Optionality and EU Harmonization of Restructuring and Insolvency Law: The Case of the Preventive Restructuring Directive and Priority Rules

Abstract Recent EU efforts to harmonize national restructuring and insolvency law seek to reduce uncertainty regarding the content of the laws of other Member States. At first blush, it therefore seems lamentable that the directives adopted or currently discussed contain optionality ‒ i.e., leaving it to Member States to choose between two or more rules. This article develops two theories for when harmonization efforts in this area are worthwhile even if the resulting directives contain optionality: first, that a limited number of clearly defined options may contribute to reducing uncertainty; second, that the mere fact that Member States must transpose directives may spur convergence beyond what is strictly necessary for compliance. The article then uses as a case study the Preventive Restructuring Directive’s options between different priority rules and the choices made in five Member States when transposing the Directive.