BLOG POST BY SCORNIK GERSTEIN LLP
On 31 December 2020, the European Regulation on Insolvency Proceedings (EIR) ceased to apply in United Kingdom (UK), and the UK-European Union (EU) Trade and Cooperation Agreement (TCA) came into effect.
The TCA made no provisions for cooperation and recognition in cross-border insolvency proceedings. Thus, albeit technically there is no “No Deal Brexit”, we could say that the TCA means “No Deal” in all issues relating to insolvency proceedings.
Below, we analyse the landscape after Brexit.
The Recast Insolvency Regulation (EU) 2015/848 allocates jurisdiction, as the appropriate forum to open main Insolvency proceedings, where a debtor´s centre of main interests is, within an EU Member State, and provides automatic recognition of those proceedings by the courts of another EU Member State.
PROCEEDINGS STARTED UP TO 31 DECEMBER 2020
Pursuant to Insolvency Amendment Regulations 2019[1], the EIR continue to apply to insolvency proceedings opened before 31 December 2020. This means that the UK will continue to recognise insolvency proceedings commenced in any EU Member State, and it will receive reciprocal recognition of UK Insolvency proceedings where the main proceeding was started before 1 January 2021.
PROCEEDINGS STARTED AFTER 1 JANUARY 2021
Insolvency proceedings opened after 1 January 2021 will require an application to the Court of each EU Member State. The recognition process will therefore depend on the national law of such EU Member State. This represents a significant change in the way that proceedings with cross border interests are governed.
UK INSOLVENCY PROCEEDINGS: RECOGNITION AND ENFORCEMENT IN SPAIN AFTER 1 JANUARY 2021.
In order to obtain the recognition of UK insolvency proceeding started after 31.12.2020 in Spain (SP), an application to the Spanish courts must be made in the appropriate local jurisdiction within SP.[2] Certain rules to bear in mind are set down in Section 742 of the Recast Spanish Insolvency act.
Most notably:
- The jurisdiction of the court or authority that has opened the foreign Insolvency proceedings must be based on Centre of Main Interests (COMI) criteria.
- The judgment opening the foreign insolvency proceedings must not be contrary to Spanish public policy.
Once the UK insolvency proceeding is recognised by the Spanish Court, the insolvency officeholder can apply for measures to preserve assets located within SP.
If you require further guidance please contact our Insolvency Department.
e-mail: london@scornik.com
Phone number: +44 (0) 207 831 7070
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[1] https://www.legislation.gov.uk/uksi/2019/146/contents
[2] Articles 951-958 of the Spanish Code of Civil procedure.
