Horst Eidenmueller

Horst Eidenmueller

The Rise and Fall of Regulatory Competition in Corporate Insolvency Law in the European Union

30/09/2019

In this essay, I discuss the rise and fall of regulatory competition in corporate insolvency law in the European Union. The rise is closely associated with the European Insolvency Regulation (EIR, 2002), and it is well-documented. The UK has emerged as the ‘market leader’, especially for corporate restructurings. The fall is about to happen, triggered by a combination of factors: the recasting of the EIR (2017), the European Restructuring Directive (ERD, 2019) and Brexit (2019).

The UK will lose its dominant market position. I present evidence to support this hypothesis.

I. INTRODUCTION

Insolvency laws in general and corporate insolvency/restructuring regimes in particular are economically important. Most recently, the OECD has published a study that attempts to link key desirable features of insolvency/restructuring laws with productivity growth in 36 countries. The study finds significant cross-country differences in the extent to which insolvency regimes promote an orderly exit of non-viable firms, indicating that some countries have scope to improve resource allocation and productivity through reforms of insolvency laws and procedures. Insolvency laws in general and corporate insolvency/restructuring regimes in particular are economically important. Most recently, the OECD has published a study that attempts to link key desirable features of insolvency/restructuring laws with productivity growth in 36 countries. The study finds significant cross-country differences in the extent to which insolvency regimes promote an orderly exit of non-viable firms, indicating that some countries have scope to improve resource allocation and productivity through reforms of insolvency laws and procedures. could (suddenly) have become feasible for entrepreneurs and, as a consequence, regulatory competition between the Member States on a significant scale could have ensued. On the contrary: the European lawmaker is involved in a long-haul harmonisation project, attempting to edge out differences between Member States’ systems so that local businesses get local access to efficient insolvency regimes.

Read more