Business crisis: Europe sets the rules - SMEs can now save themselves before bankruptcy

Entrepreneurs in difficulty no longer need to wait for bankruptcy to try to save their companies.

A European Directive 2019/1023 introduced preventive restructuring tools that allow intervention while problems are still solvable. The research carried out as part of the OITBC project - funded by Erasmus+ and coordinated by Casartigiani Arezzo - analysed how eight countries are implementing this silent revolution.

The results reveal a changing landscape. Italy focuses on the debt service coverage ratio to identify crises, Spain has set up confidential self-diagnosis systems, while Portugal monitors EBITDA and liquidity through its Central Bank. Each country is building its own early warning system, but the goal remains the same: to act before it's too late.

The innovation is not 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 the specific needs of the company," explains the research - no pre-defined models, but customised solutions for companies that represent 99% of the European business 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, the alarm sounds: the company is not generating enough cash flow to meet payments. Portugal monitors six parameters, from EBITDA to financial autonomy. Spain intercepts tax arrears. The common goal: to intervene when insolvency is "reasonably foreseeable" within the next 12 months.
to 24 months. The benefits are spread throughout the supply chain. Creditors recover more in traditional liquidations compared to other methods. Employees keep their jobs. Banks see fewer loans becoming irrecoverable. Local communities don't lose their productive fabric. A positive domino effect is documented by research, country by country. The Balkans are also on the boil. North Macedonia, Serbia, Bosnia-Herzegovina and Albania are preparing their reforms to align with European standards: different deadlines, but the same direction: modernising insolvency procedures before integration.

The OITBC project assessed the opinion of entrepreneurs through 160 questionnaires in four countries. The result: there is still a lot of work to be done to publicise these tools. The idea is therefore to create digital platforms and training seminars to fill this gap. One question remains open: how quickly will this regulatory revolution become common practice? 

The tools are there, but a change in mentality is needed. Entrepreneurs must learn to seek help before they drown. The credit system must support restructuring rather than tighten the noose. A cultural challenge rather than a technical one, in a Europe that has chosen to defend second chances rather than punish failure.

For information about the project: www.oitbc.eu