EU Restructuring Directive 2019/1023: Stay, Plans, Cram-Down

Directive (EU) 2019/1023 of 20 June 2019 requires the Member States to ensure that, where there is a likelihood of insolvency, debtors have access to a preventive restructuring framework (Article 4(1)), with a stay of individual enforcement actions to support the negotiations of a restructuring plan (Article 6), a vote on the plan by the affected parties (Article 9) and confirmation by a judicial or administrative authority that may bind dissenting voting classes through a cross-class cram-down (Article 11). It also requires that insolvent entrepreneurs have access to at least one procedure that can lead to a full discharge of debt, with a discharge period of no longer than three years counted from the dates set in Article 21(1), subject to the derogations in Article 23. Because the Directive is addressed to the Member States (Article 36), the procedure you deal with is the one in the national law of the State concerned, built on these minimum rules.

What kind of instrument this is. The Directive sets minimum rules; it does not create a single European procedure. Member States had to adopt and publish the necessary national provisions by 17 July 2021, with later dates for the electronic communication duties of Article 28 and a possible extension of a maximum of one year (Article 34). ‘Insolvency’, ‘likelihood of insolvency’ and ‘SMEs’ are to be understood as defined by national law (Article 2(2)). As at 22 October 2026, the EU Publications Office records no amending act; this guide follows the text in OJ L 172 of 26 June 2019 and does not describe any Member State’s transposition.

What does Directive (EU) 2019/1023 cover, and who is excluded? (Articles 1 and 2)

It covers preventive restructuring frameworks for debtors in financial difficulties when there is a likelihood of insolvency, procedures leading to a discharge of debt incurred by insolvent entrepreneurs, and measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt (Article 1(1)). It does not apply to procedures concerning insurers and reinsurers, credit institutions, investment firms, collective investment undertakings and the other financial entities listed in Article 1(2), public bodies under national law, or natural persons who are not entrepreneurs (Article 1(2)). Member States may also exclude certain other financial entities under comparable special supervisory or resolution arrangements (Article 1(3)).

Options and one firm rule. Member States may extend the discharge procedures to insolvent natural persons who are not entrepreneurs, and may restrict the restructuring frameworks to legal persons (Article 1(4)). They may provide that existing and future claims of existing or former workers, maintenance claims arising from a family relationship, parentage, marriage or affinity, and claims arising from the debtor’s tortious liability are excluded from, or not affected by, those frameworks (Article 1(5)). Member States shall ensure that the frameworks have no impact on accrued occupational pension entitlements (Article 1(6)). An ‘entrepreneur’ is a natural person exercising a trade, business, craft or profession (Article 2(1)(9)).

Early warning tools and directors’ duties (Articles 3 and 19)

The Directive starts before any procedure. Member States shall ensure that debtors have access to one or more clear and transparent early warning tools which can detect circumstances that could give rise to a likelihood of insolvency and can signal to them the need to act without delay (Article 3(1)). They may include alert mechanisms for missed payments of certain types, advisory services, and incentives under national law for third parties with relevant information about the debtor, such as accountants and tax and social security authorities, to flag a negative development to the debtor (Article 3(2)).

Directors. Where there is a likelihood of insolvency, Member States shall ensure that directors have due regard, as a minimum, to the interests of creditors, equity holders and other stakeholders, to the need to take steps to avoid insolvency, and to the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business (Article 19). Article 19 does not itself set the consequences of a breach; check the national law governing the duties.

Who can use a preventive restructuring framework, and who stays in control? (Articles 4 and 5)

The debtor can, and it remains totally, or at least partially, in control. Member States shall ensure that, where there is a likelihood of insolvency, debtors have access to a preventive restructuring framework that enables them to restructure, with a view to preventing insolvency and ensuring their viability, without prejudice to other solutions for avoiding insolvency (Article 4(1)). The framework shall be available on application by debtors (Article 4(7)), who remain totally, or at least partially, in control of their assets and day-to-day operations (Article 5(1)).

Filters, options and the practitioner. Member States may add filters, such as a viability test whose purpose is to exclude debtors without a prospect of viability and which can be carried out without detriment to their assets, or a limit on repeat access within a certain period (Article 4(2) to (4)). They may also make the framework available at the request of creditors and employees’ representatives, subject to the debtor’s agreement, a requirement they may limit to SME debtors (Article 4(8)). Member States shall provide for the appointment of a practitioner in the field of restructuring at least in the cases listed in Article 5(3), which include a plan that needs a cross-class cram-down under Article 11 and a request by the debtor or by a majority of the creditors (in the latter case, provided that the creditors bear the practitioner’s cost).

