Early April the EU published its new Directive (EU) 2026/799 on harmonising certain aspects of insolvency law. Article 1(1) of the so-called Certain Aspects Directive (CAD 2026/799) leaves no doubt that the directive lays down “common rules” on: (a) avoidance actions; (b) tracing of assets belonging to insolvency estates; (c) pre-pack proceedings; (d) directors’ duties to submit a request for the opening of insolvency proceedings;(e) creditors’ committees, and (f) key information factsheets. The core objective of the directive, in its own words, “… is to contribute to the proper functioning of the internal market … and to remove obstacles to the exercise of fundamental freedoms, such as the free movement of capital and freedom of establishment, which result from differences between national laws in the area of insolvency law” (recital 1).
The thought process behind the directive, therefore, is that to have the EU internal market function more smoothly, insolvency outcomes should be more predictable, comparable and transparent across the different member states. The integration of the internal market into insolvency law should also enable greater access to corporate financing. For that reason, the directive suggests it is necessary to lay down minimum requirements in targeted areas concerning insolvency proceedings, which have a significant impact on the efficiency and length of such proceedings, especially in the case of cross-border insolvencies (recital 3).
In the text of the directive these “targeted’ topics” – the “aspects” mentioned above – are further elaborated in Titles II to VII (Articles 6 to 51), following the “general provisions” in Title I (Articles 1 to 5), and preceding the “final provision” at Title VIII (Articles 52 to 57).
The transposition date for the directive is 22 January 2029, over two years and nine months from the date of its publication!
Prior to the actual text of the directive, 85 recitals appear. Most of them relate to further clarification of the substantial topics awaiting harmonisation. The first four recitals, however, concern the scope and objectives of the directive. They clarify the relationship between the directive and rules from other EU regulatory fields and the competence the European Union has if the directive’s objectives cannot sufficiently be achieved. In this column, I will take a short look at these first four recitals.
The first recital explains the directive’s objectives (see above).
The second recital begins by stating the purpose of “insolvency proceedings”: to ensure the orderly winding up or restructuring of companies or entrepreneurs that are “in financial and economic distress”. The last two elements must be read together, I think, because “economic distress” as such is not sufficient to justify an insolvency proceeding on its own. In the second sentence of the second recital, CAD 2026/799’s objectives – to contribute to the proper functioning of the internal market, etc – are viewed from the perspective of financial investors. The second sentence says: “In the context of financial investments, those proceedings, including the relevant safeguards for accurately assessing the value of those companies’ and entrepreneurs’ assets, are key, as they determine the final recovery value of such investments.” Query: are financial investors looking for harmonised systems of national law? Non-EU investors, in particular, seem to me to be primarily interested in uniform systems.
Recital 2 uses the term “cross-border” twice and seeks to identify the culprit behind the major differences in the national insolvency laws of member states, especially from the perspective of creditors and investors from other member states and those from third countries (non-EU member states). It provides that the wide differences among substantive insolvency laws, acknowledged by the Preventive Restructuring Directive 2019/1023 (PRD 2019/1023), “have contributed to increasing legal uncertainty and unpredictability about the outcome of insolvency proceedings”. This certainly looks like the EU is handing itself a testimonium paupertatis – a “proof of destitution” for those who don’t have time to Google the Latin – regarding its own proposals from seven years ago!
Now the understanding is that the time required to complete insolvency proceedings is long, there are large divergences in recovery value, and the length of the proceedings has negative repercussions on cost predictability for creditors and investors in cross-border situations in the internal market: “This divergence among the rules of member states reduces the attractiveness of cross-border investments, thus creating barriers and impacting the cross-border movement of capital within the Union and to and from third countries. Consequently, the harmonisation of certain aspects of insolvency law could require changes to be made to the laws of some Member States”. It is not explained why only the “certain aspects” mentioned were chosen.
