Restructuring plans: an international perspective

On Tuesday 23 April 2024, Macfarlanes hosted a roundtable discussion on the EU Directive on Restructuring and Insolvency of 20 June 2019 (EUR 2019/1023, Directive) and the method of, and tools offered by, its implementation across a number of EU member states and equivalent domestic legislation – namely Part 26A of the Companies Act 2006 (Part 26A) and restructuring plans (for more on restructuring plans under Part 26A of the Companies Act 2006, see our more in-depth article on “Restructuring plans – do’s and don’ts”).

Joined by lawyers from Austria, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Poland, Portugal and Spain, finance partner and head of Macfarlanes’ Restructuring and Insolvency group, Jat Bains, and guest Dr Riz Mokal of South Square joined a lively and discursive session on the comparative implementation of the Directive and Part 26A.

Whilst it is agreed that the Directive, and its approach to distress, is largely in line with global restructuring trends, particularly in the UK and the US, the implementation of the Directive - which aims to “contribute to the proper functioning of the internal market and remove obstacles to the exercise of fundamental freedoms”[1] – has, as might have been expected, been tackled differently across the EU member states, with a potential for over 140 differences in implementation between them. 

The discussion identified a number of key takeaways, namely:

• streamlined and more cohesive legislation: restructuring plans implemented pursuant to the Directive do successfully remove certain pre-existing obstacles resulting from differences between national laws and procedures concerning preventive restructuring, insolvency, discharge of debt, and disqualifications that might otherwise restrict the free movement of capital and freedom of establishment;
• flexibility and efficiency: restructuring plans, both pursuant to the Directive and Part 26A, are generally flexible and efficient tools;
• varied stages of adoption: level of adoption of the Directive varies significantly between EU members states, with some having found that they already had equivalent principles enshrined in domestic law and have had to implement very little by way of new legislation, whilst others have had to overhaul their existing regimes, in some cases the overhaul has been so significant that in such EU member states the Directive has not yet been transposed into domestic legislation;
• accepted exceptions: certain EU members states have introduced exceptions from the regime for small and medium sized enterprises but set the bar at a level which essentially renders the effect of the Directive minimal in that EU member state; and
• creditor approval preferred: there is merit in securing creditor approval to a consensual restructuring plan, both pursuant to the Directive and Part 26A, before it is submitted to the relevant court, with creditor consent offering fast track or other favourable procedures in certain jurisdictions. 

Macfarlanes LLP has a leading restructuring and insolvency practice in London. If you would like to discuss this in more detail, please do not hesitate to get in touch.

Our network of international lawyers is unique, with collaboration at its heart. Our approach is founded upon what our clients tell us works best for them. When international advice is required we work alongside leading counsel from jurisdictions around the world and always with firms and individual lawyers that are right for the job in hand. We invest significant time and resource into building and maintaining our relationships with these firms so that we understand them and can work together in a co-ordinated and seamless manner. 

[1] Directive 2019/1023 - Preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency), EU Monitor