While the recent Brexit trade deal contains various provisions for the conduct of trade in the post-Brexit era, it does not provide clarification for new cross-border insolvency proceedings involving the United Kingdom.
However, the Withdrawal Agreement which came into force on 1 February 2020 and established the terms of the UK's withdrawal from the European Union, does provide some comfort for insolvency practitioners, but only where insolvency proceedings were opened prior to the end of the Brexit transition period.
Regulation 2015/848 of the European Parliament and the Council (Recast Regulation) provides rules on the jurisdiction for commencement of insolvency proceedings and the law that applies to such proceedings in EU Member States.
Article 67(3)(c) of the Withdrawal Agreement provides that the Recast Regulation shall continue to apply to insolvency proceedings, provided that the main proceedings were opened prior to the end of the transition period. Therefore, the way in which extant insolvency proceedings are dealt with going forward will not change, provided they were opened in advance of 1 January 2021.
This means that UK insolvency practitioners will retain legal authority to deal with assets located in EU Member States without the need for further authorisation from local courts or authorities. In turn, insolvency main proceedings commenced in any EU Member State before the end of 2020 will continue to be recognised automatically in the UK. This allows Irish insolvency practitioners who are currently dealing with assets located in the UK to continue to administer those assets without the need for a Court application or any other additional measures.
We previously discussed the uncertain position for cross-border insolvency proceedings between Ireland and the UK from 1 January 2021. Our discussion on how such matters may be dealt with going forward in this jurisdiction is linked here.
It remains to be seen how insolvency proceedings commencing after 1 January 2021 will be conducted and what Court sanction might be required.
Wriiten by Mark Woodcock and Ciara Gilroy
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