Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions - Overcoming the stigma of business failure – for a second chance policy - Implementing the Lisbon Partnership for Growth and Jobs
Date: 2007-10-05
Institutions: European Commission
Subjects: European Employment Strategy, aid to undertakings, bankruptcy, company in difficulties, economic and social cohesion

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.10.2007 
COM(2007) 584 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Overcoming the stigma of business failure – for a second chance policy 

Implementing the Lisbon Partnership for Growth and Jobs 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE 
EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Overcoming the stigma of business failure – for a second chance policy 

Implementing the Lisbon Partnership for Growth and Jobs 

CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

3.4 

4. 

Introduction .................................................................................................................. 3 

Businesses at risk and business failure are inherent to our societies ........................... 3 

Business renewal is part of the market economy ......................................................... 3 

Bankruptcy is also an opportunity................................................................................ 4 

Towards a second chance policy.................................................................................. 5 

Public image, education and the media........................................................................ 6 

The role of insolvency law........................................................................................... 7 

Actively supporting businesses at risk ......................................................................... 8 

Actively supporting re-starters..................................................................................... 9 

Conclusion.................................................................................................................. 11 

Table:  Current situation in Member States............................................................................ 11 

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1. 

INTRODUCTION 

In  February  2005,  the  Commission  proposed  a  fresh  start  for  the  Lisbon  Strategy  focusing 
the  EU’s  efforts  on  delivering  stronger,  lasting  growth  and  providing  more  and  better  jobs. 
This will only be achieved by creating a supportive environment for small and medium-sized 
enterprises (SMEs) and a more entrepreneurial culture1. 

Entrepreneurship is inherently risky and it requires self-confidence and autonomy as well as 
a certain readiness for risk-taking, as business creation, business success and business failure 
are  inherent  to  the  reality  of  the  market  economy.  However,  as  part  of  the  general  lack  of 
societal  appreciation  and  understanding  of  entrepreneurship,  business  distress  or  even 
business failure is not yet sufficiently understood as a normal economic development and an 
opportunity for a new start. 

The  Commission  considers  that  a  more  supportive  environment  for  businesses  at  risk  may 
prevent failure. Furthermore, addressing the negative consequences of business failure when it 
occurs and its negative image would help make the best possible use of human creativity in 
Europe, boost entrepreneurship and promote innovation and job creation. It would also help 
foster  a  more  favourable  societal  climate  in  Europe  towards  entrepreneurship  where  only 
fraudulent  and  criminal  behaviour  is  punished.  Member  States  and  the  business  community 
are therefore invited to further work on a supportive environment for entrepreneurs at risk and 
those  who  have  experienced  a  business  failure  with  a  view  to  turning  the  EU  into  a  more 
dynamic place for entrepreneurship and second chance. 

2. 

BUSINESSES AT RISK AND BUSINESS FAILURE ARE INHERENT TO OUR SOCIETIES 

2.1. 

Business renewal is part of the market economy 

50% of enterprises do not survive the first five years of their life. The yearly average death 
rate of companies in the EU-25 is 7%2. Economic literature see business closure as an element 
compatible  with  economic  development  in  a  global  economy,  something  also  recognised  in 
the  Charter  for  small  enterprises3.  A  low  survival  rate  is  thus  not  necessarily  a  cause  for 
concern  –  entry  by  new  firms  is  part  of  the  process  whereby  entrepreneurs  react  to  market 
reality. A recent OECD study shows that survival rates of companies over a four-year period 
appear to be even lower in the US than in continental European countries4, illustrating that the 
death of companies can be compatible with economic dynamism. There is reason to believe 
that  increasing  global  competition  is  forcing  entrepreneurs  to  react  more  rapidly  and  more 
flexibly,  even  by  closing  their  business  and  opening  another  one.  The  data  confirm  a  high 
correlation between entry and exit rates in both the EU and the US, suggesting a continuous 
process  of  creative  destruction  by  which  low  productivity  firms  exit  the  market  and  are 
replaced by new ones. 