Recital 3 begins with: “The integration of the internal market in the area of insolvency law through this Directive is key to improving the efficiency of the functioning of the capital markets in the Union, including enabling greater access to corporate financing.” The term “integration” must be understood in line with the directive’s objectives. This abstract goal must be supplemented with experiences that prove valuable in practice. In the EU, “integration of the market in the area of insolvency law” tends to mean reducing or eliminating the obstacles that divergent national insolvency rules create for the EU’s single, internal market, especially for the free movement of capital and cross-border investment. To have the EU internal market function more smoothly, insolvency outcomes should be more predictable, comparable and transparent across member states. The second sentence of recital 3 adds: “… it is necessary to lay down minimum requirements in targeted areas concerning insolvency proceedings, which have a significant impact on the efficiency and length of such proceedings, especially in the case of cross-border insolvency proceedings”. This may align with the expectations of EU investors, but for investors from outside the EU, it certainly does not sound convincing.
The fourth and final general recital immediately indicates which subject is absolutely off-limits for discussion: employees’ rights. The rules concerned are untouchable, i.e. rules which stem from no less than five EU directives and their related transposed national laws, including where those national laws contain rules that are more favourable to workers or their representatives than those laid down in the directives.
The “constitutional basis” for this directive on “harmonisation of certain aspects of insolvency law” lies in Article 114 of the Treaty on the Functioning of the European Union (TFEU). These “certain aspects” should be regulated on the basis of Article 1(1) of the TFEU, which states that the treaty “organises the functioning of the Union and determines the areas of, delimitation of, and arrangements for exercising its competences”. It is certainly surprising to note that the term “harmonisation” in CAD 2026/799 is used only three times and is not further explained, nor is the term “insolvency law”. What is generally referred to as “harmonisation of insolvency law” (now even promoted to be included in the title of the directive) remains undefined, even after the European Parliament took the initiative for “harmonisation” of “insolvency law” 15 years ago.
Although the approach to harmonisation in the CAD 2026/799 and the PRD 2019/1023 seems the same, the meaning of “insolvency law” is rather different. The chosen policy has been that the PRD 2019/1023 concerns pre-insolvency (or processes to prevent insolvency) and post-insolvency (particularly “discharge of debts”), while the CAD 2026/799 relates to “certain aspects” of substantial national insolvency law itself. In legal policy terms, the PRD 2019/1023 is just the first move – as it stands in June 2026 – in a two-step process. One could say that the PRD 2019/1023 aims to harmonise pre-insolvency and post-insolvency matters (preventive restructuring and debt discharge). What are the Commission’s ideas for the next steps, not ‘pre’ or ‘post’ insolvency, but regarding the core of national insolvency law itself? Given the present trend of further harmonisation of other “certain aspects”, it suits to use the abbreviation “CAD 2026/799” to await a second (or even third?) batch of other aspects to be named in the CAD, with the addition of its year of publication.
The directive must be regarded as an EU umbrella-instrument. It certainly would be a misunderstanding to think that the directive results in an unambiguous text relating to a coherent set of soon-to-be regulated “certain aspects”. It does not. Strictly speaking, the Certain Aspects Directive 2026/799 resembles a collective building with a large number of rooms, in which the six substantial “certain aspects” have their own accommodation, preceded by general provisions that also contain definitions of importance for the individual titles.
Closer study of the present text of the recitals and the provisions clearly reveals that a patchwork of titles has emerged. For instance, the CAD 2026/799 offers over 30 options for member states, but the degree to which member states are given freedom to adopt them clearly differs by Title-subject. Such “options” for member states included in an EU instrument, such as a directive, are certainly not new. The PRD 2019/20123 has become notorious for it. The options in the restructuring rules included in the PRD 2019/1023 were around 70. These allowed member states quite some discretionary room and a rather high degree of flexibility when implementing its rules.
