Paul, Weiss, Rifkind, Wharton & Garrison LLP European Restructuring – 2025 in Review 5
At 11 p.m. on Thursday, December 31, 2020, the United Kingdom left the European Union.
This has since enabled staff in many airports in continental Europe, often with unconcealed delight, to direct British citizens to much longer queues than they would have needed to join had the U.K. remained an EU Member State.
The EU Mobility Directive (2019/2121 (EU), the Directive) has introduced a harmonised legal framework for cross-border conversions (or redomiciliations), mergers, and demergers within the EU and EEA — offering global companies new flexibility to reshape their European operations. Please see our legal update of December 2022 as well as any of our subsequent country specific insights.
In our earlier blog, "EU insolvency law: Member States move closer to harmonisation", we examined how proposals to harmonise insolvency law across the European Union are gathering pace with a draft Directive to harmonise certain aspects of insolvency law being negotiated. And the pace is, indeed, continuing.
On 12 June 2025, the Council of the EU announced that member states have agreed on a general approach to a directive aimed at bringing national insolvency standards closer together. This draft directive is designed to make the EU more attractive to foreign and cross-border investors by reducing the legal uncertainties and complexities associated with differing national insolvency laws.
The Protection of Employees (Employers’ Insolvency) (Amendment) Bill 2025 aims to provide greater protection to employees where their employer becomes insolvent. The Bill will allow greater access to a Social Insurance Fund to protect employee pay-related entitlements and claims for historic entitlements over the previous 40 years. The devil is in the detail, however, with very specific caps and limitations.
Introduction
With Directive (EU) 2019/1023, the European Union has created a uniform framework for pre-insolvency restructuring measures. The goal is to enable companies in financial difficulties to restructure at an early stage, thereby avoiding insolvency and preserving jobs. In Germany, the Directive was essentially implemented through the Act on the Stabilization and Restructuring Framework for Enterprises (StaRUG), which entered into force on 1 January 2021.
Objectives of the Directive and the German Legislator
On 27th March 2025, the Court of Justice of the European Union (“CJEU”) delivered a ruling in the case Matthäus Metzler, acting as insolvency practitioner in insolvency proceedings vs. Auto1 European Cars BV (Case C‑186/24) concerning the interpretation of Article 31(1) of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (the “Insolvency Regulation”).
Key points