EU Preventive Restructuring Directive

The Directive requires each member state to provide a preventive restructuring framework with four common features: it is available before the company is insolvent, the debtor stays in control of the business, enforcement can be stayed while a deal is negotiated, and creditors vote in classes with a court able to bind a class that voted against.

It is a floor rather than a code, and it deliberately left member states two important choices. The first is the majority a class needs to approve. The second is which priority rule applies when a dissenting class is crammed down, with states free to adopt an absolute priority rule or the relative priority alternative the Directive sets as its default.

Those two choices are why implementations reach different answers on identical facts. Germany chose absolute priority and a 75% class threshold. The Netherlands chose relative priority and two thirds of those voting. Neither is more correct, and both are compliant.

The practical consequence for a European group is that venue became a live commercial decision rather than an accident of incorporation. Before implementation, an English scheme or plan was often the only realistic route to bind a dissenting class; now there are several, and the choice turns on which claims must be bound, on publicity, on the priority rule and on where the outcome has to be recognised.