Insolvency proceedings in the European Union can serve as an effective debt collection tool when a debtor is insolvent or approaching insolvency, giving creditors access to a supervised process that may recover far more than unsatisfied enforcement steps alone. The legal framework is anchored in EU Regulation (EC) No 1346/2000 (recast as Regulation (EU) 2015/848 on insolvency proceedings), supplemented by Directive (EU) 2026/799 which entered into force on 21 April 2026 and which Member States must transpose by 22 January 2029. Understanding how to file a claim, preserve assets, and engage with cross-border procedures is essential before a creditor decides whether insolvency is the right route for recovering an unpaid invoice.
When Insolvency Proceedings Are – and Are Not – the Right Tool
Not every unpaid invoice warrants opening insolvency proceedings. A creditor considering this route should first assess whether the debtor is genuinely insolvent or imminently so, because filing against a solvent debtor can expose the claimant to cost liability and reputational risk. Insolvency proceedings are most appropriate when conventional enforcement of judgment has failed, when the debtor is known to have multiple creditors, or when the debtor's assets are dispersed across Member States.
If the claim is undisputed and the debtor has identifiable assets in a single jurisdiction, a European Payment Order under Regulation (EC) No 1896/2006 or a national payment order procedure may be faster and cheaper. Asset freezing via the European Account Preservation Order (Regulation (EU) No 655/2014) can also secure funds before a judgment is obtained, and may be combined with – rather than replaced by – insolvency proceedings. Late payment interest under Directive 2011/7/EU remains available to commercial creditors regardless of the route chosen.
Where the debtor operates across several Member States, the insolvency path becomes more attractive because Regulation (EU) 2015/848 provides a single point of control through the Centre of Main Interests (COMI), coordinating secondary proceedings in other jurisdictions under one legal framework supervised by the CJEU's evolving case law.
The Legal Framework: Regulation 2015/848 and Directive 2026/799
The primary instrument governing cross-border insolvency within the EU is Regulation (EU) 2015/848. It determines which Member State's court has jurisdiction (the state where the debtor's COMI is located), which national insolvency law applies, and how judgments opening proceedings are recognised automatically across the EU without any separate recognition procedure. This automatic recognition is one of the most practical advantages for a foreign creditor pursuing debt collection in a debtor's home state.
Directive (EU) 2026/799, which entered into force on 21 April 2026, introduces a new layer of harmonisation. Its key provisions relevant to creditors include:
- Avoidance actions: harmonised rules enabling insolvency practitioners to challenge pre-insolvency transactions that disadvantaged the creditor body, potentially recovering assets that had been transferred out of the debtor's estate.
- Pre-pack procedures: a structured mechanism allowing the debtor's business to be transferred to a buyer before formal insolvency proceedings open, with creditor oversight built in – relevant to creditors because it affects the value available for distribution.
- Directors' duty to file: harmonised obligations for directors to initiate insolvency proceedings once insolvency is established, reducing the window during which assets can dissipate before creditors can act.
- Creditors' committees: minimum standards for their composition and rights, giving organised creditor groups greater influence over the conduct of proceedings.
- Asset tracing: measures to improve access to information about the debtor's assets, directly supporting enforcement of judgment and the preparation of proofs of debt.
Because transposition is required only by 22 January 2029, national rules across Member States will differ significantly until that date. Creditors should not assume that a provision of the Directive already applies domestically – its practical availability depends on whether and how each Member State has implemented it. Where transposition details are not yet available, legal advice specific to the relevant jurisdiction remains essential.
If you are assessing how these developments affect a specific recovery strategy, our team is available to discuss your situation at our contacts page or by email at info@ferrazwhitmore.com.
