The Midlands Engine, restructuring law reform and the shadow of Brexit
By Dan French, partner at Gateley Plc
The Legal 500 recently reported that the Midlands has been left in a state of “quiet confidence” following the Brexit vote and noted the apparent lack of negative economic impact on the region’s automotive industry.
However, it also highlighted that businesses are concerned about their future commercial dealings with Europe in a post-Brexit environment, which has led to an influx of queries to legal advisors such as us, as to how they might navigate these unchartered waters, especially when things get tricky.
This is especially pertinent when taken in the context of the Chair of the Midlands Engine Sir John Peace’s statement that despite the Midlands economy having grown by 18% over the last five years, it is currently under-performing.
From a UK legal restructuring point of view, Brexit and the outcome of the snap election has meant the overall focus has been on the EU (Withdrawal) Bill and unfortunately there has been an absence of any real progress on the May 2016 Government consultation to enhance our corporate restructuring law. Effective financial restructuring is the cornerstone of any efficient economy, allowing good businesses to escape from misfortune and thrive.
In recent years, the UK has grown in prominence as the restructuring hub of Europe; a combination of flexible restructuring laws, experienced professionals and the benefit of international treaties have led companies from Europe, and around the world, to seek to take advantage of the restructuring options available in English courts.
As such, the UK has sought to stay at the cutting edge, with proposals to further refine the restructuring process and give businesses the tools to protect themselves when seeking to implement a restructuring, achieving a delicate balance of the interests of financial creditors, trade creditors and the company itself.
A key part of this pre-eminence has been the recently updated EU Regulation on Insolvency Proceedings, but the role of the UK has now been thrown into uncertainty by the decision to leave the EU in 2019. Our restructuring processes will only remain recognised by the 27 other member states until our withdrawal from the EU, although our membership of the United Nations continues to confer certain cross-border assistance from members.
Options for the UK include seeking agreement with the EU27 to allow us to replicate the current benefits of this regulation, look at making an extension to the creditor moratorium, and the widening of the law in the UK to promote company rescue. The expanded availability of the provisions which require essential supplies to a distressed company will, in particular circumstances, be of real advantage in saving a corporate entity, rather than sending it into a pre-pack or closure.
Our forthcoming Gateley Plc Midlands Restructuring Conference on Thursday 2 November will look to explore these complex challenges and we are delighted to welcome Simon Hall, Director of Investment & Export for The Midlands Engine who will join us as a panellist at the ICC Birmingham. The panel will consider what the future looks like for the Midlands Engine regional economy and how businesses operating in the economic heart of our country should be preparing for the challenges ahead.
The conference will bring together leaders from across a range of disciplines to explore what steps businesses can take to navigate change, uncertainty and complexity in today’s world and I encourage you to sign up for what will be an informative conference.
Dan French, partner at Gateley Plc, will be a panellist alongside Simon Hall at the ‘Midlands Restructuring Conference 2017: Navigating complexity, change and uncertainty’, at the ICC Birmingham on Thursday 2 November, 8am-2.30pm. Tickets are available here.