At 11 p.m. on Thursday, December 31, 2020, the United Kingdom left the European Union.

This has since enabled staff in many airports in continental Europe, often with unconcealed delight, to direct British citizens to much longer queues than they would have needed to join had the U.K. remained an EU Member State.

From a restructuring and insolvency perspective, however, Brexit has also created a degree of inconvenience. While the U.K. remained in the EU, it enjoyed the benefits of the EU Regulation on Insolvency Proceedings (as recast in 2015), which applies in all EU Member States apart from Denmark. It provides a mutually applicable set of rules governing when insolvency proceedings can be opened in an EU Member State, requiring that proceedings which have been properly opened be recognised by the courts of other Member States and determining which Member State’s laws will apply once proceedings have been opened. The EU Insolvency Regulation would previously have allowed recognition of U.K. collective insolvency proceedings such as administration and liquidation. 

The U.K. also enjoyed the benefits of the EU Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (as recast in 2012), which requires the courts of one Member State to recognise the judgments of another. U.K. practitioners have evoked the EU Judgments Regulation as a route to recognition of U.K. schemes of arrangement. The U.K.’s restructuring plan closely resembles a U.K. scheme of arrangement, albeit some regard it as a little closer to an insolvency procedure.   

So far as other EU Member States are concerned, therefore, the U.K. has therefore exited two mutually applicable legal frameworks, and it has entered a world where recognition of insolvency proceedings and judgments relies instead on the domestic law of each state concerned. It is rare for nations to move from a more legal comprehensive framework to one that is less so, and this creates scope for conflicts of law that might not previously have existed. 

As such, the U.K.’s experience might be interesting for others, both in relation to “incoming” proceedings (i.e., proceedings in another EU Member State where the U.K. courts are asked to assist) and “outgoing” proceedings (U.K. proceedings where the courts of another EU Member State are asked to assist).

Before completing this introduction, however, it is worth mentioning one other principle of U.K. domestic law which practitioners in other jurisdictions have frequently complained creates conflicts. This is the so-called “rule in Gibbs,” whereby the English courts will not allow debts governed by English law to be compromised by a foreign restructuring or insolvency process where the creditors have not submitted to that jurisdiction. The UK’s erstwhile membership of the European Union had no effect on this long-established rule. However, some are speculating that the U.K.’s exit may indirectly result in changes to the rule if the U.K. decides that changes of this kind are needed to prevent it from being seen as an international outlier. This article will touch further on the rule in Gibbs later.     

Incoming Proceedings: Current U.K. Domestic Law

The EU Insolvency Regulation was “preserved” in U.K. domestic law by the European Union (Withdrawal) Act 2018. However, it would be wrong to give the impression that the text of this regulation was preserved in full. The majority of its operative provisions, or “Articles,” were disapplied. Accordingly, under the resulting legislation (the Retained Insolvency Regulation), the U.K.’s domestic law has retained only those operative provisions of the EU Insolvency Regulation which govern when proceedings may be opened in the U.K. The Retained Insolvency Regulation does not provide any route for automatic recognition of proceedings opened in EU Member States. 

The European Court of Justice no longer plays any direct role in resolving disputes in the application of even the retained provisions, although its further decisions on how to a determine a debtor’s center of main interest (COMI) will continue to carry weight.   

The U.K. has also adjusted the retained provisions relating to the opening of proceedings to make it clear that the grounds for jurisdiction to open insolvency proceedings provided by those retained provisions are in addition to, rather than in substitution for, any grounds for jurisdiction to open such proceedings which apply under other U.K. law.

There are, however, a number of other routes by which the U.K. may recognize proceedings opened elsewhere, including in EU Member States.

First, the U.K. has adopted the UNCITRAL Model Law on Cross-Border Insolvency into its domestic law. The provides a route for recognition of both foreign main proceedings, i.e. proceedings taking place in a state in which the company has its COMI, and foreign non-main proceedings, i.e., proceedings taking place in a state in which the company has an “establishment.” It also provides a route for seeking other forms of assistance or relief in relation to those proceedings.

Perhaps helpfully for those in other EU Member States who might now wish to take advantage of this route, the U.K. courts confirmed some time ago that, for this purpose, they will interpret a company’s COMI in the same way as they would under the Retained Insolvency Regulation which, as stated above, reflects the EU Insolvency Regulation. 

Second, Section 426 of the U.K.’s Insolvency Act 1986 requires the courts having insolvency jurisdiction in the U.K. to assist the equivalent courts in any other “relevant country or territory.” Section 426 is perhaps of limited relevance here, given that only one EU Member State, the Republic of Ireland, has been designated as a “relevant country or territory.” However, it did prove to be of use in the recent Irish case of Silverpail Dairy.

Silverpail was an Irish company that had entered examinership in Ireland and which was proposing an Irish scheme of arrangement to restructure its debts. It had a number of creditors in England, including the U.K. tax authorities, that it wished to compromise. The Irish High Court sent a letter of request to its English counterpart to seek recognition by the English court of the examiner’s appointment and an order that the English creditors would be bound by the scheme. The English High Court duly granted the assistance sought. 

