Restructuring law reform and the shadow of Brexit

Stuart Tait, left, and Andrew Buchanan

Gateley Plc partner Andrew Buchanan looks at the issues ahead of the ‘Northern Restructuring Conference 2017: Navigating complexity, change and uncertainty’

As we are all aware, Article 50 of the Treaty on European Union (EU) was triggered on 29 March 2017, creating a two-year negotiating period prior to the United Kingdom’s withdrawal from the EU.

Brexit is obviously going to be a huge logistical exercise with the loss of more than 750 international agreements, many of which will need to be replicated or replaced.

Theresa May’s recent Florence speech suggests however that we may seek to remain in the EU in all but name for a further two-year status quo transitional period.

From a UK legal restructuring point of view, Brexit and the outcome of the snap election has meant the overall focus is currently 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 while 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.

I believe the best way for the UK to deal with this would be to seek agreement with the 27 other Member States to allow us to replicate the current benefits of this EU Regulation.

I also support 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.

Others will have different views of course, and I am always interested in discussing how the UK can continue to lead the field in restructuring after Brexit, as well as considering the potential pitfalls of failing to preserve a leading position.

During Gateley Plc’s Northern Restructuring Conference on 12 October 2017, we will look to explore the different perspectives of leaders from across the business community in the North of England.

A series of presentations and interactive sessions will see speakers from the fields of business, economics, debt advisory, restructuring and private equity discuss the macro and regional economic challenges facing Northern businesses today and what they can do to prepare for the future.

I encourage you to sign up for what I expect to be an informative and engaging conference.

Andrew Buchanan, Partner at Gateley Plc, will be Chair of the ‘Northern Restructuring Conference 2017: Navigating complexity, change and uncertainty’, at The Bridgewater Hall on Thursday 12 October, 8am-2.30pm. Stuart Tait, Partner at Gateley Plc, will be a one of the Conference speakers. Tickets are available here.