English insolvency and restructuring law and procedures are significant at both the European and world level. In recent times lenders, debtors and many others have sought to take advantage of the varied, flexible and fair procedures available in our jurisdiction. This has resulted in a flow of individuals from countries such as Ireland and Germany seeking to make themselves bankrupt in the UK to take the benefit of what is deemed a more restorative and entrepreneur friendly process, while at the same time the courts have taken a pragmatic, commercial view towards expanding the availability of the scheme of arrangement process to companies with only limited connections to this jurisdiction. It remains to be seen what impact a Brexit could have on these positions and others; the terms of an exit would be key to understanding what impact there may be on the insolvency and restructuring world but it is likely that in the short term the UK would not be seen as quite the safe haven it currently is.
In the early part of this millennium the EC Regulation on Insolvency Proceedings (ECR) was introduced and immediately changed the world of cross-border insolvencies within Europe, providing a mechanism for the recognition, structuring and interrelating of different insolvency processes across the continent applying to the branches of the same company; it is scheduled to be recast in 2017. Subsequent legislation was also introduced to cover areas not covered by the ECR in respect of credit institutions and insurers. These three pieces of legislation were introduced by way of Regulation and therefore on a Brexit, the UK would no longer be a party to this legislation and, without anything further, would be forced to rely on a mish-mash of existing laws with each separate member state. It seems likely therefore that the Government would seek to replicate the position under ECR (and the other regulations) where it could directly with member states, although how quickly and easily this could be achieved following a Brexit is open to debate.
It is important to note that, as schemes of arrangement are not included within the ECR, this thriving area of UK law would not be directly impacted and the position might even be made more straightforward by the dis-application of the European Judgment Regulation, which has been a material issue in recent cases.
One possible benefit of a Brexit could, however, be that the UK may no longer need to be involved in the ongoing project to harmonise certain insolvency laws in the EU.