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The proposal is part of the EU’s drive to remove the stigma of going bankrupt for those in financial trouble.
One Tory MP has labeled the move “madcap”.
Riccardo Ribera d’Alcala, the EU’s Directorate-General for Internal Policies who drafted the plan, wrote: “The use of stigmatising labels should be ended, and the pejorative term ‘bankruptcy’ should be replaced with the more neutral ‘debt adjustment’.”
This shows just how intellectually bankrupt – sorry, debt adjusted – the European Union has become”.
– Brooks Newmark
It is argued that abandoning the word will make it easier for people who have been through bankruptcy to persuade banks to loan them money for new projects.
Brooks Newmark MP, a former banker and now a member of the Commons Treasury Committee, was scathing in his criticism of the plan.
He told the Daily Mail: “This shows just how intellectually bankrupt – sorry, debt adjusted – the European Union has become.”
Other proposals in Mr d’Alcala’s report include penalising banks if”‘inappropriate lending” contributed to a bankrupt’s financial problem.
A spokesman for the European Parliament said: “I think it is a pity that you pick out this one term to question from the entire document.
“The report makes clear that the opinions expressed in the document are the sole responsibility of the authors and do not necessarily represent the official position of the European Parliament.”