Volume 46 (2018) / Issue 8/9
Through the proposed amendment of the EU Directive 2012/30/EU, the European Commission seeks the EU-wide implementation of a Preventive Restructuring Framework. The key objective is reduction of the likelihood of insolvency of generally viable businesses with (temporary) financial difficulties. Parallel to the Commission’s efforts, the Dutch legislator published a detailed draft bill regulating the sanctioning of pre-insolvency composition. In the EU proposal and the Netherlands’ draft legislation, relevant tax implications are not addressed. This may cause uncertainty and incentives for parties involved that interfere with the objective of a pre-insolvency composition. This article examines the Dutch tax aspects – for the debtor and involved creditors and shareholders – of common discharge and restructuring solutions in a binding restructuring plan. With every subject, general tax aspects are identified that may be relevant for other jurisdictions as well. It shows that a pre-insolvency composition may have important tax implications and that in some cases creditors and shareholders could even prefer bankruptcy over restructuring. The authors consider that the Dutch scheme needs further clarification and believe it even requires specific tax regulation. The authors recommend other EU Member States to assess the national tax elements of a binding pre-insolvency composition upon the implementation of the Preventive Restructuring Framework.
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