EU

Outlook rosy for the EU Collateral Directive?

Dermot Turing, partner, Clifford Chance, London

The EU Collateral Directive has rightly been welcomed by the financial sector as a helpful measure which, at a stroke, will cut out layers of confusing bureaucracy in taking collateral. In broad terms, the Directive requires member states of the EU to abolish almost all legal rules which impose requirements on persons taking collateral, such as the need for registration, or special wording in documents, or other formalities, and also to abolish legal rules about enforcement of collateral, such as requirements to sell collateral by auction or after obtaining a court order. Furthermore, some insolvency rules which allow insolvency officials to claw back collateral provided at the moment formal insolvency proceedings are initiated must be repealed.