European Approach to Business Failure and Insolvency

The global economic crisis has negatively affected the financial situation of many entrepreneurs. The current data demonstrate that approximately 200,000 entrepreneurs face insolvency each year in the European Union. This accounts for about 600 bankruptcies per day. Bankruptcy should be seen as a natural component of market economies, and it is well-known that about a fifth of successful entrepreneurs failed in their first business. Bankruptcy is usually resolved in two ways, i.e. liquidation or restructuring. The European Union emphasizes the efficient and timely restructuring of businesses and the creation of opportunities for a second chance to business. The European Commission adopted, on the 12th March 2014, a recommendation on a new approach to business failure and insolvency (2014/135/EU). This paper aims to provide an insight into this recommendation, and therefore, the authors analyse it in successive steps. The main objective is to demonstrate the EU's current priorities in the field of resolving business insolvencies.