EU ministers back proposal to modernize cross-border insolvency rules

BRUSSELS (Xinhua) - European Union (EU) Justice Ministers Friday reached a agreement on new rules to deal with cross-border insolvency issue, aiming at helping businesses overcome financial difficulties.

The new rules will allow the procedure of restructuring a business in a cross-border context to become easier, meaning more businesses will be saved from liquidation.

The new rules are also set to be a "win-win situation" for both businesses and creditors - businesses get a second chance and creditors are more likely to obtain their money than during liquidation, a EU statement said.

The rules will help increase legal certainty and provide clear guidelines to determine jurisdiction. "When a debtor is faced with insolvency proceedings in several member states, the courts handling the different proceedings will work closely with one another," the statement said.

Every year in the EU, cross-border insolvency proceedings affect an estimated 50,000 companies, thus every year 1.7 million jobs are at stake. About one in four bankruptcies in the EU have a cross-border element.

The European Commission is therefore pushing initiatives in the area of justice policy that can foster growth in Europe. The modernisation of cross-border insolvency rules form part of this strategy, the statement said.

The European Parliament, the Council of Ministers and the Euorpean Commission will now engage in negotiations to reach an agreement on a final text. The adoption of the modernized insolvency regulation is expected by the end of the year.