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A referendum on whether the UK should leave (Brexit) or remain within the EU will now take place on 23 June 2016. As the ‘leave’ and ‘remain’ campaigns gear up and media coverage hits fever pitch, Victoria Procter and Chris Birch from the Restructuring team at Eversheds LLP, consider how Brexit might complicate cross-border restructuring and insolvency proceedings in the UK and, thereby, damage the UK’s international reputation as a leading restructuring jurisdiction.
Cross-border insolvency and restructuring can be a complex exercise, requiring navigation across multiple insolvency regimes, all with divergent insolvency procedures and rules on jurisdiction and recognition of foreign (insolvency) proceedings. This often gives rise to conflict (even competition) between regimes and ‘forum shopping’ by creditors and debtors in search of the most favourable regime. In that context, the UK is typically viewed as having a well-established, creditor-friendly insolvency regime. It is, therefore, a popular destination for creditors. Others, such as France, are considered more debtor-centric.
While global harmonisation of insolvency procedures is still a long way off (and, some would argue, undesirable if not unfeasible), limited progress has been made in harmonising rules governing jurisdiction to open, and recognition of, insolvency proceedings across different jurisdictions. The most notable examples are Council Regulation (EC) 1346/2000 on insolvency proceedings (EC Regulation) and the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency (Model Law).
The EC Regulation
The EC Regulation stands out as being a multi-jurisdiction regime, consistently applied. It aims to establish a regime for dealing with the insolvency of companies and individuals with assets and affairs in more than one EU Member State. To that end, it has introduced uniform rules on jurisdiction to open, and recognition of, insolvency proceedings across the EU (except Denmark). The UK (together with all other Member States) benefits from those consistencies, further enhancing its appeal as a destination of choice for creditors of
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