How does the stay of individual enforcement actions work? (Articles 6 and 7)

The stay pauses creditors’ enforcement while the plan is negotiated. Member States shall ensure that debtors can benefit from a stay of individual enforcement actions to support the negotiations of a restructuring plan, and may provide that the authority can refuse a stay where it is not necessary or would not achieve that objective (Article 6(1)). Without prejudice to Article 6(4) and (5), the stay can cover all types of claims, including secured and preferential claims (Article 6(2)). Member States may provide for a general stay or a limited one, which then applies only to creditors informed of the negotiations or of the stay (Article 6(3)), and may exclude certain claims in well-defined circumstances where this is duly justified and enforcement is not likely to jeopardise the restructuring or the stay would unfairly prejudice those creditors (Article 6(4)). Member States may cover workers’ claims only if, and to the extent that, they ensure that payment of those claims is guaranteed at a similar level of protection (Article 6(5)).

Maximum periods and lifting. The initial duration of a stay is limited to a maximum period of no more than four months (Article 6(6)). Member States may allow an extension or a new stay only if well-defined circumstances show that it is duly justified, for example relevant progress in the negotiations (Article 6(7)); the total, including extensions and renewals, shall not exceed 12 months (Article 6(8)). These are ceilings, not estimates of case length. The authority must be able to lift the stay in the cases listed in Article 6(9), two of which (points (c) and (d)) apply only where so provided for in national law, within the limits Member States may set there.

Insolvency filings. A national-law duty to file for insolvency proceedings which could end in liquidation, if it arises during the stay, is suspended for the stay’s duration, as is the opening of such proceedings at creditors’ request (Article 7(1) and (2)), with a possible derogation, under Article 7(3), where the debtor is unable to pay its debts as they fall due. The expiry of a stay without a plan does not, of itself, give rise to such proceedings unless the other conditions laid down by national law are fulfilled (Article 7(7)).

Can a supplier or other contract party terminate because of the procedure? (Article 7(4) to (6))

Not solely because the procedure was requested or opened. Member States shall ensure that creditors are not allowed to withhold performance or terminate, accelerate or, in any other way, modify executory contracts to the detriment of the debtor by virtue of a contractual clause providing for such measures, solely by reason of a request for or the opening of preventive restructuring proceedings, or a request for or the granting of a stay as such (Article 7(5)).

Unpaid pre-stay debts. Member States shall provide for rules preventing creditors to which the stay applies from taking those steps under essential executory contracts, for debts that came into existence prior to the stay, solely because the debtor has not paid them (Article 7(4)). Essential executory contracts are those necessary for the continuation of the day-to-day operations of the business, including supply contracts whose suspension would bring the debtor’s activities to a standstill. Member States may afford such creditors appropriate safeguards against unfair prejudice, may extend the rule to non-essential executory contracts, and may exclude certain netting arrangements from the stay within the limits of Article 7(6).

What must a restructuring plan contain, and who votes on it? (Articles 8 and 9)

A plan must contain at least the information listed in Article 8(1), and the affected parties have a right to vote on it. These include the debtor’s assets and liabilities, the affected parties and any classes, the terms of the plan (including any new financing and why it is necessary) and a statement of reasons why the plan has a reasonable prospect of preventing the insolvency of the debtor and ensuring the viability of the business. Member States shall make available online a check-list for restructuring plans adapted to the needs of SMEs (Article 8(2)).

Who proposes and who votes. Debtors have the right to submit plans, and Member States may also give that right to creditors and practitioners (Article 9(1)); affected parties vote, and parties not affected by a plan shall not have voting rights (Article 9(2)). Member States may exclude from the vote equity holders, creditors ranking below ordinary unsecured creditors, and related parties with a conflict of interest under national law (Article 9(3)).

Classes and majorities. Affected parties are treated in separate classes reflecting sufficient commonality of interest based on verifiable criteria, in accordance with national law; as a minimum, secured and unsecured creditors are in separate classes. Member States may provide a separate class for workers’ claims and may let SME debtors opt not to use classes (Article 9(4)). A plan is adopted if a majority in the amount of claims or interests is obtained in each class, and Member States may also require a majority in number; the majorities set by national law shall not be higher than 75 % of the amount or, where applicable, of the number in each class (Article 9(6)). Member States may provide that a formal vote is replaced by an agreement with the requisite majority (Article 9(7)).

When is a plan confirmed, and what is the best-interest-of-creditors test? (Articles 10, 14 and 15)

A plan that affects dissenting parties binds the parties only if a judicial or administrative authority confirms it. Confirmation is required at least for such plans, for plans providing for new financing, and for plans involving the loss of more than 25 % of the workforce, if such loss is permitted under national law (Article 10(1)).

