A new directive on corporate insolvency reform, put forward by the European Commission, has been welcomed by the insolvency trade body R3.
The organisation believes that the reforms will improve business rescue procedures across the continent.
One of the underlying principles of the directive is for countries to do more to encourage company owners to seek help at an earlier stage; an approach which R3 believes increases the likelihood that beleaguered businesses can be rescued.
The changes are likely to be more limited in the UK than some other European countries, given that many of the standards that member states will be expected to uphold are already being met.
That said, the fact that Britain voted to leave the EU some six months ago is likely to complicate matters and R3 has made clear that the impact that Brexit will have on the insolvency process must be taken into consideration when officials begin the formal negotiations on our departure next years.
Andrew Tate, R3’s president, said: “There is still no clear timetable for when the UK will leave the EU, so while we expect the Government to start work to ensure the UK is compliant with the directive, we don’t know how long the directive will apply for.
“In its Brexit negotiations, the Government must ensure that certain insolvency benefits of EU membership are not lost for the UK.
“The loss of automatic recognition of UK insolvency practitioners’ powers across the EU – provided by the EU’s Insolvency Regulation – would make cross-border insolvency work much more expensive and jeopardise the return of money from the EU owed to UK creditors.”