BRR E-alert: Looking into 2017
Business Recovery & Reconstruction E-alert - News & Views from The Bridge
2016 was marked by political shocks which will be certain to change the political, economic and legal landscape. As we arrive in 2017, there has been much comment, and no shortage of figures and predictions, but the only consensus seems to be that this is a period of exceptional uncertainty. There will undoubtedly be both difficulties and opportunities in the year ahead, but as our government hasn’t yet decided what “Brexit” means, any serious prediction is impossible.
Fortunately, there are rather more prosaic developments for the insolvency profession in 2017 that we can predict and prepare for. This year will see significant changes to insolvency practice and may see fundamental developments in our insolvency regimes.
On 6 April 2017, the new Insolvency Rules will come into force, and will replace the old rules in their entirety. The legislation consolidates and restructures the rules to create a more rational structure and more modern framework for practice. The move towards electronic communications and use of websites should be welcome changes for IPs frustrated by creditor engagement (or lack of). However, the move away from physical meetings may have a more unwelcome contrary effect.
Amended Statements of Insolvency Practice are anticipated, to reflect the legislative changes. The Joint Insolvency Committee’s work programme prioritises work on SIPs 7, 8, 10, 11 and 15.
The Recast EU Regulation on Insolvency will apply from 26 June 2017. We will have at least two more years under EU Regulation, whatever the future holds, and may then find that transitional measures are identical to existing regulation, so this new Regulation remains as relevant as it was before 24 June 2016. The changes in the recast Regulation include extending its scope, extending the jurisdiction of courts of member states, introducing a new framework for group insolvency proceedings and changes to COMI rules.
The Joint Insolvency Committee continues to work towards a new Code of Ethics for IPs and a consultation is scheduled for the first quarter of this year.
The responses to the Insolvency Service’s consultation on the Corporate Insolvency Framework showed broad support for its proposals. We might therefore see these proposals being taken forward in 2017, although there have been a range of views on the technical detail of their implementation. The proposals include a new moratorium period for distressed companies; provisions to protect essential supplies for companies in distress; creation of a new restructuring plan that would bind secured creditors and enable ‘cram down’ of creditors for the first time; and measures to encourage rescue finance. These would be dramatic changes to the UK restructuring regime, to further encourage a rescue culture.
So, we can’t say what 2017 will bring for the world at large, but perhaps by the time April comes around we will take some comfort in the black and white certainty of the new Rules.
Please do get in touch with our Business Recovery & Reconstruction team if there is anything that you would like to discuss.