New Directive (EU) 2026/799 on the harmonization of certain aspects of insolvency law

May 12, 2026

New Directive (EU) 2026/799 on the harmonisation of certain aspects of insolvency law

1. Objective and scope of the Directive

Directive (EU) 2026/799 of the European Parliament and of the Council, known as the Insolvency III Directive, has recently been adopted. Its purpose is to harmonize certain core aspects of substantive insolvency law within the European Union. It thereby seeks to contribute to the proper functioning of the internal market and the capital markets by reducing legal uncertainty, unpredictable recovery values and excessively lengthy procedures in cross-border insolvency cases.

The Directive expressly opts for minimum harmonisation: Member States are required to introduce minimum rules in specific areas, while retaining the possibility to maintain or introduce stricter provisions aimed at protecting creditors. Certain categories of undertakings, such as credit institutions, insurance undertakings and investment firms, fall outside its scope.

The Directive covers six substantive pillars:

• avoidance actions (actio pauliana);
• asset tracing;
• pre-pack procedures;
• the duty of directors to file for insolvency in a timely manner;
• creditors’ committees;
• transparency through key information factsheets.

2. Avoidance actions

With a view to protecting the general body of creditors, the Directive harmonizes the conditions under which legal acts performed prior to the opening of insolvency proceedings and which prejudice creditors may be declared null and void, voidable or unenforceable. The concept of a “legal act” is interpreted broadly and also includes omissions or failures to act. In addition, legal acts carried out by the debtor’s counterparty or by a third party may also be the subject of an avoidance action. The decisive moment is when the legal act produces legal effects.

The Directive distinguishes three categories of acts that can be challenged:

•       Preferences: legal acts that favor a creditor or a group of creditors through payment or the granting of security are challengeable if performed within three months prior to the filing for insolvency (or after filing but before the opening of insolvency proceedings). In the case of congruent security or payment, it is required that the creditor had knowledge of the debtor’s insolvency, with a rebuttable presumption applying to closely related parties.

•       Acts in exchange for no or manifestly inadequate consideration: these may be challenged if performed within twelve months prior to the filing for insolvency or thereafter until the opening of the proceedings.

•       Acts intentionally detrimental to creditors: legal acts by which the debtor intentionally caused detriment to the creditors are challengeable if performed within two years prior to the filing for insolvency and if the counterparty knew, or ought to have known, that the debtor acted with such intent.

The core consequence of a successful avoidance action is the restitution of the benefit obtained to the insolvent estate. The limitation period for such actions is capped at three years from the opening of insolvency proceedings.

3. Asset tracing

The Directive aims to enhance the efficiency of insolvency proceedings by significantly strengthening the powers of insolvency practitioners in the field of asset tracing, with particular attention to cross-border situations.

To that end, it provides inter alia for:

• direct or indirect access to bank account registers, including through interconnected systems for cross-border consultation;
• access to registers of beneficial owners (UBO registers), without prior notification to the entity or person concerned;
• direct and non-discriminatory access to various national registers and databases, such as land registers, vehicle registers and intellectual property registers.

These powers are accompanied by safeguards relating to proportionality, logging, supervision and compliance with the GDPR and other data protection rules.

4. Pre-pack procedure

The Directive introduces a harmonized framework for the pre-pack procedure, with the objective of achieving higher recovery values, accelerating liquidation and maximizing the preservation of economic activity and employment.

The procedure consists of two phases:

• a preparatory phase, during which a purchaser is confidentially sought prior to the formal opening of insolvency proceedings;
• a liquidation phase, which begins after the opening of insolvency proceedings and during which the pre-arranged sale is executed. A number of provisions are included to preserve the going concern value, including maintaining key contracts for the company’s business and interim financing.

During the preparatory phase, the debtor generally retains (partial) control, under the supervision of an independent monitor. The sale process must be competitive, transparent and conducted under market conditions. Closely related parties may also submit bids, subject to increased transparency and oversight. Mechanisms such as a public auction or a “stalking horse” may be used.

In the liquidation phase, the sale is approved by the court, by creditors or through an auction. As a rule, the business is transferred as a going concern and free of debts and liabilities, save for employment contracts and certain statutory obligations. Essential contracts may be transferred automatically without the consent of the contractual counterparties.

The possibility of a pre-pack procedure was recently introduced in Belgian law through the inclusion in the Code of Economic Law of the so-called “closed preparation of bankruptcy”. The current procedure may need to be adapted to comply with the Directive’s harmonized requirements.

5. Duty of directors to file for insolvency - Liability

A request for the opening of insolvency proceedings must be submitted within three months of the directors having become aware, or reasonably expected to have become aware, that the company is insolvent. Member States may allow alternatives or temporary suspension of this obligation, provided that an equivalent level of protection for the creditors is ensured. Belgian law currently provides for a period of one month after cessation of payments in which a declaration of bankruptcy must be made. It therefore remains to be seen whether this period will be maintained or aligned with the Directive.

Failure to comply with this duty may give rise to civil liability of directors for the damage resulting from a reduced recovery value for creditors, unless evidence to the contrary is provided.

6. Creditors’ committees 

The Directive requires Member States to enable the use of creditors’ committees to increase the involvement of creditors and monitor the fairness and integrity of insolvency proceedings. These committees must ensure a balanced representation of the various creditor interests, including employees. They are vested with information, supervisory and advisory powers vis-à-vis insolvency practitioners when significant decisions, such as the sale of assets, are to be taken.

It can be provided that the establishment of a creditors’ committee is not required where this would be economically disproportionate, notably in the case of small undertakings.

Members of the committee are in principle exempt from personal liability, except in cases of intent or gross negligence. 

Current Belgian law does not provide for a creditors’ committee. The introduction of such a committee should ensure that creditors are appropriately involved in insolvency proceedings so that their interests can be adequately considered.

7. Transparency and final provisions

Each Member State must publish a standardized key information factsheet on its insolvency regime, in a non-technical and comparable format, accessible via the European e-Justice Portal. This sheet must include, inter alia, information on the conditions for opening proceedings, the filing and ranking of claims, and the average duration of procedures.

The Directive must be transposed by 22 January 2029 at the latest. It will be evaluated as from 2034 and constitutes a major step towards further European harmonisation of insolvency law, with substantial impact on, inter alia, distressed M&A, directors’ liability and cross-border insolvencies.