With so many options to implement the PRD 2019/1023’s text into national legislation, could this have led, in the words of professors Reinhard Bork from the University of Hamburg and Renato Mangano at Palermo University in their book, European Cross-Border Insolvency Law, to “… actually disharmonising” restructuring law? Taking into account that many national member states – often for unclear justifications – firmly want to stick to their own powers and national specificities of insolvency law, it is not surprising that some paint a doomsday scenario: the PRD 2019/1023 focuses on harmonisation, but eventually encourages legislative fragmentation or, in the EU, a kind of geographical regional “mini-alignment”.
For the CAD 2026/799, it is interesting to see under which topic (“aspect”) the most options occur. Without a doubt, that is under the subject of pre-pack proceedings (Articles 21 – 39 CAD 2026/799) with over 20 options, followed at a distance by creditors’ committees, (Articles 44 – 50) with five. Under the other topics their number is very modest (or nil, as with tracing assets belonging to an insolvency estate, at Articles 14 – 20). Incidentally, this accounting table evidently says nothing yet about the weight or intrusiveness of the options in question, nor about the question of which (political) interests were the deciding factor in including such options.
Some parts of the law are not touched upon by the CAD 2026/799. The way this is separated indicates a careful exploration of the possibilities. The text uses at several spots “without prejudice”. The term “without prejudice” generally means that the rights and obligations in a relevant part of legal text are not affected. In the CAD 2026/799 eight recitals and 14 clauses and stipulations are assembled “without prejudice”. The CAD 2026/799 also protects a sort of “iron stock” of national subjects, by providing (in recital 35) that the provisions of this directive regarding pre-pack proceedings (Articles 21 – 39) do not replace national substantive rules, “… in particular those on the ranking of creditors’ claims, the distribution of proceeds, the nature, scope and form of creditors’ participation, or the remuneration of the insolvency practitioner”. These subjects (including fees!) are enshrined in national law. The question is whether member states can resist the temptation or pressure to broaden or restrict these subjects during the implementation process.
The CAD 2026/799 also refers to the European Insolvency Regulation (EIR 2015), which includes cross-border insolvency rules for the courts’ international jurisdiction and for recognition and enforcement of judgments. It will certainly be the case that in matters of avoidance actions or asset tracing and pre-packs, certain events will have a cross-border impact, within other member states and/or also third (non-EU) states when affected parties or assets located there are involved. Regarding the specific rules applying to directors (Articles 40 – 43), recital 60 invites members states to lay down provisions making directors civilly liable. To the extent that the CAD 2026/799 does not provide for specific rules, the recital continues that all other aspects of civil liability, such as the calculation of damages or the burden of proof, should be governed by national law.
Okay, but what if a director resides in a different state than the state of origin of the pre-pack proceedings? There are – in the recitals – no references to other EU instruments of private international, such as Rome I and Rome II, nor for that matter to Brussels I bis. The CAD 2026/799 is also surprisingly silent on matters of private international law in cases for instance of avoidance actions or asset tracing. It is clear that there is a gap here awaiting clear indications from the literature.
References
Directive (EU) 2026/799 of the European Parliament and the Council of 30 March 2026 harmonising certain aspects of insolvency law, OJ L 2026/799, 1.4.2026
Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on 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), OJ L 172 of 26 June 2019.
Reinhard Bork and Renato Mangano, European Cross-Border Insolvency Law, Oxford University Press, 2nd ed. 2022, p. 1.100. For a review see https://bobwessels.nl/blog/2022-11-doc2-second-ed-of-bork-mangano-european-cross-border-insolvency-law/.
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), OJ L 177, 4 July 2008.
Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) OJ L 199, 31.7.2007.
Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351 of 20 December 2012 (Brussels I bis).
This is a slightly adapted version of a regular column Bob Wessels is writing for Global Restructuring Review (GRR) on the topic of cross-border restructuring and insolvency in a European context. GRR is a subscription-only publication and the column appeared in GRR on June 3, 2026. See www.globalrestructuringreview.com.