Insolvency

National & European insolvency law provisions differ a lot between the member states and between national and European level. The divergences include

• the criteria to open an insolvency proceeding,
• the ranking of creditors,
• the valuation procedures,
• the role and level of participation of workers during insolvency proceedings.

Such divergent and often inadequate insolvency regimes mostly affect workers who usually pay the highest price. Workers representatives are best placed to distinguish genuine economic difficulties from mere “tactical insolvencies”. Their consultation and support is key for any new organisation arrangement.

EU insolvency law is of great importance to the European trade union movement. European workers are feeling the consequences of unfair insolvency rules – especially in times of crisis. Too often they are left dismissed without notice, prior consultation or payment of outstanding wages, redundancy or any other entitlements due to them.

The ETUC is seriously concerned about the increasing use of tactical insolvencies, deliberately used to evade responsibilities under labour & tax law. There is every danger that unscrupulous employers will seek to use weak restructuring rules to undermine workers’ rights & collective agreements.

A Directive on Preventive Restructuring frameworks, Second Chance and Measures to increase the Efficiency of Restructuring was adopted in June 2019. Unfortunately, it fell short of the expectations of ETUC and its affiliates. Since most of the rules refer to national legislation, countries can continue to compete on the lowest standards.

A well-functioning European insolvency framework with a focus on preventive restructuring is essential

• to safeguard employment and workers’ interests,
• to support economic growth and cross-border investment.

The European Trade Union movement will analyse the impact of the new EU directive on workers’ rights and has issued guidelines for national implementation.

Insolvency rules must explicitly guarantee workers' rights to information, consultation and agreement throughout all stages of the procedure. The EU legislator must ensure that sustainable and inclusive procedures are put in place. This means that a restructuring plan must become null and void in the absence of meaningful consultation and agreement of the workers.

Find here the ETUC position paper on the Commission Proposal for a Directive on Preventive Restructuring, Second Chance, Insolvency and Discharge Procedures.