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Cross-border recognition of insolvency and restructuring proceedings post-Brexit

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Aconley Lucy
Lucy Aconley

Counsel

London

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Wells Philip
Philip Wells

Associate

London

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16 April 2021

In this article, Lucy Aconley and Philip Wells consider the post-Brexit position regarding inbound and outbound recognition of insolvency and restructuring proceedings between the UK and the EU and the patchwork legal framework parties must navigate through.

The key points being:

  • Despite the announcement of a new free trade agreement between the EU and UK back in December 2020, we are effectively in a “no deal” scenario when it comes to the recognition of insolvency proceedings and, more generally, civil judgments, between the EU and the UK. The reciprocal, automatic recognition frameworks are no more. Debtors and insolvency practitioners must now navigate through a patchwork of international treaties, European legislation, domestic legislation and common law to assess whether inbound/outbound recognition is forthcoming and, if it is, what that “recognition” really looks like in practice.
  • The lack of an automatic recognition regime will likely increase the cost, complexity and time taken to complete cross-border restructurings and insolvencies. However, it should not be equated with a loss of recognition per se. There may be more pathways to navigate but the analysis is not, by any means, insurmountable. Over time, as debtors become more familiar with the post-Brexit legal landscape, a clear and well-trodden path to obtaining recognition will likely emerge.

This article was initially published in the March 2021 edition of Butterworths Journal of International Banking and Financial Law. The article was written prior to the decision in Gategroup Guarantee Ltd, Re [2021] EWHC 304 (Ch), which may affect the ability to use one or more of the recognition pathways described in the article.