Article

Brexit: Beyond All Recognition?

Recovery

31 Mar 2021

Howard Morris and Jai Mudhar authored an article for Recovery, covering the UK’s restructuring and insolvency regime now that the UK is no longer in the direct sphere of influence of the European Insolvency Regulation (EIR) or the European Judgments Regulation.

“The loss of the EIR and the judgments regulation has, undeniably, caused some challenges and changed the landscape of cross-border restructurings and insolvencies,” the authors wrote. “Due to the loss of automatic recognition of UK restructuring and insolvency processes, it is likely that the number of parallel proceedings in jurisdictions across the member states will increase. This will bring added complexity and cost, not least due to the lack of uniformity of domestic laws across the member states, which has the potential to create different outcomes in different jurisdictions. It should be noted that these challenges are not entirely new, as IPs have been tackling cross-border insolvency situations in non-EU jurisdictions. The continued recognition of schemes of arrangement and restructuring plans under the Rome I Regulation provides some welcome certainty. Further confidence would follow with (i) an increased adoption of the model law across the member states, and (ii) with respect to schemes of arrangement, the UK’s accession to the Lugano Convention.”

They added: “The EU member states are gradually reforming their domestic laws to comply with the EU Restructuring Directive, which may increase certain jurisdictions’ popularity for restructurings. It is likely, however, that the UK will remain a popular hub for restructurings and insolvencies, not least due to the predictability and flexibility of the tools available and the extensive experience of the English judiciary. The restructuring industry may be disappointed by the recent decision of the High Court on the new restructuring plan’s status. However, the decision undoubtedly serves to reinforce the judiciary’s reputation for interpreting and applying the law and disregarding political or national economic interests, a characteristic that attracts parties to use the jurisdiction of the English Courts.”

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