Directors liability in the twilight zone

The legislative efforts of the European Union with respect to insolvency were, for a long time, limited to providing uniform rules of international private law on the competent court, applicable law and recognition by means of the European Insolvency Regulation. In recent years, the legislative efforts have shifted towards harmonization of substantive insolvency law at a European level. The most defining characteristic of this harmonization attempt is the focus on reorganization instead of liquidation. In November 2016, the European Commission presented its proposal for a Directive on Preventive Restructuring Frameworks, Second Chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures. The Directive provides for the possibility to reorganize prior to and outside of court supervised insolvency procedures. It envisions that such preventive restructurings should enable enterprises to restructure at an early stage and to avoid the opening of formal insolvency procedures. In four reports, leading practitioners and academics reflect on the current role and responsibilities of directors in the twilight zone in their respective jurisdiction and what role liability should play also under the envisioned Directive.