Step-by-Step: How to Use Insolvency Proceedings to Recover a Debt
Step 1 – Verify the Debtor's COMI and Applicable Law
Before filing or lodging a claim, a creditor must identify where the debtor's COMI is located. Under Regulation 2015/848, the COMI is presumed to be the place of the registered office for companies, but this presumption can be rebutted where the real administration is elsewhere. Getting this analysis wrong means filing in the wrong jurisdiction, which can delay proceedings by months. EUR-Lex and national court registers are the starting point; in complex group structures, specialist advice is necessary.
Step 2 – Establish Your Claim and Gather Documentation
A creditor wishing to participate in insolvency proceedings must submit a proof of debt (or equivalent national filing). The documentation typically required includes:
- The contract, purchase order, or other agreement giving rise to the debt.
- Invoices, delivery notes, or performance records confirming the amount owed.
- Any prior correspondence acknowledging the debt or requesting payment.
- Evidence of any enforcement steps already taken (court orders, bailiff reports, enforcement of judgment records).
- A calculation of late payment interest, if claimed under Directive 2011/7/EU or the applicable national law.
Documents originating outside the jurisdiction may require certified translation and, depending on the Member State, apostille or legalisation. Errors at this stage are among the most common reasons foreign creditors see their claims rejected or subordinated.
Step 3 – Lodge the Proof of Debt Within the Deadline
Each Member State sets its own deadline for lodging proofs of debt after the opening of insolvency proceedings. These deadlines are subject to national rules and are typically short – often measured in weeks rather than months. Missing the deadline can result in exclusion from the first dividend or from the proceedings altogether. Creditors based outside the EU should note that the Regulation provides for a minimum notice period for foreign creditors, but in practice tracking the proceedings promptly is essential. The European Insolvency Register, maintained under Article 24 of Regulation 2015/848, provides a central access point to national insolvency registers.
Step 4 – Engage With the Insolvency Practitioner
The appointed insolvency practitioner (liquidator, administrator, or equivalent under national law) controls the estate and verifies claims. A creditor should communicate formally and in writing, provide all supporting documentation promptly, and respond to any requests for clarification within the times given. Where a creditors' committee exists – and Directive 2026/799 will eventually standardise their operation – participation can provide early visibility of asset realisations and distribution timelines.
Step 5 – Monitor Avoidance Actions and Asset Realisations
The insolvency practitioner may pursue avoidance actions against third parties who received preferential payments or assets from the debtor before the proceedings opened. A creditor with information about such transactions should share it with the practitioner, as a successful avoidance action increases the estate available for distribution. Under Directive 2026/799, harmonised rules on avoidance actions will improve consistency across Member States, though again transposition is pending until 22 January 2029.
Asset tracing provisions in the Directive are also designed to assist practitioners – and, indirectly, creditors – in identifying concealed or transferred assets. In cross-border cases, asset freezing obtained prior to the opening of proceedings may preserve assets pending their inclusion in the estate.
Step 6 – Receive Distribution and Enforce Remaining Balances
Distributions are made according to the priority rules of the applicable national insolvency law. Unsecured trade creditors typically rank below secured creditors, employees, and tax authorities, though this hierarchy varies by jurisdiction. If the distribution does not cover the full claim, any remaining balance may – depending on national law – survive as a judgment debt that can be enforced if the debtor or a personal guarantor later recovers financial capacity.
Cross-Border Considerations: Secondary Proceedings and Group Insolvency
Where a debtor has an establishment (not just assets) in a Member State other than the COMI state, secondary proceedings limited to that establishment may be opened. Secondary proceedings were historically automatically liquidation proceedings, but Regulation 2015/848 allows them to take any form available under national law. A creditor with a local connection to a secondary proceeding state may benefit from lodging in both the main and secondary proceedings, subject to the anti-double-recovery coordination rules in the Regulation.
For corporate groups, the Regulation provides a framework for cooperation and communication between insolvency practitioners in different Member States, including group coordination proceedings. ESMA and EBA have published guidance relevant to financial sector debtors; for non-financial corporate groups, coordination remains largely voluntary and depends on the goodwill of national practitioners. Creditors in multi-debtor group structures should map the insolvency landscape across all relevant Member States before deciding where to focus their claims.
