Entrepreneurs facing difficulties no longer need to wait for bankruptcy to attempt to save their companies. European Directive 2019/1023 has introduced preventive restructuring tools that allow intervention whilst problems remain solvable. Research conducted within the OITBC project – funded by Erasmus+ and coordinated by Casartigiani Arezzo – has examined how eight countries are implementing this quiet revolution.
The findings reveal a landscape in flux. Italy focuses on the Debt Service Coverage Ratio to identify crises, Spain has created confidential self-diagnostic systems, whilst Portugal monitors EBITDA and liquidity through its Central Bank. Each country is building its early warning system, yet the objective remains identical: acting before it’s too late.
The innovation isn’t merely technical – it’s cultural. Before the directive, entrepreneurs were subject to procedures initiated by creditors. Today, they can take the initiative when they see the storm approaching. “Free-form restructuring allows interventions to be tailored to specific company needs,” the research explains – no pre-packaged models, but bespoke solutions for businesses that represent 99% of Europe’s entrepreneurial fabric.
The indicators that save companies vary from country to country. Italy examines net worth and debt servicing capacity. When the DSCR falls below 1, alarm bells ring: the company isn’t generating sufficient cash flows to meet repayments. Portugal monitors six parameters, from EBITDA to financial autonomy. Spain intercepts missed tax payments. The common goal: intervening when insolvency is “reasonably foreseeable” within the next 12-24 months.
The benefits ripple throughout the entire supply chain. Creditors recover more in traditional liquidations compared to other methods. Employees retain their jobs. Banks see fewer loans turn bad. Local communities don’t lose their productive fabric. A positive domino effect is documented by the research, country by country.
The Balkans are also stirring. North Macedonia, Serbia, Bosnia-Herzegovina, and Albania are preparing their reforms to align with European standards: different timescales, but the same direction: modernising insolvency procedures ahead of integration.
The OITBC project has taken the pulse of entrepreneurs through 160 questionnaires across four countries. The result: there’s still much work to be done in spreading awareness of these tools. Hence, the idea is to create digital platforms and training seminars to bridge the gap.
One question remains open: How quickly will this regulatory revolution become standard practice? The tools exist, but a change of mindset is required. Entrepreneurs must learn to seek help before drowning. The credit system must support restructuring rather than tightening the noose. A cultural challenge before a technical one, in a Europe that has chosen to champion second chances rather than punish failure.