What impact might a 'no deal' Brexit have on cross-border insolvencies and restructurings?
01 August 2019
A ‘no deal’ Brexit will see key pieces of European legislation that have provided a uniform and predictable legal regime for European cross-border insolvencies and restructurings fall away (e.g the European Insolvency Regulation and the Judgments Regulation).
However, the hurdles, although likely to increase the costs and length of such proceedings, should not be insurmountable.
In the case of a ‘soft’ Brexit, there may be a transitional period during which the European Insolvency Regulation and the Judgments Regulation will continue to apply. This would ensure ‘business as usual’ for cross-border restructurings and insolvencies until the end of the transitional period.
The popularity of the English scheme of arrangement is unlikely to be affected by Brexit. Although new European alternatives are coming onto the statute book, and more are expected in light of the European Directive on Preventive Restructuring Frameworks, the flexibility and speed of the English scheme process will mean it will retain its position as a valuable tool for restructuring both English and foreign companies.