JUSTICE/ENTERPRISES : BUSINESS BANKRUPTCY: COMMISSION WANTS THREE-YEAR LIMIT.

The European Commission wants to dive more in depth into legal conditions for enterprise insolvency, namely by reducing the "time to discharge" to three years maximum. The member states had asked for this specific time limit in 2011 to reduce the waiting period - which is often long - before an entrepreneur can start a new business. Currently in the EU, half of all businesses do not survive the first five years of their existence. An average of 200,000 firms go bust in the EU each year, resulting in 1.7 million direct job losses - and a quarter of these bankruptcies have a cross-border element. Yet the procedures involved in a bankruptcy - the time required to discharge a debt, the conditions for opening proceedings, the filing of claims and the rules for restructuring plans, etc - "can have an adverse effect on cross-border investment," says the Commission.

Commissioner Viviane Reding's services already have a plan. But, to gather support, they launched, on 5 July, a public consultation of professionals in the sector. "Currently, the time it takes to close down a failed business varies significantly throughout the EU, ranging from four months in Ireland to over six years in the Czech Republic and in some countries failed entrepreneurs cannot obtain discharge at all." Which is why the EU executive is pushing for a harmonised three-year timeframe, and it seems the member states agree with this. Reding said: "Honest business owners should get a second chance, so that insolvency does not become a life sentence if things go wrong. SMEs, which are the backbone of our economy, are particularly important."

This consultation, which has been a long time coming, completes a project that was already on the table of the justice ministers, and the Irish Presidency of the EU had made it a priority (but did not have time to wrap it up). It concerns a reform of the Insolvency Regulation, which dates from 2000 - to regulate cross-border insolvency procedures in the EU. It is not every day in the EU that the member states agree: but it seems this time Reding managed to get everyone to agree on this - including the British government. Her...