplification effectively results in a lack of oversight. This point may need to be kept in mind when transposing the Directive into national law.
How will the EU-Directive 2026/799 proceed?
At European level, the process will be completed when the Directive enters into force 20 days after its publication on 1 April 2026. However, the decisive step for German insolvency practice is still to come: As a directive, the legal act must be implemented into national law by 22 January 2029. Only then will the new provisions take tangible effect in German insolvency law.
From a creditor’s perspective, there is therefore still cause to keep a close eye on the further proceedings even after the directive has entered into force.
In our view, the structure of the pre-pack procedure remains particularly problematic, especially with regard to the rules on the obligation to contract and the prevention of excessive abuse by related purchasers.
We will closely monitor further developments, critically assess the implementation into German law – as always – and continue to report on the practical implications for creditors.