A new chapter for EU Insolvency Law: the harmonisation of EU Law through Directive 2026/799
One of the most persistent frustrations in cross-border insolvency has been the unpredictability of outcomes once a matter crosses into another EU member state. A creditor seeking to enforce rights or recover assets against a debtor with a European trail has historically faced the challenge of navigating up to 27 distinct insolvency regimes, each with its own rules on how far back suspect transactions can be investigated, whether directors face personal liability for a delayed filing, and how quickly a distressed business can be sold as a going concern. That inconsistency has long translated into higher costs, extended timelines, and reduced recoveries.
On 21 April 2026, Directive (EU) 2026/799 of the European Parliament and of the Council came into force (“Directive”), introducing a focused alignment of specific areas of insolvency legislation throughout Member States.
The Five Pillars
The Directive does not seek to standardise national insolvency frameworks in an exhaustive manner, its intervention is highly selective, and it aims at establishing a common baseline across five targeted areas of insolvency law, which have a significant impact on the efficiency and length of proceedings, especially in the cross-border setting.
The five targeted areas are as follows:
1. Avoidance actions across three transaction types: preferences, undervalue transactions, and acts with deliberate intent to prejudice creditors; are harmonised with common look-back periods and a three-year limitation period from the opening of proceedings. A rebuttable presumption of knowledge applies where the counterparty was closely connected to the debtor.
2. Pre-pack proceedings receive a formal EU-wide framework for the first time, enabling a confidential preparation phase overseen by a court-appointed monitor, followed by a swift sale upon formal opening of liquidation. Essential contracts transfer automatically to the buyer, without the need for counter-party consent, subject to defined safeguards.
3. Directors' duties now include a mandatory obligation to file a request for the opening of insolvency proceedings within specified time limit (no longer than three months) from when they become aware that the company is insolvent, with civil liability for creditors' losses arising from non-compliance.
4. Creditors' committees must be constituted in proceedings of sufficient economic significance, with harmonised rules on composition, working methods, and information rights over the insolvency practitioner, to ensure that creditors interests can be adequately considered.
5. Asset tracing is strengthened by granting practitioners direct access to national centralised bank account registers, together with cross-border access through the EU's BARIS interconnection system, on a case-specific basis.
What this means for matters in England and Wales
England and Wales will not be implementing this Directive due to Brexit. However, that does not mean this Directive is irrelevant to UK insolvency practitioners and their clients.
Where a UK creditor, director or insolvency practitioner is involved in proceedings with an EU element, whether that is an insolvent debtor with assets in Germany, a pre-pack sale of a business operating across multiple EU member states, or avoidance action proceedings commenced by a foreign officeholder, the substantive rules that will govern their position are precisely those that Directive is now shaping.
Understanding how each member state transposes these provisions, and how the new framework interacts with existing national law, will be essential to protecting creditor rights and maximising recoveries.
How we can help
Cross-border insolvency sits closely alongside of our day-to-day work at Isadore Goldman. We regularly assist creditors, shareholders, lenders and insolvency practitioners in other jurisdictions with UK-based corporate insolvencies including administrations, liquidations and personal insolvency. We advise UK-based clients on formal and informal procedures with a foreign element. We advise foreign clients on recognition of foreign proceedings in the UK, enforcement of creditor rights and remedies, and the protection of investments and recoveries across borders. Through our membership of R3, INSOL Europe and INSOL International, we are well-connected to insolvency and restructuring professionals across the world.
As EU member states begin the work of transposing Directive over the coming years, we will be monitoring developments closely and advising clients on the practical implications. Whether they are seeking to enforce in an EU jurisdiction, managing exposure to avoidance claims, or assessing the viability of a cross-border pre-pack structure.
If you have an insolvency or restructuring matter with an international or EU dimension and would like to discuss how the new Directive may affect you, please do not hesitate to contact our team.