Fixing Europe’s restructuring regime

Author: Lizzie Meager | Published: 25 Jan 2016

The EU's fragmented insolvency regime has many critics. But there's little consensus on whether the goal should be a single market, minimum standards, or something in between

Italy's Parmalat has the dubious honour of being Europe's answer to Enron. Its 2003 bankruptcy remains the continent's largest to-date, and when the dairy manufacturer filed for court protection in 2003, these were relatively untested legal waters. A corporate collapse of this scale quickly revealed the gaps, inconsistencies and contradictions lurking beneath the surface of what looked like perfectly good legislation.

Cases like Parmalat and Enron aren't common, and they force lawmakers to change their approach. Before Parmalat, if you went bankrupt in Italy, that status – along with your debts – remained with you until you died. So in the hope of protecting 36,400 jobs, the Italian government rushed to pass a new bankruptcy law allowing companies to restructure.

The situation that those...