1 

2 
3 
4 

Modern  SME  Policy  for  Growth  and  Employment,  European  Commission,  COM(2005)551  final, 
10.11.2005. 
European business. Facts and figures. Data 1995-2004, Eurostat, 2006. 
http://ec.europa.eu/enterprise/enterprise_policy/charter/index_en.htm. 
The sources of economic growth in OECD countries, OECD, 2003; and Business Demography: growth 
in the population of enterprises, Eurostat, Statistics in focus No 48/2007. 

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2.2. 

Bankruptcy is also an opportunity 

Out  of  all  company  closures,  bankruptcies  account  for  some  15%5,  while  11  to  18%  of  all 
company creators have experienced some failure6. Even though there is a natural correlation 
between  the  business  cycle  and  the  number  of  insolvencies7,  bankruptcies  also  happen  in 
periods of high GDP growth. There is a strong case for believing that bankruptcy is in essence 
a  direct  consequence  of  entrepreneurial  renewal:  only  4-6%  of  bankruptcies  are 
fraudulent8. 

However, the role of business failure in economic life is not well understood in our society. 
Public opinion makes a strong link between business failure and personal incapacity or fraud. 
In  the  EU,  stigma  is  present  in  the  business  environment,  the  legal  framework  and  also  in 
cultural and societal behaviour. This creates unnecessary hurdles to entrepreneurs who wish to 
restart.  Despite  existing  knowledge  of  restarters’  performance,  customers  and  financiers  are 
reticent to place orders and invest. 79%9 of EU citizens affirm that they would give a second 
chance to those who have previously failed. But attitudes change when it comes to “practice”: 
47%10 of Europeans would be reluctant to order from a previously failed business; 51%11 of 
them would never invest in businesses in financial difficulties. 

Available  analysis  also  shows  that  only  a  small  fraction  of  failed  entrepreneurs  make 
another attempt to start up12, despite the fact that the majority of ex-entrepreneurs still have 
entrepreneurial preferences13 and young people hope for a second chance14. This is first of all 
because insolvencies have a particularly great impact on entrepreneurs themselves. Around 
one  third  of  bankrupts  sell  their  house,  while  negative  repercussions  reach  other  family 
members  in  25%  of  cases.  Business  failure  is  a  stressful  situation  leading  to  relationship 
breakdown in 15% of cases15.  

Moreover,  entrepreneurs  who  have  failed  are  still  confronted  with  an  environment  which 
underestimates  the  new  opportunities  created  by  business  failure.  Evidence  suggests  that 
failed  entrepreneurs  learn  from  their  mistakes  and  are  generally  more  successful  second 
time  around16.  Restarters  usually  experience  faster  growth  than  newly  established 
companies17  and  after  five  years  their  start-ups  have  good  survival  rates.  Research  on  the 

5 

6 

7 
8 
9 
10 
11 
12 
13 
14 

15 
16 

17 

A.C.P.  de  Koning,  Business  failure  and  entrepreneurship  in  international  perspective,  EIM  Small 
Business Research and Consultancy, 1999. 
Kreditanstalt  für  Wiederaufbau  Bank  Group  2007,  Mittelstandsmonitor  2007,  http://www.ifm-
bonn.org/presse/mimo-2007.pdf. 
The concept of business insolvency varies from one country to another, making it hard to compare data. 
The percentage would be 3-4% in Italy and the UK and 7% in Austria (2003-2006 national data). 
Flash Eurobarometer No 192 (2007). 
Flash Eurobarometer No 146 (2004). 
See footnote 9. 
G. Metzger, After life – who takes heart for restart? ZEW Discussion Paper No 06-038, 2006. 
E. Stam, D. B. Audretsch and J. Meijaard, Renascent Entrepreneurship, ERIM, 2006. 
In a 2005 youth survey by Junior Achievement-Young Enterprise, involving respondents from 18 EU 
Member States and 7 countries from Eastern Europe and the Balkans, 58% of young Europeans felt that 
if they failed at starting a business they would have a second chance. 
R. Blom, Faillissement - oorzaak en gevolg, Graydon, 2004. 
Facing  the  challenge  -  The  Lisbon  strategy  for  growth  and  Employment,  report  from  the  High  Level 
Group chaired by Wim Kok, 2004; or I. Ekanem and P. Wyer, A fresh start and the learning experience 
of ethnic minority entrepreneurs, International Journal of Consumer Studies 31 (2), 144–151, 2007. 
Global Benchmark Report 2006 – Ready for globalisation?, Confederation of Danish Industries, 2006. 

