The Preventive Restructuring Directive 2019/1023 is best known for its system (in Articles 4-19) for preventive restructuring frameworks (‘restructuring plans’) and the way the directive’s rules have been implemented in the Member States. Other topics are equally important, such as early warning systems and measures to increase the efficiency of proceedings, including improving the professional quality of judges and practitioners, not only for dealing with preventing insolvency proceedings but also those concerning insolvency itself and discharge of debt. The latter topic, Title III of PRD 2019/1023 (‘Discharge of debt and disqualifications’), is the subject of Jokubauskas’ book, Entrepreneurs and Insolvency Law. The Right to a Fresh Start, which I briefly discuss here.
The book analyses the discharge of debts procedure in relation to insolvent entrepreneurs, covering the protection of human rights under insolvency law. The last topic (‘human rights’) receives little attention in corporate restructuring literature. However, it yields surprising insights that can also be useful in corporate restructuring and insolvency proceedings. I’m thinking of rules related to the European Convention on Human Rights (ECHR) and the Charter of Fundamental Rights of the European Union, two distinct, but closely linked, human‑rights instruments in Europe. For instance, the right to property (when in a restructuring plan, shareholders will also be affected) and the limitations of processing and protection of personal data.
The Preventive Restructuring Directive harmonizes only certain elements of the insolvent entrepreneurs’ discharge procedure, namely the right to access to the discharge procedure leading to a full discharge (Article 20(1)), the maximum duration of the discharge procedure (Article 21(1)), the disqualification period (Article 22), certain restrictions of access to a discharge of debt proceedings and exceptions for ‘dishonest’ entrepreneurs or acting ‘in bad faith’ (Article 23(1)) and consolidation of professional and non-professional debts in the discharge procedure (Article 24). All other elements of the discharge procedure remain the exclusive competence for the Member States, and therefore, the Directive harmonizes only few, but essential milestones of the discharge procedure. It leaves broad discretion for the Member States to decide how the discharge procedure should be regulated. It helps that the author takes the UNCITRAL Legislative Guide on Insolvency Law for Micro- and Small Enterprises (2022) into account.
In the EU, the process of discharge of debt is a key mechanism in insolvency law when addressing individual over-indebtedness. The ‘fresh start’ principle is the guiding objective of the debt discharge process for insolvent entrepreneurs. The book explores how fundamental human rights apply within such insolvency proceedings. Aiming to justify the limitation of creditors’ property rights when their claims are discharged, Jokubauskas discusses the models and procedures for insolvency proceedings involving entrepreneurs. The book also addresses questions such as: what justifies a ‘right’ to discharge? Who is actually to be considered an ‘entrepreneur’? Why should a procedure (the directive also includes a ‘repayment plan’) lead to a ‘full’ discharge? How long should the procedure last to give insolvent entrepreneurs the opportunity to have such a full discharge? 10 years? 7? 3? Or just 1? The PRD 2019/1023 stipulates that the period should not exceed three years.
From my own experience, I add that these questions keep recurring, and that socio-political policies are constantly being reconsidered to find good answers to the general problem of overindebtedness. The book helps to place the questions raised in the correct legal context and to develop a well-reasoned perspective. The book will be of interest to researchers in the field of restructuring and insolvency law and in the field of human right. In addition, it can be recommended for experts in the field of (development of) entrepreneurship, legislative policy advisors and corporate law experts who – in my impression – are increasingly confronted with human rights issues.
Remigius Jokubauskas, Entrepreneurs and Insolvency Law. The Right to a Fresh Start. Routledge 2025, 220 pages. ISBN 9781032995601.