Brexit—impact of the Withdrawal Agreement and draft Withdrawal Agreement Bill on R&I lawyers

Brexit—impact of the Withdrawal Agreement and draft Withdrawal Agreement Bill on R&I lawyers

We look at the likely impact of the Withdrawal Agreement and draft Withdrawal Agreement Bill for R&I lawyers, in particular its impact on the Brexit SI: Insolvency (Amendment) (EU Exit) Regulations 2019, SI 2019/146.

What was presented/published?

Withdrawal Agreement (19 October 2019)

European Union (Withdrawal Agreement) Bill (the Bill)

European Union (Withdrawal Agreement) Bill—Explanatory Notes

This legislation has been introduced to facilitate the ratification and implementation of the Withdrawal Agreement (19 October 2019) agreed in principle between the UK and the EU on 17 October 2019.

The Bill is required in order to implement the Withdrawal Agreement, to enable the government to ratify the deal and to give it effect in domestic law. The Bill contains provisions on various matters, including the transition period. It incorporates several amendments to the European Union (Withdrawal) Act 2018 (EU(W)A 2018), particularly for the purpose of legislating for transition, deferring several provisions from exit day to the end of the transition (or ‘implementation’) period.

Key dates

  • Saturday, 19 October 2019—MPs voted to withhold approval of the new Brexit deal until the European Union (Withdrawal Agreement) Bill has passed, triggering a requirement for the Prime Minister to seek an extension to the Article 50 withdrawal period.
  • 21 October 2019—the Bill had its first reading in the House of Commons (no debate).
  • 22 October 2019—the Bill had its second reading in the House of Commons with support of 329 votes to 299. However on the same date, MPs rejected the programme motion seeking to fast track the Bill through Parliament on a shortened timetable.
  • 31 October 2019—exit day (NB EU have now agreed further extension to 31 January 2020).

How is the definition of exit day impacted by the Bill?

The Bill is designed to operate in conjunction with the EU(W)A 2018 and incorporates several amendments to the EU(W)A 2018 for this purpose, particularly for transition, deferring several provisions from exit day to the end of the transition (or ‘implementation’) period. In particular, the Bill contains amendments to EU(W)A 2018, to introduce savings upon repeal of the ECA 1972 on exit day, to continue its effect during the implementation period.

The Bill also amends the EU(W)A 2018 provisions on retained EU law, delaying their effect in order to save, and incorporate into domestic law, EU legislation and case law applicable in the UK at the end of the implementation period. For this purpose it amends the relevant date for retained EU law and related provisions from exit day, to ‘IP completion day’. IP completion day replaces exit day for many purposes throughout the Bill and amended EU(W)A 2018 and is defined in s 37 of the Bill as 31 December 2020 at 11.00 pm (subject to a power to amend this definition as required to reflect the day and time that the transition or implementation period actually ends). Under Article 132 of the Withdrawal Agreement, the UK-EU Joint Committee can adopt a single decision extending the transition period for ‘up to two years’.

For Brexit SIs introduced to address deficiencies in retained EU law under EU(W)A 2018, s 8, then Schedule 6, para 1 of the Bill specifically provides that references to exit day in the commencement provisions of those Brexit SIs are instead to be read as reference to IP completion day (unless this provision is expressly disapplied by the SI in question).

Withdrawal Agreement

The main changes to the Withdrawal Agreement (19 October 2019) include a revised Protocol on Ireland/Northern Ireland and revised political declaration on the framework of the future EU-UK relationship.

The provisions relating to insolvency are largely unchanged; Article 67(3)(c) of the Withdrawal Agreement (19 October 2019) provides that in the UK and Member States:

 ‘Regulation (EU) 2015/848 of the European Parliament and of the Council shall apply to insolvency proceedings, and actions referred to in Article 6(1) of that Regulation, provided that the main proceedings were opened before the end of the transition period.’

 What are the practical implications for R&I lawyers?

The effect of the Withdrawal Agreement (19 October 2019) (if/when implemented by the Bill) is to preserve the status quo and allows the Recast Regulation on Insolvency to apply, provided that main proceedings were opened before the end of the transition period.

The Insolvency (Amendment) (EU Exit) Regulations 2019, SI 2019/146 (the Insolvency Brexit Regulations) were made on 30 January 2019 under EU(W)A 2018, s 8. The Insolvency Brexit Regulations are fully effective from exit day (see Insolvency Brexit Regulations, SI 2019/146, reg 1(3)), as defined in EU(W)A 2018, ss 20(1)–(5).

The Insolvency Brexit Regulations amend various legislation including Regulation (EU) 2015/848, the Recast Regulation on Insolvency (ie retained direct EU legislation).

The effect of the Bill (if enacted in this form) would be to amend ‘exit day’ in the following Brexit SIs to ‘IP completion day’, defined as 31 December 2020 at 11.00 pm (subject to a power to amend this definition):

  • the Insolvency Brexit Regulations
  • the Credit Institutions and Insurance Undertakings Reorganisation and Winding Up (Amendment) (EU Exit) Regulations 2019, SI 2019/38 (Insurers and Credit Institutions Regulations)


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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.