A key new directive harmonising certain aspects of insolvency law was published in the Official Journal of the European Union on 1 April 2026.
Directive (EU) 2026 / 799 (the “Directive“), which aims to reduce complexity arising from the differing insolvency rules across Member States, was adopted by the European Parliament on 10 March 2026 and approved by the Council of the European Union on 30 March 2026. Member States now have just over two years and nine months to transpose the Directive into national law.
The Directive provides new minimum rules in respect of insolvency proceedings in each Member State, divided into five main pillars: (1) avoidance actions; (2) pre-pack proceedings; (3) duty to file for insolvency; (4) creditors’ committees; and (5) asset tracing.
The Directive does not apply to specified regulated entities or natural persons who are not entrepreneurs and it does not harmonise certain core concepts such as the definition of insolvency or the threshold for opening insolvency proceedings, which remain to be determined at Member State level.
The five main pillars: key features of the directive
1. Avoidance actions
The Directive introduces harmonised minimum standards to enable insolvency practitioners to claw back and treat as void, voidable, or unenforceable transactions that are detrimental to the general body of creditors and which were perfected prior to the formal opening of insolvency proceedings, or after the request to open (or the resolution to commence), but before the formal opening of proceedings. These minimum standards are similar to existing provisions under Irish law relating to unfair preferences, improper transfers of assets, invalid floating charges, and post-petition dispositions, albeit with shorter look-back periods (3 months for preferences; 12 months for inadequate consideration and 2 years for intentional detriment). In transposing the Directive, Ireland will have the discretion to retain the longer look back periods currently in place.
2. Pre-pack proceedings
The Directive introduces a two-phase EU-wide pre-pack mechanism, to facilitate the sale of distressed companies or their assets:
- a “preparation phase”, where the debtor remains at least partially in control of the day-to-day business and can benefit from a stay on enforcement actions. An independent monitor is appointed to oversee the sales process, applying a “best-interest-of-creditors” test to ensure that creditors are not worse off following a pre-pack sale as compared to a liquidation or the sale of the business, or part of it, as a going concern. Alternatively, Member States may require that a public auction be conducted to assess the fair market price of the company, including where a creditor challenges the best bid recommended by the monitor; and
- a “liquidation phase”, where the court opens formal insolvency proceedings and may appoint the monitor as insolvency officeholder. The court may authorise the sale if it is satisfied that the sale process has met the required standards and that the monitor has performed their obligations. The Directive contains a number of provisions to assist the preservation of going concern value, including maintaining key contracts for the company’s business and the provision of interim financing.
The Directive does not affect pre-packs utilised as part of a receivership, which process practitioners will be familiar with.
3. Duty to file for insolvency
The Directive mandates Member States to introduce requirements for directors to act promptly and request the opening of insolvency proceedings within three months of becoming aware (or when they ought reasonably to have been aware) of an entity’s insolvency. Member States must ensure that directors who do not comply with this duty are held personally liable for the resulting damage caused to creditors.
The potential implications of this provision raised concerns throughout the adoption of the Directive, particularly among common law practitioners, with the result that moderations were made to the scope of the duty, with the aim of giving some flexibility to facilitate restructurings. The Directive therefore provides that the duty may be suspended if directors take measures designed to avoid damage to creditors and that ensure an equivalent level of creditor protection as is posed by the duty to file. In providing for this option Members States must ensure that directors are liable for damage caused to creditors that would not otherwise have been caused had the insolvency proceedings been opened, subject to a defence of demonstrating that the measures were reasonably likely to secure an equivalent or better outcome than that provided by the duty to file. The Directive includes another limited moderation for discharging the duty by the publication of a notice of the company’s insolvency in a public register, in order to ensure that third parties, including creditors, are on notice of this fact, and can take such action as they deem appropriate in the circumstances, including requesting the opening of insolvency proceedings.
While the precise implications of this new duty remain to be seen, it will undoubtedly necessitate enhanced care and diligence in managing restructurings through examinership, which frequently require a considerable planning phase.
4. Creditors’ committees
The Directive requires the establishment of creditors’ committees, at the request of creditors, in order to increase the involvement of creditors and monitor the fairness and integrity of insolvency proceedings. Appointed committee members must, as far as possible, fairly reflect the various groups of creditors. While the provisions bring some welcome standardisation across Member States, they are similar to existing provisions for committees of inspection and will necessitate only minor adjustments to the existing law.
5. Asset tracing
The Directive introduces enhanced tools for insolvency practitioners to identify, trace, and recover assets. At the request of insolvency officeholders, designated courts or administrative authorities may obtain direct access to bank account information (using the BARIS system to access foreign registers), beneficial ownership data (including the beneficial owner’s name, month and year of birth, country of residence, nationality, and extent / nature of interest held), and various national asset registers listed in the Annex, including for real estate or share records.
Conclusion
The Directive, together with the Recast Insolvency Regulation and the Preventive Restructuring Directive, is another important step towards the development and harmonisation of insolvency laws across Member States. While it does not eliminate the differences between Member States’ insolvency laws, it establishes a common minimum framework that aims to make European insolvency proceedings more transparent, efficient, and predictable for stakeholders both inside and outside the EU.
Contact us
Should you require further information about the Directive, please contact Corporate Restructuring & Insolvency partners Brendan Colgan, Kevin Gahan, or Kathryn Rice, or your usual Matheson contact.
This article is intended for general information purposes only and does not constitute legal advice. Specific legal advice should be sought in relation to any particular matter.