European Commission to help businesses recover an extra €600 million in cross-border debts Published on: 25/07/2011
The European Commission proposed a new Europe-wide preservation order to ease the recovery of cross-border debts for both businesses and citizens.
Around 1 million small businesses face problems with cross-border debts and up to €600 million a year in debt is unnecessarily written off because businesses find it too daunting to pursue expensive, confusing lawsuits in foreign countries.
A small Italian cheese company supplies mozzarella to a frozen pizza maker in France. After the French company falls behind on its payments, the Italian firm stops the shipments, but it’s stuck with thousands of euros of unpaid bills. How will the Italian company recover the debt?
Today there is no easy answer. Fraudsters can easily move money from one Member State to another, stashing funds in several accounts in multiple countries. At the moment, it’s up to national law to require a bank to pay the money from a client’s bank account to a creditor. The current situation in the 27 Member States is legally complicated, time consuming and expensive.