Whilst there are currently several different outcomes of Brexit, it is crucial for businesses to prepare for a no-deal Brexit. England is recognised as a worldwide specialist in the provision of restructuring and insolvency services, however in the event of a no-deal Brexit this recognition will potentially cease to exist.
All EU member states, excluding Demark, are subject to the Insolvency Regulation 2000 (Council Regulation (EC) No 1346/2000) and the Recast Insolvency Regulation (Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast)) (“Insolvency Regulations”). The Insolvency Regulations provide that member states must automatically recognise any insolvency proceedings commenced in a member state. The aim of the Insolvency Regulations was to facilitate proceedings and the recovery or realisation of insolvent company assets.
If the UK were to the leave the EU, without a deal, the automatic recognition of any UK insolvency proceedings would be lost and, similarly, any European proceedings would lose their recognition in the UK. The UK would have to apply to the court of each member state where a relevant asset is located for the assistance in the realisation and recovery of that asset. The EU member state would have to apply to the UK court for recognition of their powers and authority.
There are similar regulations, 2001 Brussels Regulation (Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) and Recast Brussels Regulation (Regulation (EU) 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast)) (“Judgments Regulations”), which play a similar and central role in restructuring work. Unless agreed, the Judgment Regulations would cease to apply in the UK.
In essence, the effect a no-deal Brexit would have on cross-border recovery and insolvency is the UK and EU member states would regard each other as third countries. This would render it difficult, time consuming and expensive to resolve any cross-border relating to corporate recovery and insolvency for both the UK and EU member states.
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