[ Source: ilsole24ore, by Beda Romano on 18th January 2017 ]

Today new EU regulations has entered into force with the purpose of facilitating debt recovery of smaller companies.  Amongst others, the national judiciary may issue European account preservation orders freezing funds in the bank accounts valid over all European countries. According to EU Commission data, small and medium enterprises lose credits for about 600 million Euro every year.

Vera Jourova, the commissioner for Justice stated: “as a former entrepreneur I perfectly know how unpaid invoices may have an impact on company accounts.  Particularly small enterprises may not afford legal fees to require support for debt recovery.  Thanks to the European account of preservation order both companies and individuals may recover their money abroad requiring freezing funds in the current account of the debtor”:

About one million small and medium enterprises have to deal with outstanding debts at international level.  The new EU tool (EAPO) provides that in case of non-payment, a company may require to judiciary operating in debtor country who after verification of the requirements, shall issue an order valid all over the EU territory, except for Denmark and the United Kingdom.

The judicial decision shall be issued within 10 days after receiving the request and will force national authorities of the country where the debtor holds a current account to freeze the unpaid sum in order to guarantee its further payment.  The short term of 10 days avoids the debtor from moving those amounts from a bank to another or from a country to another in order to avoid its debt payment to creditor.

“The recovery of the amount will be faster, less expensive and more efficient”, stated Brussels authorities in a press release.   The goal is to guarantee a sole procedure and standard forms all over EU.

“Since there is a sole procedure to be followed, the legal fees will be limited”, said the Community executive.  Creditor needs to simply inform local judiciary about both bank and debtor details. It is not necessary to specify current account details.

Nowadays a company may refer to national authorities of the debtor’s country to achieve the same goal. However, the legal fees for those companies are relevant because they often do not know local regulation.  In addition, the new rules consider that debtor shall not be informed by judiciary about relevant freezing of its current account and avoids the transfer of such amount abroad or in another bank.