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profile  of  successful  entrepreneurs  shows  that  18%  had  already  run  one  enterprise.  6%  had 
run two or more18. 

Finally,  while  being  part  of  economic  life,  insolvency  has  a  negative  impact  on  jobs, 
consumers and public and private creditors. In 2006, some 135 000 company insolvencies in 
the EU-15 threatened the jobs of 1.4 million employees (1.5 million in 2005) and the number 
of personal insolvencies amounted to more than 237 000 in Germany and the UK alone19. The 
same  year  in  Austria  outstanding  debts  to  employees  represented  243  million  euros.  As 
regards  other  unpaid  debts,  in  Germany  50%  of  debtors  were  active  enterprises  and  self-
employed.  In  France,  where  the  yearly  estimated  costs  of  insolvency  proceedings  are  13.7 
billion  euros,  some  55-60%  of  unpaid  debts  are  due  to  tax  and  social  security  authorities 
and  banks,  this  percentage  being  70-80%  in  the  case  of  bankrupt  services  companies20. 
Unpaid  debts  in  Germany  amounted  to  31.1  billion  euros  in  2006  (37.5  in  2005;  39.4  in 
2004), in Italy 9.6 billion in 2004, in Finland 1.37 billion in 2003. The wide range of costs 
that bankruptcies entail would be reduced if businesses at risk were better assisted and, 
in case of bankruptcy, a fresh start was facilitated. 

3. 

TOWARDS A SECOND CHANCE POLICY 

The  Commission  has  started  addressing  the  need  for  a  new  policy  to  tackle  the  issue  of 
business at risk and the negative effects of business failure since 2001 and, subsequently, as 
part of the Entrepreneurship Action Plan21. It renewed its commitment to such a policy in 
the Modern SME policy22, launched in 2005. In particular, the Commission has flagged the 
need  to  improve  bankruptcy  procedures.  Given  its  limited  competencies  in  the  area  the 
Commission  has  limited  itself  to  collecting  data  on  the  legal  and  social  consequences  of 
business  failure23,  facilitating  the  identification  and  dissemination  of  good  practices24  and 
recently to working on early warning tools as a means of reducing the stigma of failure. This 
has helped trigger reform across the EU and many Member States have already drawn some 
inspiration from the good practices and policy conclusions collected at European level.  

There is in many EU countries – although to varying degrees – a policy commitment at the 
level of national and regional authorities to address the issue of business failure and promote 
fresh starts. In the context of the renewed Lisbon Strategy, around one third of the Member 
States have put forward plans to reform the national insolvency legislation in their National 
Reform  Programmes25.  As  a  result,  progress  has  been  made  in  improving  insolvency  law: 
half  of  the  Member  States  have  taken  measures  to  reduce  the  discharge  periods,  remove 
restrictions or streamline bankruptcy proceedings (see Annex). The UK addressed most issues 

