Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings comes into effect on 26 June 2017 for insolvency proceedings that are opened on or after that date. The Recast Regulation replaces the EC Regulation (1346/2000) on insolvency proceedings and has direct effect in the UK until such time as the UK leaves the EU.

The pre-pack procedure is not having an easy time of it. In a previous blog, we reported that the advocate general of the European Court of Justice (ECJ) had concluded that the Dutch pre-pack procedure cannot be regarded as bankruptcy or liquidation proceedings, and that the provisions for transfer of undertaking therefore also apply to pre-packs. The ECJ has now confirmed his standpoint.

The European Association of Certified Turnaround Professionals (EACTP) organized an evening of debate about the proposed new European Directive on business insolvency held in Brussels on May 2nd at the offices of Squire Patton Boggs. Salla Saastamoinen, the European Commission Director of the Civil and Commercial Justice Unit, attended the event called A New European Restructuring Regime in a Changing World and met turnaround professionals from across Europe.

Earlier this year it was announced that the UK’s Financial Assistance Scheme (“FAS”) would close to applications from 1 September 2016.

This does not affect pension plans that are currently progressing through the notification and qualification process or pension plans that have already qualified for assistance. However, any qualifying pension plans that have not yet started the process need to move quickly as they now have less than a month to make a notification to the FAS.

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

This edition of Global Insight comes to you shortly after the United Kingdom voted to leave the European Union.

Summary

Pension scheme trustees will generally be concerned to try to ensure that the “safety net” provided by the Pension Protection Fund (PPF) remains potentially available for their scheme.

Daycare company Estro was declared bankrupt in July 2014, but the undertaking was relaunched immediately, as the relaunch was prepared in a ‘pre-pack’ insolvency. All 3600 employees of the bankrupt company were dismissed by the administrator. About 2600 employees were immediately employed again by the relaunched company, which company was a so called ‘connected party’ as the shareholder also held a substantial part of the shares of Estro.

A lingering misperception among American businesspersons and some commercial lawyers is that it is a fool’s errand to commence an insolvency case seeking reorganization in a European nation because those national laws prescribe liquidation rather than rehabilitation. These business leaders often dismiss out-of-hand insolvency relief on the continent for a troubled European subsidiary and elect to wind up the company’s affairs outside the judicial system.

This update focusses on the recent Supreme Court decision in Re Lehman Brothers International (Europe) concerning the application of the “contributory rule” in administration and the admissibility and set-off of contingent claims in administration

Lehmans and the contributory rule