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On 30 March 2026, the Council and the European Parliament formally adopted the Directive harmonising certain aspects of insolvency law, commonly known as "Insolvency III". The Directive entered into force on 21 April 2026.
First proposed by the European Commission in December 2022, the text is not the first EU initiative to harmonise insolvency law – it builds on instruments such as the Insolvency Regulation and the 2019 Restructuring Directive. Its novelty lies in addressing areas not yet harmonised at EU level, including pre-pack proceedings.
Insolvency III now moves from negotiation to implementation, with Member States required to transpose it by 22 January 2029.
At ADVANT, we are launching a cross-border series bringing together the perspectives of France, Germany and Italy – not country by country, but theme by theme.
We start with one of the Directive's most technical – and potentially most impactful – components: the framework governing pre-pack proceedings.
Episode 1 – Pre-pack proceedings under Insolvency III: what are we talking about?
Adopted on 30 March 2026 and in force since 21 April 2026, the Insolvency III Directive harmonises selected aspects of insolvency law, with transposition due by 22 January 2029. Among its most technical – and potentially most impactful – components is the framework on pre-pack proceedings.
The Directive defines pre-pack proceedings as proceedings comprising a preparation phase and a liquidation phase, allowing the sale of the debtor's business, in whole or in part, as a going concern to the best bidder, in the course of insolvency proceedings.
A preparatory phase organises the sale process upstream; a subsequent liquidation phase ensures judicial approval and implementation. The Directive also sets defined standards for that preparation phase – a competitive, market-conform sale process and enhanced creditor safeguards.
Pre-pack is therefore addressed not as a mere practical technique, but as a structured insolvency tool embedded in a broader European framework.
Episode 2 – Does pre-pack already exist in our national laws?
2.1. French law already provides a statutory basis for pre-pack preparation: a single Commercial Code provision authorises the conciliator or ad hoc representative to organise the sale's preparation for implementation in safeguard, reorganisation or liquidation proceedings.
Practice has since shaped the model: negotiations may target identified investors or run a broader marketing process, and courts may reopen competition once judicial proceedings open, even where serious offers were secured during conciliation.
2.2. German insolvency practice already features a pre-packaged plan, agreed with creditors out of court and submitted with the insolvency application. It differs from the Directive's model in one key respect: the vote on the plan only takes place after proceedings open, at the court's hearing – a preliminary out-of-court vote is not possible.
As a result, the time advantage typically associated with a pre-pack has not been fully realised in Germany, since judicial control still applies once the case opens – and the practice itself rests on informal negotiation rather than a dedicated statutory framework.
To align with the Directive, Germany's already creditor-focused Insolvency Code (InsO) is expected to introduce targeted adjustments, including Pre-Pack sales and enhanced tracing tools such as BARIS – giving pre-pack sales, for the first time, a binding legal framework with legal certainty for cross-border cases.
2.3. Pre-packaged plans in judicial restructurings have a long tradition in Italy. Indeed, since the reform in 2005, the sale of the business to a pre-selected purchaser was the only feasible structure for preserving the going concern value, until further reforms allowed also plans providing for the company to continue to trade.
A sale of the business is possible at the early stage of judicial restructurings, whenever there is already a fixed offer to purchase, and also in a negotiated composition, always based on the authorization by the Insolvency Court. In any case, the sale is subject to a solicitation of the market and is always final, irrespective of the debtor being able to reach an agreement with the creditors or to obtain creditors’ approval or Court confirmation of the plan.
Insolvency III will therefore stand on well tested market and legal practice in Italy, though requiring some adaptations to implement the new EU prepack model.
Episode 3 – What is the role of creditors in pre-pack proceedings?
The Insolvency III Directive redefines, to a certain extent, the position of creditors within the process.
It imposes defined principles on the preparation phase: a competitive, transparent, fair and market-conform sale process, with the monitor required to justify compliance, recommend the best bidder and confirm the offer meets the best-interest-of-creditors test – an economic benchmark new to a largely practice-driven process in several jurisdictions.
The Directive also provides for a stay of individual enforcement during the preparation phase, and allows, in certain circumstances, suspending the opening of liquidation where this would not serve creditors' general interest.
3.1. In the French model, the preparation phase takes place within conciliation, an amicable framework: creditors are generally consulted but do not formally govern the process, and in return are not subject to specific procedural constraints. Limited power, limited burden.
One gap stands out: the Directive requires a stay of individual enforcement during preparation, while French law today only allows a stay granted individually by a court – reviving the debate on a genuine stay within the amicable phase.
Insolvency III introduces a different equilibrium: by embedding creditor protection in defined standards, and letting creditor approval substitute certain safeguards, it moves towards a more integrated, more influential creditor role in governing the pre-pack.
