With continuing daily headlines in the news it can be difficult to resist Brexit fatigue, but with the UK government and EU representatives at a very sensitive stage in the negotiations regarding the terms of the UK’s exit from the EU, it is worth focussing for a moment on a less publicised end of the financial services market, that of bankruptcy and restructuring.
Whilst the City of London’s leading position in the world as a world financial centre is undisputed, over the last 15 or so years the City has developed into a prime location to carry out restructurings of major global companies. The UK’s interaction with and membership of the EU has played a major part in that growth.
Since 2002, the EC Regulation on Insolvency (now evolved into the Recast Insolvency Regulation) has been law.
It provides for mutual recognition and application of member states’ insolvency law across the EU 27 countries (other than Denmark, who opted out) and applies to both companies and individuals.
In short, if an entity or person has their centre of main interests (known as COMI) in a particular EU jurisdiction, then that that country will host “main proceedings” and its insolvency law will have application and recognition throughout the EU. The implementation of this regulation has greatly simplified the work of insolvency practitioners appointed to companies with assets spread across Europe. In particular, such companies as Nortel, APCOA and Wind Hellas have utilised the UK courts to base their restructuring procedures.
It has also assisted trustees in bankruptcy of people made bankrupt in the UK owning foreign assets, and has, for example, made it that much easier for them to prove title to and sell holiday homes on the Cote d’Azur or the Costas of Spain. Previously, it was necessary to make separate applications in each jurisdiction where assets were located, often a time consuming and expensive process with uncertain outcomes.