In this paper, the FMLC has considered issues of legal uncertainties which may arise in consequence of Brexit in relation to cross-border insolvency proceedings. Despite HM Government’s plans to transpose E.U. legislation into U.K. law by means of the European Union (Withdrawal) Bill, in the event no bespoke agreement is negotiated between the U.K. and the E.U., several legal and operational uncertainties remain. Of particular importance to the financial markets is the loss of the mutual and reciprocal recognition provisions written into the Recast E.U. Insolvency Regulation, which cannot be resolved by means of a wide-ranging reception statute.
The report—entitled Issues of Legal Uncertainty Arising in the Context of the Withdrawal of the U.K. from the E.U.—the Impact on Cross-Border Insolvency Proceedings—considers this and other complexities relating to cross-border corporate insolvency—including the effect of restructuring tools such as schemes of arrangement or related financial services measures such as the Settlement Finality Directive and the Financial Collateral Arrangements Directive. To address these uncertainties, the FMLC has made recommendations in section 6 which include a strong preference for preserving the mutual effect of the Recast EUIR via negotiation of transitional arrangements and/or a bespoke treaty between the U.K. and the E.U.
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