New EU insolvency directive welcome
The European Commission’s new directive on corporate insolvency reform is a welcome step towards improving business rescue procedures across Europe, says insolvency and restructuring trade body R3.
R3 adds that the UK’s world-class insolvency and restructuring regime already meets many of the standards in the new directive, while the government is currently carrying out its own corporate insolvency reform project. Many of the EU’s proposals are reflected in what the UK government has already consulted on.
Andrew Tate, R3 president, said:
“The focus on early advice and restructuring in the new directive is welcome. The earlier companies seek advice about their problems, the more likely that businesses and jobs can be saved.
“There is already an increasing focus on restructuring and early intervention as part of the insolvency regime in the UK, and an EU-wide framework for this type of work will make it much easier to handle cross-border cases.
“The UK’s world-class regime already meets many of the standards set out in the new directive, so changes here will be limited compared to those changes that might be expected in other Member States.
“Of course, the introduction of the directive is complicated by Brexit. There is still no clear timetable for when the UK will leave the EU, so while we expect the government to start work to ensure the UK is compliant with the directive, we don’t know how long the directive will apply for.
“In its Brexit negotiations, the government must ensure that certain insolvency benefits of EU membership are not lost for the UK. The loss of automatic recognition of UK insolvency practitioners’ powers across the EU – provided by the EU’s Insolvency Regulation – would make cross-border insolvency work much more expensive and jeopardise the return of money from the EU owed to UK creditors.”