3.2. The Directive aims to bundle the interests of creditors in the proceedings and strengthen the participation of creditors. For Germany, this is less revolutionary, because creditor participation by way of creditors' meetings and creditors' committees is already known and established in practice under the Insolvency Code.
3.3. The Italian model is more debtor-oriented and centered on Court supervision and approval. In this context, the role of the creditors differs between restructuring frameworks aimed at reaching an agreed solution, including on the plan and sale, and judicial restructuring frameworks where a majority (but even a qualified minority) of creditors can approve the plan.
Insolvency III will bring a change to the existing model in liquidation proceedings, if Italy elects to include creditor approval as a condition to the sale without Court scrutiniy on the merits.
Episode 4 – What does the "best-interest-of-creditors" test really mean in a pre-pack?
One of the most significant elements of the Insolvency III Directive is the introduction EU-wide of the "best-interest-of-creditors" test within pre-pack proceedings.
Under the Directive, the monitor must not only recommend the best bidder but also confirm that the selected offer does not breach the best-interest-of-creditors test.
4.1. In France, courts traditionally assess competing offers against statutory criteria – preservation of activity and employment, and settlement of liabilities – through a judicial, discretionary analysis. The Directive instead introduces an explicit economic benchmark: creditors must not be worse off than under the relevant alternative scenario, echoing concepts already familiar in French law via the classes-of-affected-parties framework.
This entails comparing the proposed outcome against realistic alternatives – liquidation, piecemeal sale or continuation – often through formal valuation exercises (going-concern value, liquidation value, alternative scenarios), an expertise increasingly seen in French cases involving classes of affected parties.
4.2. This approach has also been standard in German insolvency proceedings for a long time. Among other things, it must be demonstrated on the basis of a business-based comparative calculation that the proposed path, be it liquidation, restructuring or the (partial) sale of parts of the company, offers the best compensation for the creditors involved.
4.3. The best interest of creditors is traditionally applied in Italian proceedings as well and the standards for evaluation are well established both in the Insolvency Code and in professional standards for evaluation of the liquidation alternative.
Based on the best interest of creditors test, public creditors can be forced to accept a plan by order of the Court which, under certain conditions, can override even the dissent of the Tax Authorities and social security agencies.
Insolvency III does not seem, then, to change the Italian system in this respect.
Whether this discipline enhances creditor protection or instead increases litigation risk and complexity will depend on how Member States transpose and operationalise the Directive.
Episode 5 – What are the creditor committees introduced by Insolvency III?
The Insolvency III Directive provides for the involvement of creditor committees in certain insolvency proceedings, potentially limited to larger enterprises.
In pre-pack proceedings, this links directly to the preparation phase: where creditors approve the monitor's recommended bidder, Member States may waive certain safeguards – such as demonstrating the sale process was competitive, transparent and market-conform, and the monitor's obligation to justify that compliance.
In practice, creditor approval may replace part of the structured verification otherwise required: instead of the monitor documenting and defending the process's competitiveness before the court, a creditor body's endorsement could validate the pathway to sale.
5.1. Under current French law, no creditor committee governs the preparation phase: negotiations remain confidential between the debtor, the conciliator and potential bidders, and creditors, though consulted individually, do not collectively approve the bidder. Once proceedings open, creditors may act as controllers, but only in a supervisory role.
If the Directive is transposed without major limitation, France would need to introduce a formalised creditor body capable of approving the monitor's recommendation in pre-pack situations falling within its scope.
5.2. In Germany, it has long been standard practice to set up a creditors' committee in major insolvency proceedings. The committee represents the interests of all creditors and acts independently of the insolvency administrator.
The members of the creditors' committee support the insolvency administrator in his management and supervise it. They must inform themselves about the course of business, inspect the books and business papers and have the financial transactions and holdings audited. The committee may call in experts for the examination and is obliged to inform the insolvency court in the event of breaches of duty by the insolvency administrator.
The creditors' committee has the duty to approve decisions or legal acts of the insolvency administrator, in particular in the case of measures of particular importance for the proceedings.
Similar to members of a supervisory board, the members of the creditors' committee are also obliged to maintain secrecy about confidential information they receive in connection with their activities.
5.3. In the Italian model, creditors’ committes have a significant role in judicial liquidation, where they approve the liquidation plan and oher acts of the insolvency adminstator, but are absent in out-of-Court and judicial restructurings alike. A sale of business in a distressed context always requires Court authorization, even in frameworks based on agreement with creditors.
Insolvency III would then significantly increase the influence of creditors in distressed sales, if Italy elects to include creditor approval as a fast pathway to the sale, limiting the powers of the Court. It will be also for the Italian legislator to choose whether the approval of the sale be entrusted to a creditors’ committee or to a general vote of the creditors.
