The European Commission made a proposal to modernise the existing rules on cross-border business insolvency so that they support restructuring of business in difficulties and create a business-friendly environment – the current rules date from 2000. According to the Commission, the changes will improve the efficiency and effectiveness of cross-border insolvency proceedings.

The new rules on cross-border business insolvency proposed by the European Commission will shift focus away from liquidation and develop a new approach to helping businesses overcome financial difficulties, all the while protecting creditors' right to get their money back. The Commission highlights that it is 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". In April 2012, the Commission launched a public consultation on cross-border business insolvency.

The proposal has as main aim to bring the Regulation, which dates from 2000 up to date with developments in national insolvency laws, in particular in terms of highly indebted firms. It will also increase legal certainty, by providing clear rules to determine jurisdiction, and ensuring that when a debtor is faced with insolvency proceedings in several Member States, the courts handling the different proceedings work closely with one another. Information to creditors will be improved by obliging Member States to publish key decisions – about the opening of insolvency proceedings, for example.

Around half of enterprises survive less than five years, and around 200,000 firms go bankrupt in the EU each year. This means that some 600 companies in Europe go bust every day. A quarter of these bankruptcies have a cross-border element. The Commission stressed that the challenge is to address the debtor's financial difficulties while protecting the creditor's interests. In the future, there could be separate rules for honest entrepreneurs and for cases where the bankruptcy was fraudulent or irresponsible. In the case of honest bankruptcies, a shortened discharge period in relation to debts and the legal restrictions stemming from bankruptcy would make sure entrepreneurship does not end up as a "life-sentence" should a business go bust.