The backing of the European Parliament has now been given to an initiative by the European Commission to help businesses recover millions of Euros currently lost annually in cross- border debts.
The Commission estimates that around one million small businesses struggle to recover cross-border debts in the EU’s single market with up to €600 million being lost each year. At the moment, most small businesses unnecessarily write off debts because it is often too difficult and expensive to pursue debt recovery actions in foreign countries.
To help small and medium sized enterprises, the Commission proposes the introduction of a European Account Preservation Order to enable creditors to preserve the sums due to them in a debtor’s bank account. Such an order, to be effective Europe-wide, would prevent debtors from removing or disposing of their assets while procedures to obtain and enforce a judgment are ongoing.
“Europe is simplifying procedures for companies and helping them save time and money” the EU’s Justice Commissioner, Vice-President Viviane Reding, says. “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 the Member States in the Council, which is expected to happen in June 2014.
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