There was also a panel debate about the draft Directive chaired by EACTP President Jukka-Pekka Joensuu and featuring leading industry experts, Andreas Lehmann, a lawyer and partner from Squire Patton Boggs in Germany and Chris Laughton, an accountant and partner in Mercer and Hole in England. Greg Fine, CEO of TMA Global was also in attendance. For a summary of the draft Directive, see an article published by Andreas Lehmann Early Restructuring and a Second Chance for Entrepreneurs
Ms. Saastamoinen explained that the negotiations of the draft Directive in the Council are now on a chapter by chapter examination. The current holder of the EU Presidency, Malta, is unlikely to reach an agreement on the proposal despite the broad support of the Member States. The Estonian Presidency will continue the negotiations when they take over the Council leadership on 1 July 2017 . From the European Parliament side, the discussions are still at a very early stage with their position expected to be finalized by the end of the year. Taking into consideration the EU’s legislative process, the proposal is likely to be adopted by 2018. This would give an additional 2 years for Member States to transpose the proposal into national legislation, which will mean that by 2020 a new restructuring regime would be functional across the EU.
This means that the Directive will not be implemented until after “Brexit”- when the UK leaves the EU In 2019 – and will only apply to EU27. It is not yet known whether, and if so how, EU legislation will continue to apply to the UK after Brexit. Chris Laughton explained that the UK Government has already reviewed the Corporate Insolvency Framework in England and Wales in 2016. Following the review, it announced its intention to introduce legislation for a Moratorium and Restructuring Plan to bind secured creditors for a short period to enable companies facing short term difficulties to attempt a financial restructuring. Publication of detailed proposals has been delayed by the UK triggering Article 50 to start the Brexit process, followed by calling a UK General Election. It is not yet known when legislation might be passed for a UK Restructuring Plan but there is broad support for the Government’s proposals amongst the Restructuring professionals. For more details see A Review of the UK Corporate Insolvency Framework
Some of the highlights from the discussions during the event were;
- Although the Directive wants to encourage the harmonisation of approach to Business Restructuring across Europe, it was important to recognise problems which are so local, they should be dealt with by national laws;
- The key to Business Restructuring was to recognise where there was no value in parts of the business and to put in place a process for saving the viable parts without liquidating the whole business;
- The aim of introducing a common approach across Europe is for investors in cross-border businesses to have legal certainty as to how they can realise their investments when enforcement becomes necessary;
- The Council wanted to make these new regimes accessible to small and medium- sized enterprises;
- The Directive wanted to encourage monitoring, training and codes of practice for restructuring practitioners and insolvency judges which would be organised at national- rather than a pan-European- level;
- It was hoped that the establishment of early warning systems would lead to more small and medium-sized enterprises having the opportunity to take advice whilst there was still the possibility of a restructuring succeeding.
Mr. Joensuu said: “I also think it is very important to explore the role of the EACTP in the corporate insolvency framework, and whether these proposals will impact on the admission criteria and the overall certification process we have established for accrediting turnaround professionals in Europe.”