The only certainty following the referendum is that exiting the EU will substantially alter the legal landscape from a recovery and insolvency viewpoint.
Over the past few years the various EU members have been working hard to eradicate or minimise inconsistencies between the individual regulations which have led not only to confusion but also to “forum shopping” by those facing insolvency. The idea is to provide a level playing field so that businesses in particular know where they stand should a company in another country get into trouble.
The reciprocity that has been established will need to be addressed in some manner to prevent conflicts arising between jurisdictions. The Association of Business Recovery Professionals (R3) has stated that it will be working closely with experts to understand the implications of leaving the EU and shall voice any concerns to the government.
It is a key aspect of due diligence, for potential trading partners, that the ability to pursue debt is considered and that, at the outset of the contract or engagement, the “what if” scenario of subsequent insolvency is considered.
It remains to be seen what changes will be brought into our insolvency legislation to compensate for the withdrawal from the EU to address this.
