EU releases drafts of insolvency laws
EC proposes US inspired insolvency rules to increase risk taking and reduce bankruptcies
Proposes firms should be able to stop paying suppliers and banks for a four month period while restructuring debts
Says over-indebted businessmen (what about women?) should have their debts cancelled 3 years after bankruptcy
Where to start with this one then?
Firstly, when businesses get into trouble, suppliers are the first to not get paid, so how will the EU address that or is the big fat finger going to be offered? Suppliers are usually screwed for far longer before any insolvency rules kick in.
Secondly, while bankruptcies are a feature of businesses, going down the US route is far from ideal on so many levels, not least the wipe-clean and start all over again as if nothing's happened scenario.
Thirdly, there should be tighter laws on how much insolvency firms can take as fees before creditors get paid out.
Whatever level of business is affected, it's always the little man that gets screwed. If they want to help SME's and really transmit QE to the economy, give these businesses a backstop, not the banks.
