In our previous article, we looked at the immediate implications of the EU Referendum Leave vote – or ‘Brexit’ – for business insolvency, but it’s worth taking a broader look at how the UK corporate insolvency regime could be affected by the outcome.
R3 – the Association of Business Recovery Professionals – have suggested that leaving the EU will have a major impact on the way corporate insolvency works in the UK, which is still by no means a certainty as the Conservative leadership race features a Leaver (Andrea Leadsom) and a Remainer (Theresa May) as its final two candidates, and it is unclear when, if ever, either would invoke Article 50.
In the meantime, international corporate insolvency proceedings with the EU should continue as normal, but if the UK does eventually depart from the EU, it could become more difficult to negotiate with debtors and creditors on the continent, making it even more important to seek out professional insolvency advice at the earliest opportunity.
Andrew Tate, president of R3, said: “The decision to leave comes as the government is in the middle of renewing the UK’s corporate insolvency framework. This is an incredibly complex and important project, but there may now be some uncertainty around the future of this work.
“Some of the proposals have their origin in EU harmonisation programmes, while it’s not clear where insolvency reform will fit on the government’s agenda in the next couple of months.”
The referendum result is still no immediate cause for concern unless your business suffers financially, either due to the slump in the exchange rate, or because of falling consumer confidence, either one of which could impact on your bottom line.
As the months progress, it should become clearer what kind of time scale we can expect for Brexit to be completed – if ever – and confidence should gradually return as a consequence, allowing the attention to shift from immediate company insolvencies, to the wider issues facing the insolvency regime internationally.