18 

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20 

21 
22 
23 

24 

25 

The  profile  of  the  successful  entrepreneur.  Results  of  the  survey  “Factors  of  Business  Success", 
Eurostat, Statistics in focus 29/2006. 
Insolvencies in Europe 2005/6, Creditreform Economic Research Unit. 
P. Matsakos et al., Vie et Survie des PME, PMI, TPE dans leur environnement quotidien aujourd'hui et 
demain, Rapport Saratoga/Datar, 2004. 
The European Agenda for Entrepreneurship, European Commission, COM(2004)70 final, 11.2.2004. 
See footnote 1. 
Activities  carried  out  within  the  Multiannual  Programme  for  Enterprise  and  Entrepreneurship  2001-
2006 (“Best Procedure”, “European Charter for Small Enterprises”). 
Final  report  of  the  expert  group  of  the  Best  project  on  Restructuring,  Bankruptcy  and  a  Fresh  Start, 
European Commission, 2003. 
Annex to the Communication from the Commission to the Spring European Council: Implementing the 
renewed  Lisbon  Strategy  for  Growth  and  Jobs  -  "A  year  of  delivery".  European  Commission, 
COM(2006)816 final, 12.12.2006. 

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already  in  2002.  Spain  and  Italy  introduced  similar  measures  in  their  laws  more  recently. 
However,  almost  half  of  the  EU  countries  still  need  to  take  the  first  steps  in  this  direction. 
Also, no Member State has yet set up a comprehensive strategy for a second chance policy – 
only  Austria  has  announced  new  plans  for  2008.  Indeed,  there  is  still  room  to  go  further  to 
foster a more positive attitude towards entrepreneurship, to encourage more people to start up 
and to reduce risks and the stigma of failure. 

3.1. 

Public image, education and the media 

The first step to tackle the negative effects of business failure is to publicly discuss it, address 
the  entrepreneurs  of  the  future  and  raise  awareness  of  the  benefits  of  renewed 
entrepreneurship.  Research  indicates  that  cultural  support  (e.g.  through  promotional 
campaigns) is positively linked to the amount of entrepreneurial activity in the EU26.  

Many young people never become entrepreneurs in the end. Entrepreneurship education is a 
fundamental  means  to  materialise  their  entrepreneurial  spirit  and  make  them  aware  that 
business failure is the starting point of a new beginning. Nowadays Europeans are reluctant to 
take up opportunities for self-employment and entrepreneurial activities and are clearly afraid 
of bankruptcy27. National lifelong learning strategies can play a key role in developing and 
updating entrepreneurial and business skills. 

A Dutch booklet28 presents seven cases where entrepreneurs share their own experience about 
bankruptcy and explain how they became successful restarters. It can be downloaded from the 
website of the Dutch Ministry of Economic Affairs. 

In the EU the general public often perceives bankruptcy as a criminal affair, no matter the 
cause.  The  media  have  a  positive  role  to  play  in  tackling  this  misperception  and  in 
disseminating  information  on  the  benefits  our  society  can  derive  from  the  experiences  of 
failed entrepreneurs. So do relevant awards. 

In the last two years in Germany there has been a START AWARD with a category called 
RESTART.  Sponsored  by  the  two  public  support  banks  and  a  regional  start-up  support 
agency, it was given to honest entrepreneurs who learned from business failure and succeeded 
with their second start-up. Mainstream media were eager to report more on the topic. 

Lessons to be learnt 

•  The benefits of a fresh start should be put forward in information campaigns and education 
programmes,  showing  that  making  several  attempts  goes  hand  in  hand  with  a  normal 
learning process, research and discovery. 

•  The  media  can  play  a  role  in  dissociating  bankruptcy  and  fraud  and  disseminating  the 
benefits  of  renewed  entrepreneurship,  thus  improving  the  image  of  business  restarters 
among the public at large and valuing their experience. 

•  Further discussing the issue with all relevant actors should help uncover the many facets 

of stigma surrounding business failure. 

26 
27 
28 

Global Entrepreneurship Monitor 2004. 
See footnote 9. 
Tweede kans – failliet gaan betekent niet mislukken/lessen in vallen en opstaan, http://www.minez.nl/. 

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3.2. 

