The UK's withdrawal from the European Union has created uncertainty around insolvency law. Let's look at how things have changed in the wake of Brexit, and what that means for current and future German insolvency proceedings.

What is the state of play post-transition period?

According to Art. 67(3)(c), Art. 126 of the Withdrawal Agreement, the Regulation (EU) 2015/848 on insolvency proceedings (EUInsRe) only applies to insolvency proceedings commenced before the end of the transitional period on 31 December 2020. This means that, in some cases, the EUInsRe will continue to apply to insolvency proceedings relating to the UK for a very long time, as larger international insolvency proceedings usually take several years. 

That said, The Trade and Cooperation Agreement doesn't contain any provisions regarding insolvency law. From the point of view of Germany and other EU Member States, the UK therefore shifts from being Member State to a third country. 

What does this mean for insolvency proceedings going forward?

• It's expected that most insolvency proceedings will still be mutually recognised.
• The enforcement of claims arising from insolvency proceedings is likely to be more difficult after Brexit. So far, there is no effective fallback solution compared to the Regulation (EU) 1348/2000 on the service of judicial documents. The Hague Convention does not apply to insolvency matters, Art. 2 (e). Instead, the German-British agreement of 20 March 1928 and civil procedural law will apply. 
• Brexit is also likely to have a significant impact on companies that were founded under English law but have their administrative headquarters in Germany. In the event of insolvency, full personal liability threatens the individuals involved.

Find out more

To discuss any of the issues raised in this article in greater detail, please reach out to a member of our Restructuring & Insolvency team.