An initiative by the European Commission to help businesses recover millions of euros that are currently lost each year in cross-border debts has now received the backing of the European Parliament.
The proposed European Account Preservation Order will help ensure that businesses recover these cross-border debts by allowing creditors to preserve the amount owed in a debtor’s bank account.
Around one million small businesses struggle to recover cross-border debts in the EU’s Single Market, says the Commission. This equates to up to €600 million lost every year in debts that are unnecessarily written off because, for small businesses, it is often too difficult and expensive to pursue complex lawsuits in foreign countries.
With the European Account Preservation Order debtors will be prevented from removing or dissipating their assets while procedures to obtain and enforce a judgment are ongoing. The Preservation Order will be effective Europe-wide and, according to the Commission, will greatly improve the prospects of successfully recovering cross-border debt.
“Today’s votes send one clear message: Europe is simplifying procedures for companies and helping them save time and money,” said Vice-President Viviane Reding, the EU’s Justice Commissioner. “Small and medium-sized enterprises are the backbone of European economies – having an easy procedure in place for businesses to quickly recover outstanding debts across borders is crucial.”
Before the proposal can become law it must be adopted by Member States in the Council (voting by qualified majority), and this is expected to happen in June this year.
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