The role of insolvency law 

Making a fresh start after bankruptcy can be challenging from a legal standpoint. Still in many 
countries  bankruptcy  law  treats  everyone  in  the  same  way  irrespective  of  whether  the 
bankrupt  was  fraudulent  or  irresponsible  or  whether  the  failure  was  through  no  obvious 
fault of the owner or the manager, i.e. honest and above-board. Also, numerous rules impose 
restrictions,  prohibitions  and  disqualifications  on  bankrupts  solely  on  the  basis  of  the 
existence of bankruptcy proceedings. This automaticity of approach takes no account  of the 
risks  that  are  an  everyday  fact  of  business  life  and  implies  a  belief  that  the  bankrupt  is 
someone in whom society can have no trust or confidence. A radical shift in the rationale of 
insolvency laws is needed in the EU. 

Recent  research29  sought  to  test  whether  relaxing  the  severity  of  personal  bankruptcy  law 
would stimulate entrepreneurship across 15 countries. 13 EU countries were analysed, along 
with Canada and the US, where the federal Bankruptcy Code permits debtors an immediate 
discharge. The study used discharge as a measure of “severity” and data on self-employment 
over 13 years. It concluded that bankruptcy law has a strong effect on business start-ups 
and that its economic significance was greater than GDP growth and stock market returns. 

Greece  has  introduced  a  new  bankruptcy  code  aimed  at  differentiating  between  plain  and 
fraudulent bankruptcy. In the future, non-fraudulent bankrupts will not  be  liable  to  personal 
arrest and their rights to vote and stand for election will remain intact.  

Entrepreneurs can find it difficult to free themselves from overwhelming debts and then again 
starting up. Often the remaining debts will not automatically cease to exist once insolvency 
proceedings are closed: if the debtor is a natural person he will remain answerable for them. 
In the event of personal liability, the creditors will be free to recover the remaining debts by 
attachment  of  the  debtor’s  personal  assets.  Nonetheless,  when  the  entrepreneur’s  personal 
assets  do  not  suffice,  debt  relief  is  sometimes  possible.  For  honest  bankrupts  a  plan  for 
repayment  of  the  debts  is  possible  in  countries  like  Portugal,  Hungary  or  Finland.  They  are 
automatically granted a discharge in Belgium, Ireland or the UK30. 

In the UK all bankrupts are subject to some restrictions during the period of their bankruptcy 
but  honest  bankrupts  are  discharged  within  a  maximum  of  12  months.  Bankrupts  whose 
conduct was dishonest, reckless or culpable may have severe restrictions imposed upon them 
for up to 15 years. 

29 

30 

J.  Armour  and  D.J.  Cumming,  "Bankruptcy  Law  and  Entrepreneurship".  University  of  Cambridge, 
Centre for Business Research, Working Paper No 300, 2005. 
Entrepreneurship  Policy  Indicators:  Bankruptcy  legislation  in  OECD  Member  and  Non-Member 
Economies, OECD CFE Working Paper Series No 1, 2006. 

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Moreover,  there  seems  to  be  a  clear  correlation  between  the  relative  quality  of  a  country’s 
insolvency legislation and the relative effectiveness of its insolvency regime31, the rule of law 
being  key  to  our  society32.  In  particular,  lengthy  proceedings  are  generally  too  time-  and 
money-consuming and deter a fresh start through capital destruction. In the EU, the average 
time  to  complete  a  bankruptcy  procedure  and  close  a  business  varies  between  4  months 
(Ireland) and 9.2 years (Czech Republic), the cost ranging from 1% (the Netherlands) to 22% 
of  the  estate  (Poland)33.  Streamlined  bankruptcy  proceedings  would  mean  an  easier  exit  for 
loss-making enterprises, better re-allocation of resources and a fairer distribution of remaining 
assets among creditors.  

In Latvia a new Insolvency Law will come into force on 1 January 2008. One of the goals 
being  to  reduce  the  length  of  procedures,  it  will  substantially  change  the  objectives  and 
principles of insolvency proceedings. 

