The draft Withdrawal Agreement: implications for Insolvency Proceedings

Posted in Financial restructuring and insolvency The Withdrawal Agreement

The draft Withdrawal Agreement provides for the EU Insolvency Regulation (EU) 2015/848 (the EIR) to continue to apply to insolvency proceedings provided the main proceedings were opened before the end of the transition period, it does not specify whether the Insolvency Regulation will continue to apply where only secondary proceedings have been opened.

The EIR determines the proper jurisdiction for a debtor's insolvency proceedings and the applicable law to be used in those proceedings. It also provides for mandatory recognition of those proceedings in other Member States.

Where a debtor’s centre of main interests is within a Member State, the EIR recognises that Member State as the appropriate forum for main insolvency proceedings concerning the debtor, and provides for automatic recognition of those proceedings by the courts of other Member States. Any further proceedings in other Member States where the debtor has an “establishment” are secondary to those main insolvency proceedings and relate only to assets in that secondary Member State.

This means that the UK will continue to recognise insolvency proceedings commenced in other Member States, and will receive reciprocal recognition of UK insolvency proceedings where the main proceedings are started before 1 January 2021.

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