Conditions for confirmation. They include at least adoption in accordance with Article 9, equal and proportionate treatment of creditors with sufficient commonality of interest in the same class, notification to all affected parties in accordance with national law, the best-interest-of-creditors test where there are dissenting creditors and, where applicable, new financing that is necessary and does not unfairly prejudice creditors’ interests (Article 10(2)). The best-interest test is examined only if the plan is challenged on that ground, and the authority must be able to refuse a plan with no reasonable prospect of preventing insolvency or ensuring the viability of the business (Article 10(3)).

The test, valuation and effects. The test is satisfied if no dissenting creditor would be worse off under the plan than under the normal ranking of liquidation priorities under national law, either in liquidation, whether piecemeal or by sale as a going concern, or in the next-best-alternative scenario if the plan were not confirmed (Article 2(1)(6)). The authority decides on valuation only where a dissenting affected party challenges the plan for an alleged failure of that test or an alleged breach of the cram-down condition in Article 11(1)(b)(ii) (Article 14(1)). Confirmed plans bind all affected parties named or described in accordance with Article 8(1)(c); creditors not involved in the adoption of a plan under national law are not affected by it (Article 15).

What is a cross-class cram-down? (Articles 11, 12 and 13)

A cross-class cram-down lets the authority confirm a plan not approved in every voting class and make it binding on the dissenting voting classes. Under Article 11(1), this is possible upon the debtor’s proposal or with its agreement where the plan fulfils at least these conditions: (a) it complies with Article 10(2) and (3); (b) it has been approved by a majority of the voting classes, at least one of them being a secured creditors class or senior to the ordinary unsecured creditors class, or, failing that, by at least one voting class of affected parties (or, where so provided under national law, of impaired parties) other than an equity-holders class or any other class which, upon a valuation of the debtor as a going concern, would not receive any payment or keep any interest or, where so provided under national law, which could reasonably be presumed not to receive any payment or keep any interest if the normal ranking of liquidation priorities were applied under national law; (c) dissenting voting classes of affected creditors are treated at least as favourably as any other class of the same rank and more favourably than any junior class; and (d) no class can receive or keep more than the full amount of its claims or interests.

Room for national choices. Member States may limit the debtor-agreement requirement to SME debtors and increase the number of classes needed under point (b)(ii) (Article 11(1)). By way of derogation from point (c), they may provide that a dissenting voting class is satisfied in full by the same or equivalent means where a more junior class is to receive any payment or keep any interest, and may derogate from that rule where necessary to achieve the aims of the plan and where the plan does not unfairly prejudice any affected party’s rights or interests (Article 11(2)).

Equity holders and workers. Where Member States exclude equity holders from Articles 9 to 11, they shall ensure by other means that equity holders cannot unreasonably prevent or create obstacles to the adoption and confirmation of a plan (Article 12(1)), and Member States shall also ensure that equity holders cannot do so as regards its implementation (Article 12(2)). Workers’ rights under Union and national labour law are not affected by the framework (Article 13(1)).

Appeals and protection for new and interim financing (Articles 16 to 18)

Appeals. Any appeal provided for under national law against a judicial authority’s decision confirming or rejecting a plan is brought before a higher judicial authority, and an appeal against such a decision taken by an administrative authority is brought before a judicial authority (Article 16(1)). An appeal against a confirmation has no suspensive effects on the plan’s execution, although Member States may allow judicial authorities to suspend it where necessary and appropriate to safeguard a party’s interests (Article 16(3)).

New and interim financing. New financing (to implement a plan) and interim financing (including, as a minimum, assistance during the stay), as defined in Article 2(1)(7) and (8), must be adequately protected: as a minimum, in the case of any subsequent insolvency of the debtor, such financing shall not be declared void, voidable or unenforceable, and its grantors shall not incur civil, administrative or criminal liability, on the ground that the financing is detrimental to the general body of creditors, unless other additional grounds laid down by national law are present (Article 17(1)). Member States may make that protection conditional on plan confirmation (new financing) or ex ante control (interim financing), exclude interim financing granted after the debtor became unable to pay its debts as they fall due, and give grantors priority in later insolvency procedures (Article 17(2) to (4)).

Other transactions. Without prejudice to Article 17, transactions reasonable and immediately necessary for negotiating a plan, such as its fees and costs, closely connected professional advice and workers’ wages for work already carried out, are not to be declared void, voidable or unenforceable in a subsequent insolvency on the ground of detriment to the general body of creditors, unless other additional grounds laid down by national law are present (Article 18(1) and (4)), subject to the national options in Article 18(2) and (3); Article 18(5) covers transactions that are reasonable and immediately necessary for implementing a plan and are carried out in accordance with the plan as confirmed by a judicial or administrative authority.

