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16/12/2016

Brexit: A clearer picture for the UK’s insolvency and restructuring regime?

As R3’s president Andrew Tate explained in his blog on Brexit in September, the UK’s vote to leave the European Union has brought with it a huge number of questions, challenges and uncertainties for the insolvency and restructuring profession, no less than for any other sector. R3 has been hard at work ever since the referendum on behalf of our members, finding out what the profession believes will help it to navigate the uncertain waters of Brexit, making sure that politicians are aware of members’ views, and presenting a coherent case for what we believe will help the insolvency regime in the UK to continue to be one of the best-regarded in the world.

Earlier this week, we hosted a breakfast roundtable with DLA Piper on the implications of Brexit on our regime, with representatives from the government, the business community, and the insolvency, restructuring and legal professions. During the breakfast a number of recommendations were discussed as to how the government can secure the best possible deal for the insolvency and restructuring regime so that the UK remains an attractive place to do business. A strong insolvency regime is vital for an economy to create entrepreneurs, encourage cross border investment, improve access to credit and ensure business rescue, so it is vital that the UK government negotiates a good deal for the UK’s insolvency and restructuring regime. You can read our recommendations in more detail here.

Helping to underpin the success of the UK’s insolvency and restructuring regime are two European regulations to which the UK is a signatory: the European Insolvency Regulation, and the Recast Brussels (Judgments) Regulation. As explained in our briefing paper, R3 believes that the benefits of these Regulations must be preserved in any future Brexit scenario, so that the UK’s insolvency procedures are recognised across the EU, reducing the time and cost to creditors of recovering assets caught up in cross-border EU insolvencies. Around two-thirds of R3 members surveyed recently say that at least some of their cases involve cross-border EU work, making the smooth functioning of insolvencies involving assets in the UK and one or more EU Member State post-Brexit a priority for R3.

We hope that the briefing paper will underline to politicians in the UK and in Brussels the importance of the European Insolvency Regulation and the Judgments Regulation, as well as the general principle that a well-ordered insolvency and restructuring regime is best for creditors, businesses, employees, and the economy as a whole.

R3 has been discussing this issue with a number of politicians over recent months, including Baroness Hayter, the Shadow Brexit Minister in the House of Lords, who has twice mentioned the need for the government to consider IPs’ ability to reclaim money for creditors in any Brexit scenario in parliament (see, for example, this speech). A recent roundtable meeting with Lord Price, the Minister for Trade Policy, also gave R3 the opportunity to air our members’ views, and we are pleased to have opened a channel of communication which we hope will stay open as the negotiations continue. In October, we hosted a parliamentary lunch and a parliamentary breakfast on corporate insolvency reform where Brexit was the main topic of discussion; both events were attended by senior cross-party MPs, including BEIS Committee chair Iain Wright MP and the Parliamentary aide to the Chief Secretary to the Treasury, Craig Williams MP who asked many pertinent and thoughtful questions about the issue of cross-border insolvency and restructuring. R3 has also been in contact with the Insolvency Service and the Department for Exiting the EU. R3 also submitted evidence to the Justice Select Committee on the impact of Brexit on the UK’s regime.

Nearly six months after the referendum result, it’s still too early to say what the long-term impact of the decision to leave the EU will be. There’s huge uncertainty about what the future holds, with many of 2016’s most seismic events having defied the predictions of pollsters and pundits; 2017 looks set to continue in the same vein. But whatever happens, R3 will campaign to make our members’ voices heard in the corridors of power, and we’ll do our utmost to get a post-Brexit settlement for the insolvency and restructuring industry which recognises the UK’s great strengths in these areas, and which protects the interests of IPs, creditors and businesses.

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.