Good news on EU debts
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by Martial Tardy and David Harris • Hauliers with foreign debtors who go bust may soon have the chance to get some of their money back more easily, thanks to new European regulations.
The EU's Justice and Home Affairs ministers this week approved a convention on insolvency procedures in Brussels which should stop countries from giving priority to creditors in their own countries. "The aim is to ensure an effective distribution of the debtor's assets and guarantee uniform treatment among creditors in the EU, regardless of their nationality," says the EU.
The draft convention means that any procedure opened in the debtor's country would be effective in all other EU states. Under insolvency law in some EU states, foreign creditors have little chance of securing a share of limited assets in a firm that goes under.
The move may also help British hauliers who go bust to get any vehicles they have abroad back to the UK.
Barry Knights, an insolvency practitioner who is a veteran of hauliers bankruptcy cases, says: "Any move to harmonise EU regulations on insolvency would be welcome. One of the biggest headaches when a British firm goes bust with vehicles abroad is the rush to get them back. In France and Belgium trucks are often impounded so that the proceeds of selling them can be used to pay creditors in those countries.
"Britain does not do this if a French or Belgium firm goes under, which is just one way in which European insolvency law is inconsistent," he adds.
The EU is working out precise details and Spain, which is chairing the talks, promises they will be ready by November.