Can an insolvent entrepreneur get a fresh start? (Articles 20 to 24)

Yes: Member States shall ensure that insolvent entrepreneurs have access to at least one procedure that can lead to a full discharge of debt in accordance with the Directive, and may require that the activity to which the debts are related has ceased (Article 20(1)). Any partial repayment required for discharge must be based on the entrepreneur’s individual situation, be proportionate to their seizable or disposable income and assets during the discharge period, and take into account the equitable interest of creditors (Article 20(2)).

Three years at most, subject to derogations. Subject to the derogations in Article 23, the discharge period is no longer than three years, starting at the latest from the decision to confirm a repayment plan or the start of its implementation or, in other procedures, from the decision to open the procedure or the establishment of the insolvency estate (Article 21(1)). An entrepreneur who has complied with any national-law obligations is discharged on expiry without having to apply for an additional procedure, though Member States may allow the authority to verify compliance (Article 21(2)). Disqualifications on the sole ground of insolvency then cease to have effect, at the latest, at the end of the discharge period (Article 22).

Derogations. Article 23(1) is mandatory: Member States shall maintain or introduce provisions denying or restricting access to discharge, revoking it or providing for longer periods where the entrepreneur acted dishonestly or in bad faith under national law towards creditors or other stakeholders, when becoming indebted, during the insolvency proceedings or during the payment of the debt, without prejudice to national rules on burden of proof. Article 23(2) to (5) allows further, optional derogations in well-defined, duly justified circumstances, for example for substantial violation of a repayment plan or abusive applications (Article 23(2)), and, where duly justified, the exclusion of specific categories of debt such as secured debts, debts arising from criminal penalties or tortious liability, and family maintenance obligations (Article 23(4)).

Practitioners, courts and electronic communication (Articles 25 to 28)

Courts and practitioners. Without prejudice to judicial independence and to any differences in the organisation of the judiciary across the Union, members of the judicial and administrative authorities dealing with these procedures must have suitable training and the necessary expertise, and the procedures must be dealt with efficiently (Article 25). Practitioners must likewise be trained and have the necessary expertise, under clear, transparent and fair rules on eligibility, appointment, removal and resignation, and, to avoid any conflict of interest, debtors and creditors must be able to object to the selection or appointment of a practitioner or request a replacement (Article 26(1)); Article 27 adds oversight and remuneration rules.

Electronic means. Parties, practitioners and authorities must be able to file claims, submit restructuring or repayment plans, notify creditors and lodge challenges and appeals by electronic means, including cross-border (Article 28); the first three had to apply from 17 July 2024 and the last from 17 July 2026 (Article 34(1)).

How does the Directive relate to Regulation (EU) 2015/848?

The two instruments do different jobs. According to recital 12, Regulation (EU) 2015/848 deals with jurisdiction, recognition and enforcement, applicable law and cooperation in cross-border insolvency proceedings, but does not tackle the disparities between national laws on preventive and discharge procedures; the Directive sets substantive minimum standards for them. Under recital 13, the Directive should be without prejudice to the Regulation’s scope and does not require procedures within its scope to fulfil all the conditions for notification under Annex A. If you are a creditor in proceedings listed in Annex A, see our guide to lodging a claim in insolvency proceedings in another EU country.

Relocation of the centre of main interests. Where a Member State implements the Directive by procedures which do not fulfil the conditions for notification under Annex A, the total stay under them is limited to no more than four months if the debtor’s centre of main interests was moved from one Member State to another within the three months before the request to open preventive restructuring proceedings (Article 6(8), second subparagraph).

What it means for a creditor or a business with a cross-border presence

1. Identify the State and the procedure. Find out where the debtor’s procedure was opened, what it is called and whether it is listed in Annex A to Regulation (EU) 2015/848, and consult the State’s Article 8(2) check-list.

2. Check whether you are an affected party. Only affected parties vote (Article 9(2)); if you are listed, check your class, the value given to your claim and the statement of reasons (Article 8(1)(h)).

3. Know your contract position. The procedure or the stay alone does not entitle you to terminate under an ipso facto clause (Article 7(5)), and, if the stay applies to you, unpaid pre-stay debts alone may not justify such steps under an essential executory contract (Article 7(4)).

4. Use your challenge rights. The best-interest test is examined, and valuation decided, only on a challenge on the grounds in Articles 10(2) and 14(1); check national time limits.

5. If you run the business. Mind the Article 19 duties, and plan new and interim financing with a lawyer in the State concerned so that it falls within Articles 17 and 18 as implemented there.

6. If the debtor is an individual entrepreneur. A discharge may be available under Articles 20 to 23, subject to the derogations the Member State has adopted. To recover a debt instead, see our guides to the European Account Preservation Order and to which EU court has jurisdiction under Brussels I bis.

Frequently asked questions

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