The Place of Micro and Small Enterprises in European Insolvency Law

Micro and small enterprises (MSEs) form the backbone of the European economy but remain particularly vulnerable to financial distress and insolvency. Despite the EU's efforts to harmonise insolvency laws, significant divergences persist among Member States, especially regarding tailored frameworks for smaller businesses. The Preventive Restructuring Directive (PRD) (EU 2019/1023) introduced optional provisions for small and medium-sized enterprises (SMEs), yet their selective transposition reflects the reluctance of some jurisdictions to adopt special regimes. The 2022 Proposal for further harmonisation sought to address these gaps, notably by introducing simplified winding-up procedures for microenterprises. However, disagreements over national legislative autonomy, the roles of insolvency practitioners and courts, and inconsistencies in definitions hindered consensus. This paper critically examines the evolution of EU insolvency law as it relates to MSEs, evaluates national implementation practices, and explores possible pathways for harmonisation, despite the ultimate failure to establish a unified winding-up regime for smaller businesses. It argues that while a coordinated EU approach is necessary, achieving a balance between legal uniformity and national flexibility remains a significant challenge.