The decision has received attention in both England and Ireland. Because the debts compromised in England were governed by English law, commentators have suggested that this decision marked an erosion of the rule in Gibbs. However, another view is that Section 426 always provided a statutory route for the English courts to allow a compromise of English law-governed debt by a non-English insolvency procedure, but only where the request to do so is made by a court in a relevant country or territory such as Ireland.

Finally, English common law can also have a role to play where, for whatever reason, none of the above routes is available to provide the assistance being sought.         

Outgoing Proceedings

Naturally, U.K. practitioners are also interested to know the level of assistance that the courts of other EU Member States are likely now to provide. 

As the Retained Insolvency Regulation only has U.K. domestic law status, there will be no automatic recognition in EU Member States of proceedings opened in the U.K. in relation to debtors whose COMI is in the U.K. or which have an establishment in the U.K.

In addition, only four EU Member States (Greece, Poland, Romania, and Slovenia) have so far chosen to import the UNCITRAL Model Law into their domestic legislation.

Mercer Agencies Limited provides a recent example of a case where the courts of an EU Member State recognized an U.K. insolvency procedure under the provisions of its domestic law. The company in question was in administration in Northern Ireland. The administrators made a request to the High Court in the Republic of Ireland for an order recognising the administrators’ appointment, the power of the administrators to bring and defend proceedings in the name of the company, and the power of the administrators to collect and gather in the property of the company. It appears that the main purpose of the application was to enable the administrators to institute proceedings in Ireland for the collection of debts. The court made the order sought in May 2025. 

The judge specifically noted that, prior to Brexit, such applications had generally been unnecessary due to the U.K. being a party to the EU Insolvency Regulation, resulting in a lack of precedents for applications of this kind. However, in granting the orders sought, the judge was able to rely on an earlier Irish High Court decision in which it had granted orders to aid liquidators appointed in the British Virgin Islands. The judge believed that this precedent required him to find that there was sufficient equivalence between the UK administration and the insolvency regimes available in Ireland and that the orders were sought for a legitimate purpose, but he was satisfied in both regards.

The judge still felt obliged to consider a decision of the Irish Supreme Court in which it had adopted a restrictive approach to recognition and enforcement of foreign insolvency proceedings under Irish domestic law, but fortunately he did not feel constrained by that decision. 

By way of contrast, in an August 2025 interim ruling, the Frankfurt am Main Regional Court declined to recognise the U.K. restructuring plan of the Luxembourg entity Project Lietzenburger Straße Holdco (PLSH), which is part of the “Aggregate” group, under any of the three possible laws that might allow him to afford recognition to foreign restructuring proceedings. This restructuring plan had been sanctioned by a judgment of the English High Court in early 2024.

First, the judge noted that, although Section 343 of the German Insolvency Code would have allowed for automatic recognition of foreign insolvency proceedings where the full body of a debtor's creditors were included in the proceedings, PLSH's restructuring plan had not included all its creditors.

Second, he observed that, whilst section 328 of the German Code of Civil Procedure might have applied had the German court been satisfied that an English court would have given reciprocal recognition to an equivalent German judgment, expert evidence on recognition was not admissible at the present level of the proceedings.

Finally, he looked at the EU Judgments Regulation but concluded that it could not be applied to a judgment of an English court following Brexit.

The restructuring plan in question had been required because PLSH had wished to amend the maturity date of its finance debt but had never received the unanimous approval that would have been required under the senior loan agreement. Given that the restructuring plan which obliged the dissenting creditors to accept the extension has not been recognized in Germany, the German courts would conceivably not regard creditors as bound by the maturity extension, leaving PLSH liable to repay those creditors immediately.

Commentators have noted that this is unlikely to be the final decision in this particular process. They have suggested that an appeal to the Higher Regional Court of Frankfurt may lead to a different decision.

It appears that expert evidence on recognition would be available at a subsequent hearing and could be used to seek to convince the appeal court that the German Code of Civil Procedure applies. However, other commentators have noted that the rule in Gibbs might yet provide an obstacle in this respect. If a German court found that the rule in Gibbs would prevent an English court from recognising a decision of a German court compromising debt governed by English law, it might not be convinced that true reciprocity exists. 

Concluding Thoughts

Perhaps unsurprisingly, it appears that the U.K. and Ireland have found it easiest to find solutions to the legal issues outlined above, and this is to a large part due to those two countries’ shared common law heritage. It remains for practitioners to find solutions which are equally effective vis-à-vis the U.K. and other EU Member States, but this might be viewed as a test for practitioners’ ingenuity rather than as an insurmountable obstacle.   

This piece was originally published by TMA in the Journal of Corporate Renewal – December 2025, find a link to the website here: December issue of Journal of Corporate Renewal.