The European Parliament has voted overwhelmingly to back proposals to modernise Europe's rules on cross-border insolvency so that failed businesses are offered a 'second chance' rather than going into liquidation.

Around 200,000 firms go bankrupt in the EU each year and a quarter of these have a cross-border element. The new rules, originally proposed by the European Commission in December 2012, will see the creation of an EU-wide system of web-based insolvency registers; steps to avoid the opening of multiple proceedings, and new regulations dealing with the insolvency of groups of companies.

The proposals will also increase legal certainty, by providing clear rules to determine jurisdiction, and ensuring that when a debtor is faced with insolvency proceedings in several member states, the courts handling the different proceedings work closely with one another. Member States will be obliged to publish key decisions, such as about the opening of insolvency proceedings, in order to improve information for creditors.

The aim is to increase the efficiency and effectiveness of cross-border insolvency proceedings and encourage a move towards an EU 'rescue and recovery' culture to help companies and individuals in financial difficulties by encouraging restructuring, which may also increase the possibility that creditors will get some of their money back.

Vice-President Viviane Reding, the EU's Justice Commissioner, said: 'Europe needs modern rules on cross-border insolvency to help service our economic engine. The first option for viable businesses should be to stay afloat rather than liquidating. I am glad to see that the European Parliament agrees.'