Lessons to be learnt 

•  It  is  vital  to  create  the  right  framework  which,  while  protecting  all  parties’  interests 
appropriately,  recognises  the  possibility  for  an  entrepreneur  to  fail  and  start  again. 
Bankruptcy  law  should  include  a  clear  distinction  between  the  legal  treatment  for  non-
fraudulent and fraudulent bankrupts. 

•  Entrepreneurs who go bankrupt through no fault of their own should be entitled to receive 
a formal Court decision declaring them non-fraudulent and excusable. The decision should 
be publicly accessible. 

•  An early discharge from remaining debts subject to certain criteria should be provided for 

in insolvency law. 

•  Legal restrictions, disqualifications or prohibitions should be reduced. 

•  Legal  proceedings  should  be  made  simpler  and  faster,  thus  maximising  the  value  of  the 
assets in a bankruptcy estate when reallocating resources. Typically, proceedings should 
last a maximum of one year. 

3.3. 

Actively supporting businesses at risk 

The  stigma  of  business  failure  is  one  reason  why  many  SMEs  in  financial  trouble  conceal 
their problems until it is too late. Timely action is crucial to avoid bankruptcy and a rescue is 
in many cases preferable to liquidation. This is why the legal systems of countries like France, 
Estonia, Spain, Malta or Italy now opt rather for restructuring and business continuity.  

Many  entrepreneurs  often  lack  the  necessary  resources  and  experience  for  successful  crisis 
management. If mistakes occur at this stage, or if there is no proper advice available in time, 
bankruptcy can become inevitable. 

31 

32 

33 

2004  EBRD  Legal  Indicator  Survey  for  transition  economies,  in  The  European  Restructuring  and 
Insolvency Guide 2005/2006. 
Closer  judicial  cooperation  should  help  ensure  that  some  bankrupts  do  not  cross  borders  in  order  to 
avoid disqualifications and restrictions imposed by their home country but unknown in the country of 
the  next  establishment.  The  E-justice  Group  of  the  Council  is  studying  the  possibility  of  setting  up  a 
register  of  company  law-related  Court  judgments  at  EU  level,  allowing  direct  interconnection  of 
national registers and Courts. 
Doing Business in 2007, World Bank. 

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Denmark  is  introducing  a  pilot  “early  warning  system”  modelled  on  the  Dutch 
Ondernemersklankbord. With 4-year funding, this system will help viable enterprises that are 
headed for insolvency owing to temporary problems by giving them practical know-how and 
advice.  

Early warning tools can be of many kinds, ranging from on-line resources, through relevant 
publications to more direct involvement of those actors who are better equipped to follow the 
financial situation of businesses. Additional funding to overcome an unstable period can also 
be  crucial.  To  help  entrepreneurs  assess  their  financial  health  at  an  early  stage,  the 
Commission has put a self-assessment tool on-line34.  

In the reminders for VAT non-payment, France includes information on where entrepreneurs 
who  are  facing  financial  problems  can  seek  advice35.  Also,  entrepreneurs  can  take  out  an 
insurance  policy  covering  expenses  (legal  advice  and  mediator  fees)  for  settling  debts  at  an 
early stage. 

Lessons to be learnt 

•  The  number  of  insolvencies  cannot  be  reduced  to  zero,  but  early  support  for  viable 
enterprises  will  help  keep  insolvencies  to  a  minimum.  Support  measures  should  focus  on 
bankruptcy prevention, expert advice and timely intervention. 

•  Attention  needs  to  be  paid  to  the  accessibility  of  support,  as  businesses  at  risk  cannot 

afford expensive advice. 

•  The  networking  opportunities  offered  by  the  EU36  and  European  business  organisations 

should be fully exploited. 

•  Insolvency  laws  should  provide  an  option  to  restructure  and  rescue  rather  than  focus 

solely on liquidation. 

3.4. 

