Insolvency law: EU proposal brings far-reaching changes

On May 23, 2025, the Council of the European Union published a comprehensive proposal for a directive on the harmonization of insolvency law. This initiative aims to facilitate cross-border investment in the single market, reduce legal uncertainty, and increase the efficiency of insolvency proceedings across Europe. The proposed directive will have far-reaching implications, in particular for German insolvency law. Once adopted, it will need to be transposed into applicable national law by national legislators. 

Key elements of the proposed directive 

The proposal comprises a total of 137 pages, 55 of which are recitals alone. The planned regulations affect numerous aspects of insolvency proceedings and present both opportunities and challenges for companies, advisors, and insolvency administrators. The most important changes include:

1. Introduction of a pre-pack procedure 

A key element of the proposal is the introduction of a so-called pre-pack procedure. Such procedure involves preparing the sale of a company before the official opening of proceedings – under court supervision and in confidence. Contractual relationships can be transferred to the buyer as part of this procedure, which is supposed to enable a faster and more efficient transfer of the company. 

2. New rules for revocatory action 

The directive provides for new rules for revocatory action. These include protection for financing from previous restructuring attempts, but also a comprehensive regulatory framework against actions that are detrimental to creditors. 

3. Access to international registers 

Another important aspect is access to registers and information about assets and bank accounts, including those in other EU countries. This should significantly improve the identification of assets in the event of insolvency. 

4. Uniform obligation to file for insolvency 

The directive provides for a uniform EU-wide obligation, subject to liability, to file for insolvency in the event of illiquidity. Member States are to be given certain flexibility options. The proposed directive also includes the option for Member States to suspend the obligation to file for insolvency if the insolvency is published in a public register. 

5. No administrator-free liquidation for micro-enterprises 

Contrary to earlier considerations, the introduction of administrator-free liquidation for micro-enterprises will not be implemented. Accordingly, the role of the insolvency administrator will remain unchanged in these cases as well. 

6. Making creditor committees more flexible 

The composition and working methods of creditors' committees is to be made more flexible in order to enable more efficient participation by creditors. 

Implications for practice 

The implementation of the directive into German law would entail profound changes – especially for medium-sized and large companies. The Council of Europe's proposed directive affects not only substantive insolvency law, but also the duties of management, liability risk, and the requirements for restructuring advice. 

Companies and consultants should familiarize themselves with the planned regulations at an early stage and adapt their strategies accordingly. The complete draft directive is available (only in German) on the website  of the Council of the European Union. 

Do you have questions about the directive’s implementation into German law, or would you like to prepare strategically for the upcoming changes? We will be happy to advise you.