EU Inc.: Council mandate removes the insolvency chapter from the 28th regime proposal
On 23 October 2026, the Council of the EU adopted its negotiating mandate on the proposed EU Inc. Regulation (the 28th regime corporate legal framework). The Council's text removes Chapter X of the Commission's proposal, which would have created a simplified, digital winding-up procedure for insolvent EU Inc. companies that qualify as innovative startups, including mandatory electronic auction platforms for selling insolvency estate assets. Under the Council's mandate, insolvency of an EU Inc. company is expressly outside the scope of the proposed Regulation and remains subject to national insolvency law.
The Council has kept harmonised rules on nullity, digital filing for all liquidations and a fast-track liquidation procedure for solvent EU Inc. companies, with added safeguards for creditors and more personal liability for directors.
Next up will be to see what the European Parliament’s position is. Then the Council presidency can start trilogue negotiations (three-way negotiations between the European Parliament, the Council and the Commission). The European Council has called for agreement on EU Inc. by the end of 2026. Whether Chapter X on insolvency returns in some form will be a key point to watch in those negotiations. Innovative startups, their investors and lenders, and insolvency practitioners should follow developments closely.
Background: the 28th regime and the excision of Chapter X
The proposed "EU Inc." is an optional, 28th regime corporate legal framework intended to sit alongside the 27 EU Member States’ national company law regimes.
In April 2026, we looked at the insolvency and liquidation provisions of the Commission's draft EU Inc. proposal. Compared to the Commission's initial draft, the Council has curtailed the proposal's restructuring and insolvency ambitions by removing the simplified winding-up regime for insolvent startups.
The Council's note to Coreper (the Committee of Permanent Representatives of the Member States) states that, following political guidance, "Chapter X on insolvency has been removed from the text". The EU Inc. Regulation, in the Council's version, now says expressly that closure matters "such as rules governing insolvency or rules governing liquidation other than those laid down in Articles 82–87, are outside of the scope of this Regulation", and that they "remain subject to applicable national and Union law".
What remains: nullity, digitalisation and solvent liquidation
Nullity of an EU Inc.
Nullity of an EU Inc. company may only be ordered by a court, and only on an exhaustive list of grounds:
- the articles of association are invalid (for example, they do not state the company's name, its object or the subscription for the first shares)
- the company's activities are unlawful or contrary to public policy
- the company's objects are unlawful or contrary to public policy
- all founder members lacked legal capacity when the company was formed.
No other ground of non-existence or nullity can apply to an EU Inc. company. Nullity leads to liquidation but does not of itself affect commitments entered into by or with the company. Third parties may challenge a nullity decision within six months of its publication.
Digital filing and the once-only principle for all EU Inc. liquidations
For all EU Inc. liquidations, the Council preserves the 'once-only' digital filing mechanism. Dissolution information and liquidation documents for an EU Inc. are filed fully online with the business register. The business register updates the company's status straight away, informs the relevant national authorities and shares documents with them digitally, so the company does not have to file the same information separately. Creditors can submit claims fully online, with no national requirement for a physical form or notarial authentication.
Fast-track liquidation of solvent EU Inc. companies: conditions and safeguards
The harmonised fast-track liquidation procedure has been kept and developed in more detail. The core conditions are unchanged. At the date of dissolution, the EU Inc. company must have:
- ceased its economic activity
- no assets, or have distributed all of them to shareholders
- no liabilities
- no pending administrative or judicial proceedings
The Council's text adds more detail and safeguards to fast-track liquidation:
| Creditor consent | An EU Inc. company with outstanding liabilities may still use the fast-track procedure if all known creditors consent.
Consenting creditors waive their right to enforce claims against the company once it is struck off the register. |
| Directors' liability for false consent | Directors are personally (and, where applicable, jointly and severally) liable to creditors for damage caused by a false or fraudulent declaration of consent, or by consent obtained under duress or by materially misleading a creditor.
A director can escape liability by proving that the problem was not attributable to them and that they took all reasonable steps to make sure the consent was genuine. |
| Court-ordered dissolution | A court may authorise the fast-track procedure if the conditions are met, unless the dissolution involves unlawful activity or public policy concerns. |
| Effect of removal | Removal from the business register ends the EU Inc. company's legal personality, unless national law deems to keep it alive where assets are found later.
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| Creditor protection after removal | Creditors whose claims were still being considered, or who did not submit a claim, keep their rights. They can claim against the directors, who are personally (and, where applicable, jointly and severally) liable for unsatisfied liabilities.
Creditors can also access the books and records through a person appointed by the general meeting of creditors, who must keep them for six years after removal.
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The deadlines and objection rules in the fast-track liquidation procedure are set out below.
Party | Deadline | Effect of objection or silence |
Creditors | 30 days from publication of the fast-track filing. Creditors who originally consented may object only on "strong grounds". Late objections count if received before removal from the register. | Any objection ends the fast-track procedure; the business register acts "without conducting any assessment" |
Tax and social security authorities (where national law requires clearance before strike-off) | 30 days from publication, extendable once by up to 30 days | An objection ends the fast-track procedure; silence is treated as clearance |
Business register | On expiry of the creditor and authority deadlines | Strikes off the EU Inc. company if there are no objections |
Key takeaways on the Council's EU Inc. insolvency and liquidation changes
- No EU-level insolvency regime: By dropping Chapter X, the Council preserves Member State sovereignty over substantive insolvency. Insolvent EU Inc. entities must navigate the patchwork of 27 national insolvency regimes rather than a single digital EU procedure.
- Loss of cross-border e-auctions and legislative outlook: Deleting Chapter X also discards mandatory national insolvency e-auction platforms and their EU interconnection. Whether the European Parliament seeks to reinstate e-auctions or parts of Chapter X in upcoming trilogues ahead of the targeted end-2026 agreement will be a pivotal negotiation dynamic.
- A workable exit for solvent entities, but with heightened director exposure: Fast-track liquidation provides a streamlined, cost-effective exit for dormant or clean businesses. However, directors face joint and several personal liability for false declarations or unconsidered creditor claims, making rigorous pre-dissolution diligence essential.
- Lenders and trade creditors must monitor registers actively: The 30-day objection window is tight, and consenting creditors extinguish their claims upon strike-off. Counterparties must maintain active register tracking to object before strike-off occurs.
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By dropping Chapter X, the Council preserves Member State sovereignty over substantive insolvency.