Actively supporting restarters 

The  main  constraints  entrepreneurs  face  when  setting  up  a  second  venture  –  resources, 
relevant skills  and  psychological support – are not  sufficiently  addressed by public support. 
Being alone as an entrepreneur is among the top four difficulties when starting up37. 

In general, fresh starts are deterred because of the lack of resources to set up a new business, 
notably  of  financial  means38.  Often  restarters  plan  to  start  with  less  capital  than  other  new 
starters, plan businesses with relatively few employees and choose a limited company as legal 
form.  During  the  early  months  of  their  start-up  their  main  problems  are  finding  clients  and 
customers, liquidity and obtaining public financial support.  

34 
35 
36 

37 
38 

http://ec.europa.eu/sme2chance.  
http://www.entrepriseprevention.com/. 
The  INTERREG  IVC  programme  under  the  European  Regional  Fund  is  a  strong  tool  to  foster  the 
exchange of good practices in the area of business support, http://www.interreg3c.net/web/fic_en. 
See footnote 18. The other three difficulties are contacts with customers, administration and financing. 
See footnote 12. 

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In  Saxony  (Germany),  SMEs  that,  in  the  context  of  insolvency  proceedings,  prove  their 
ability to reorganise can obtain funding from the Public Development Bank of Saxony with a 
view  to  drawing  up  an  insolvency  plan,  continuing  in  business  and  starting  afresh  once  the 
insolvency proceedings are closed. 

It is vital to ensure that bankrupts take stock of their experience and are then well trained for 
their new business. The existence of entrepreneurial role models, being mobile and having a 
higher  education  would  increase  the  probability  of  starting  anew.  Also  younger  ex-
entrepreneurs are much more likely to be renascent entrepreneurs than are older ones39. These 
are some common trends, but the needs of restarters are rather singular and require a flexible 
approach when designing support measures. 

Since  2004,  Luxembourg  has  offered  some  40  non-fraudulent  bankrupts  a  tailor-made 
training course on management issues to better equip them for their fresh start. 

Bankrupts can lose confidence in their own capabilities and be emotionally affected. Specific 
professional  and  psychological  advice  on  how  to  overcome  bankruptcy  is  then  crucial.  Re-
entry  into  the  business  community  would  also  be  facilitated  by  matching  restarters  with 
market niches, new partners and potential investors. 

The French association Re-créer, created in 1999 with the backing of the French Chamber of 
Commerce  and  Industry  and  the  French  Association  of  Bankers,  works  on  boosting  the 
confidence of restarters who underwent business failure.  

Lessons to be learnt 

•  Relevant  authorities  should  devote  sufficient  financial  means  to  fresh  starts  by  removing 

barriers to public finance schemes for start-ups.  

•  Banks  and  financial  institutions  should  revisit  their  very  cautious  attitude  towards 
restarters, often based on negative credit ratings. The Commission plans to put this issue 
on the agenda of the Round Table of Bankers and SMEs. 

•  EU countries should ensure that the names of non-fraudulent bankrupts do not appear on 

lists restricting access to loans in the banking sector. 

•  Public  procurers  should  be  aware  that  public  procurement  directives  do  not  allow  for 

former non-fraudulent bankrupts to be disadvantaged. 

•  Adequate psychological and technical support and specific training and coaching should 

be available for restarters. 

•  Relevant  authorities  should  facilitate  getting  support  from  customers,  business  partners 
and investors by fuelling links between them and potential restarters with the objective of 
meeting restarters’ needs. 

39 

See footnote 13. 

EN 

10 

   EN 

 
                                                 
4. 

CONCLUSION 

Good national framework conditions for entrepreneurship are crucial to the full exploitation 
of the EU’s entrepreneurial potential and to the creation of dynamic companies. The societal 
appreciation of successful entrepreneurship, vital to this end, should go hand in hand with a 
policy  of  promoting  a  second  chance  for  entrepreneurs  who  are  at  risk  or  have  failed. 
Consequently,  the  Commission  invites  EU  countries  to  engage  more  vigorously  in  reducing 
the stigma of business failure as part of their commitment to promote entrepreneurship under 
the  Growth  and  Jobs  Strategy  and  within  the  context  of  a  comprehensive  entrepreneurship 
policy.  The  Commission  will  continue  to  support  the  Member  States’  efforts  by  raising  the 
visibility of national  good  practices. To speed up the pace of reforms, the Commission will 
also provide communication material to be used for campaigns in order to promote a better 
image of business failure. 

