The European Commission launched a public consultation on modernising EU rules governing insolvencies. In the light of the results, the Commission will later decide whether and how the existing Regulation needs to be revised in order to bolster businesses and strengthen the EU's Single Market.

The public consultation launched by the European Commission on the Insolvency Regulation which date from 2000 and set out how bankruptcies – of companies or individuals – should be coordinated between several EU countries, has as main goal to know whether the rule should be revised to improve the European Single Market. According to the Commission, this consultation -which will be opened until 21 June 2012, is part of the EU's efforts to preserve jobs and to promote economic recovery, sustainable growth and a higher investment rate, as set out in the Europe 2020 strategy. In addition, in 2008 it was adopted the Directive for the protection of employees in the event of the insolvency.

To the Commission, a modern system of European insolvency law is essential for financial stability and for the efficiency of the financial system. The EU Justice Commissioner Viviane Reding also added that it is an essential part of a modern Single Market and encourages entrepreneurs to take risks. And if necessary, it provides an orderly way for businesses to close down.

Around half of enterprises survive less than five years. In 2010, a total of 220,000 businesses went into liquidation in the EU. This means that some 600 companies in Europe went bust every day. The Commission stresses that it is therefore essential to have modern laws and efficient procedures in place to help businesses, which have sufficient economic substance, overcome financial difficulties and to get a "second chance".