What are the implications for the European restructuring profession of the continued uncertainty over the UK’s withdrawal from the EU? The High Court gave its judgment in the Article 50 judicial review proceedings on 3 November 2016. The Court decided the UK Government does not have the power under the Crown’s prerogative to give notice pursuant to Article 50 for the UK to withdraw from the European Union. The Government has confirmed its intention to appeal the decision to the Supreme Court. The Supreme Court has said it will accept a leapfrog appeal (avoiding the intermediate step of a Court of Appeal hearing) and has reserved between December 5th and December 8th for the hearing. This will be the first time since the Supreme Court was formed in 2009 that a hearing will take place before all 11 justices, demonstrating the importance of the case.
For a longer article explaining the background of the case and discussing the result in more detail, see the post Brexit Means… on our Brexit Legal Blog.
It is possible that because of this legal ruling, the British Prime Minister, Theresa May, may not be able to serve the Article 50 notice for the UK to withdraw from the European Union by March 2017 in accordance with her original timetable. Until the Article 50 notice has been served, the EU leaders are refusing to entertain even preliminary discussions about what will happen after the UK exits the EU. What is the impact of this upon European restructuring professionals?
At the moment, European cross-border restructuring is governed by Council Regulation (EC) 1346/2000 on insolvency proceedings. On 5 June 2015, the amended or “recast” Insolvency Regulation was published in the Official Journal of the EU, as Regulation (EU) 2015/848. The majority of the provisions of the Recast Regulation will apply from 26 June 2017. It will govern European cross-border restructurings by UK insolvency practitioners until the UK finally leaves the EU, which looks like mid-2019 at the earliest. Until the Article 50 notice is served, the UK cannot begin negotiations about a new treaty to ensure recognition in Europe for UK insolvency practitioners.
In the meantime, we can be sure of only one thing: the uncertainty as to what Brexit really means for the European restructuring profession will continue for a while yet.