Our bankruptcy and restructuring practice advises creditors across EU jurisdictions on navigating both main and secondary proceedings. For jurisdiction-specific questions – for example, concerning proceedings in Greece – our dedicated Greek debt recovery practice can assist.
Realistic Timelines and Cost Drivers
Cross-border insolvency proceedings are rarely resolved quickly. From the opening of proceedings to a first significant distribution, timelines subject to national rules commonly range from one to several years in contested or complex cases. Cost drivers for a creditor include translation costs, local counsel fees in each relevant jurisdiction, proof of debt preparation, and – where pursued – participation in hearings or creditors' committee meetings.
A creditor must weigh those costs against the realistic recovery prospect. A detailed cost-benefit analysis before committing to active participation is advisable. In some cases, selling the claim to a debt purchaser at a discount may be more efficient than active participation in prolonged proceedings – this is a commercial decision that depends on the specific facts of the case and the applicable national rules on claim assignment.
Common Errors by Foreign Creditors
- Missing proof of debt deadlines due to failure to monitor the European Insolvency Register or local court notices.
- Relying on Directive 2026/799 as if already transposed – its provisions apply directly only from the date each Member State enacts implementing legislation, which is not required until 22 January 2029.
- Confusing COMI with registered office in restructured or relocating corporate groups, leading to proceedings in the wrong jurisdiction.
- Failing to claim late payment interest correctly, which can reduce the admitted claim amount.
- Not securing assets before proceedings open – once insolvency proceedings are opened, the automatic stay generally prevents individual enforcement, making pre-filing asset freezing a critical step.
- Submitting documents without certified translation, causing claims to be treated as inadmissible or delayed.
- Assuming a single legal strategy works across all Member States – national insolvency laws remain substantially different, and the European Commission's harmonisation effort through Directive 2026/799 addresses only selected aspects.
Decision Checklist: Is Insolvency the Right Route for Your Claim?
- Is the debtor actually insolvent or unable to pay its debts as they fall due?
- Have conventional debt collection steps (payment demand, payment order, enforcement of judgment) been exhausted or assessed as insufficient?
- Is the debt amount material enough to justify the costs of insolvency participation?
- Have you identified the debtor's COMI and confirmed which national law governs the proceedings?
- Are documents ready for prompt submission of a proof of debt?
- Have you considered whether asset freezing is available and appropriate before proceedings open?
- Have you taken advice on the priority of your claim under the applicable national insolvency law?
- Where Directive 2026/799 provisions are relevant, have you confirmed whether the relevant Member State has already transposed them?
If you are working through this checklist and have questions about how the EU insolvency framework applies to your specific situation, our team welcomes an initial discussion. You can reach us at info@ferrazwhitmore.com or through our contacts page.
Looking Ahead: Directive 2026/799 and the Evolving Landscape
Directive (EU) 2026/799, which entered into force on 21 April 2026, represents the most significant step in EU insolvency harmonisation since the 2015 recast of the Insolvency Regulation. Its provisions on avoidance actions, pre-packs, directors' duties, creditors' committees and asset tracing are designed to reduce the disparity between Member States that has long complicated cross-border debt recovery. Until Member States complete transposition by 22 January 2029, the Directive's impact will be uneven, and creditors will need jurisdiction-by-jurisdiction advice rather than a single EU-wide strategy.
Monitoring transposition progress in the relevant Member States – through EUR-Lex, national legislative databases, and specialist legal sources – will be essential for creditors with recurring cross-border exposure. The European Commission and the CJEU will play important roles in shaping how the Directive is interpreted and enforced as implementing measures accumulate. We will continue to publish updates as Member States advance their transposition. You can also follow developments through our alert on Directive (EU) 2026/799 entering into force.
For tailored guidance on how these changes affect your cross-border recovery strategy, please contact our team at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.