Commenting on the government’s position paper on post-Brexit civil judicial co-operation – which states that the government will seek to “[reflect] closely the substantive principles of cooperation under the current EU framework” – insolvency and restructuring trade body R3, says:
“The UK’s insolvency and restructuring profession will be encouraged by the position the UK government has adopted on resolving cross-border insolvencies post-Brexit. We’re pleased the government is listening to what R3 has called for.
“The existing set-up – where insolvency appointments and procedures are automatically recognised across the EU – is an important part of the UK and EU insolvency and restructuring framework and available alternatives would not bring the same level of benefits to creditors and investors both here and in the EU. Automatic recognition is win-win for the UK and Brussels.
“Mirroring the existing EU-UK insolvency relationship will be vital for ensuring Brexit does not threaten the UK’s status as an international restructuring and insolvency ‘hub’.
“If Brexit throws up barriers to resolving cross-border insolvencies or restructurings, they are likely to take the form of a plethora of applications to courts by insolvency practitioners to recognise qualifications which all Members States have been content to recognise for the past 15 years. This would add time and cost to insolvency proceedings, reduce potential returns for creditors and investors after insolvencies, and would damage the UK’s reputation as a place to do business.
“With automatic recognition, costly court proceedings can be skipped and there is a degree of certainty about whether assets on the continent can be retrieved for UK-based creditors – or that assets in the UK can be retrieved for creditors in the EU.
“It’s now up to the EU to recognise the risk that EU-based creditors and investors could be harmed if EU insolvency practitioners and lawyers struggle for recognition in the UK.”