In this blog, we highlight changes to law, practice and procedure that will or could impact the restructuring insolvency market this year – covering important changes that should be on your radar – as well as providing an update on those changes that were expected but which might be delayed beyond 2020.

Brexit – will it be business as usual for R&I practitioners?

This week sees the UK finally leave Europe.

The proposal to reinstate Crown preference in insolvency has met resistance from all angles; the insolvency profession, turnaround experts, accountants, lawyers and funders. But despite HMRC’s bold statement in its consultation paper that the re-introduction of Crown preference will have little impact on funders, it is clear following a discussion with lenders that it may well have a far wider impact on existing and new business, business rescue and the economy in general than HMRC believes.

Brexit insolvency issues for trustees of pension schemes with overseas sponsors

You might remember that before 2016, in the world before the EU referendum (which did exist!), it was effectively not possible for the insolvency of an overseas sponsor of a UK pension scheme to trigger entry into the PPF unless the overseas sponsor had a branch or office (an “establishment”) in the UK (for legal geeks you might remember this was the issue discussed in the Olympic Airlines case which was heard by the Supreme Court in 2015).

With the gradual opening of energy supply markets allowing new energy providers to challenge the established providers and bring increased competition to the market, the last two decades have seen an increase in smaller energy providers entering the market and sharing a growing customer base. But what happens to the customers when an energy provider becomes insolvent?

We are yet to see the true impact of Christmas trading in the retail industry although HMV is already a victim of the tough conditions for retailers. Additionally, Boots has announced a fall in sales and the launch of a “transformational costs management program” to save more than $1 billion and Next has confirmed that profits in store have fallen and although online sales are up, the uncertainty about the UK economy after Brexit makes forecasting difficult. Only one thing is clear – consumers remain at risk in the event of a retail business entering administration.

An effective and well-equipped insolvency and restructuring regime gives confidence to investors and financiers, enabling credit to flow through to businesses and boost economic activity, growth and innovation.

What is the GDPR?

UK lawyers and restructuring professionals have been highlighting their concerns for British business and Financial Markets if the Government is unable to negotiate a bespoke treaty between the UK and the EU to preserve the mutual and reciprocal recognition provisions written into the Recast EU Insolvency Regulation (Recast EIR) and the Recast Brussels Regulation (the Judgements Regulation) after Brexit in 2019.

The uncertainties of the UK’s Brexit negotiations with the remaining 27 EU member states are weighing heavily on the UK economy. The 2 years of negotiations will not even begin until notice is served under Article 50 and the procedure as to how Article 50 can be triggered will be the subject of a Supreme Court decision expected later this month.

While the number of corporate insolvencies in Germany has declined over the last couple of years, the general market perception is that the number of insolvencies may increase again in 2017. Also, as more larger companies are facing distressed situations, the overall value of distressed debt is therefore expected to rise as well.

The legal framework for restructuring & insolvency in Germany will also change in 2017, not only based on domestic legislation, but also because of developments on the EU level.