EN 

11 

   EN 

 
TABLE: CURRENT SITUATION IN MEMBER STATES

40 

Y  Measures exist 

(Y) 

Measures planned/available 
partially 

N  No measures exist 

/
n
o
i
t
a
m
r
o
f
n
I

n
o
i
t
a
c
u
d
e

N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N 
N 
N 

2 

y
g
e
t
a
r
t
s

l
l
a
r
e
v
O

N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N 
N 

1 

-
n
o
n
n
e
h
w
y
t
i
c
i
l
b
u
P

t
r
u
o
C

t
n
e
l
u
d
u
a
r
f

n
o
i
s
i
c
e
d

d
e
c
u
d
e
R

c
t
e

,
s
n
o
i
t
c
i
r
t
s
e
r

l
a
g
e
l

r
e
t
t
e
B

t
s
e
n
o
h
r
o
f

t
n
e
m
t
a
e
r
t

s
t
p
u
r
k
n
a
b

e
g
r
a
h
c
s
i
d
t
r
o
h
S

t
b
e
d
r
o
/
d
n
a
d
o
i
r
e
p

f
e
i
l
e
r

d
e
n
i
l

m
a
e
r
t
S

s
g
n
i
d
e
e
c
o
r
p

(Y) 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
Y 

3 

(Y) 
N 
N 
Y 
Y 
N 
N 
Y 
N 
N 
Y 
(Y) 
N 
Y 
N 
N 
(Y) 
N 
(Y) 
N 
N 
(Y) 
N 
N 
Y 
N 
Y 

12 

Y 
N 
N 
(Y) 
Y 
N 
N 
(Y) 
Y 
(Y) 
Y 
N 
N 
(Y) 
N 
N 
(Y) 
(Y) 
(Y) 
(Y) 
N 
(Y) 
N 
N 
N 
Y 
Y 

15 

(Y) 
N 
N 
Y 
(Y) 
(Y) 
Y 
(Y) 
Y 
N 
(Y) 
(Y) 
N 
Y 
N 
N 
N 
(Y) 
(Y) 
(Y) 
N 
N 
(Y) 
N 
(Y) 
(Y) 
Y 

17 

N 
N 
(Y) 
(Y) 
N 
(Y) 
Y 
Y 
Y 
Y 
(Y) 
(Y) 
(Y) 
(Y) 
N 
N 
N 
N 
Y 
Y 
N 
Y 
N 
N 
Y 
Y 
Y 

17 

t
r
o
p
p
u
s

e
t
a
l
u
m

i
t
S

N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
Y 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
Y 
N 
N 

s
k
n
i
l

r
e
t
s
o
F

N 
N 
N 
N 
N 
N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N. 
N 

3 

2 

n
i
h
t
i

w
n
o
i
s
s
u
c
s
i
D

r
o
t
c
e
s

l
a
i
c
n
a
n
i
f

N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
N 
(Y) 
N 
N 
N 
N 
N 
N 
N 
N 
N 

1 

)

Y
(
+
Y

l
a
t
o
T

4 
0 
1 
4 
4 
2 
2 
4 
3 
3 
4 
4 
1 
4 
1 
0 
2 
4 
7 
3 
0 
3 
1 
0 
4 
3 
5 

Belgium 
Bulgaria 
Czech Republic 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 
United Kingdom 

Total Y+(Y) 

40 

This  table  does  not  reflect  an  assessment  of  measures.  It  shows  whether  or  not  measures  exist, 
according to Member States’ reports and available data. 

EN 

12 

   EN