Currently, when a UK airline enters insolvency, its operations cease, aeroplanes are grounded and passengers are stranded – in part due to the heavy industry regulation and, in part, because of complex aeroplane financing arrangements. Any operational continuity enabling the repatriation of passengers would be a loss-making activity likely to deplete the amount of money available to the company’s creditors; a result that would be contrary to the aim of UK insolvency processes in general. This starkly contrasts with insolvent U.S. airlines, all of which have been in U.S.

On 23rd November 2016, the European Commission released a package of banking legislation reforms. Some of these were expected in particular those related to the minimum requirement for eligible liabilities and own funds (MREL) under the Bank Recovery and Resolution Directive (BRRD) and the implementation of the Financial Stability Board's (FSB) total loss absorbing capacity (TLAC) principles into the MREL requirements.

The process of Brexit will take many years, and the implications for our clients’ businesses will unfold over time. Our MoFo Brexit Task Force is coordinating Brexit-related legal analysis across all of our offices, and working with clients on key concerns and issues, now and in the coming weeks and months. We will also continue to provide MoFo Brexit Briefings on a range of key issues. We are here to support you in any and every way that we can.

Following the referendum…and after Brexit

On 6 January 2011, the European Commission (the “Commission”) published a consultation paper on the technical details of a possible EU framework for bank recovery and resolution (the “Consultation Paper”).1 The paper follows the communication from the Commission dated 20 October 2010 on an EU framework for crisis management in the financial sector (the “Communication”).2