It’s of course too early for the implications of Brexit to the UK insolvency market yet to be fully known but Andrew Tate, President of R3, has provided some early comment and what we consider to be the headline points of interest are summarised below:
- For the financial market: the immediate effect of the UK’s decision to leave the EU is already being felt with the pound dropping dramatically against the Euro and US dollar. Businesses which are reliant upon imports may begin to feel the strain of increasing costs in the short term and an increase in corporate insolvencies could follow. Where these increased costs are passed on to consumers, this could see a rise in personal insolvencies.
- For creditors: once our exit from the EU has been formalised, it may prove more difficult for insolvency practitioners to retrieve assets within the EU. The recognition of UK insolvency proceedings within the EU will of course need to be negotiated as part of the Brexit discussions, but it remains to be seen whether automatic recognition will be maintained. If not, insolvency practitioners will likely face further hurdles in pursuing assets in the EU.
- For the insolvency regime: the current regime has been in development for some years on the basis of the existing EU legislative framework. With the UK now due to leave the EU, it is likely that the renewed regime will be further delayed until a new agreement with the EU has been finalised.
The full commentary is available here.