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Before I hazard any kind of answer to the above, let me first declare my interest in the #Brexit / #Bremain debate, from the perspective of an insolvency lawyer.

I was born under an EC star, already a European citizen. It was the summer of 1974. The UK had joined the EEC (as it was then known), under a Conservative government, the previous year. It was our third attempt to join this exclusive club, the French having previously always vetoed our applications. The first Brexit / Bremain referendum took place before my first birthday, under a Labour government, in June 1975, with 67.23{ba3215b0bf35eaeb06be458b3396ffbfc50bb9db10c9ff1594dfc3875e90ea48} of votes cast then in favour of the UK remaining within what we now know as the EU. Unlike some contributors to the debate therefore, I personally have no memory or frame of reference for what life was like ‘on the outside’, although as a student of modern history I know that for fully 13 years before we joined the EEC we had been an active, founder member of EFTA (the European Free Trade Association). EFTA is an organisation which survives today, albeit all of EFTA’s surviving members apart from Switzerland subscribe to the European Economic Area, which allows them to trade with the EU under strict rules embodying the underlying principle of free movement of persons, goods, services and capital. For anyone in Britain today to truly remember what it was like outside either of these clubs, therefore, they would have to have been born before 1950.

From the legal perspective, which is the angle from which I most naturally approach this debate, European institutions have not always offered us (any of us, not just the Brits) a smooth ride, but on balance for me the positives have outweighed the negatives and things have been getting better, not worse. I saw sufficient merit in the teachings and principles of the European legal model to wish to read for one of the first available degrees in “Law with European Law”, a 4 year course which took me to live and study in Utrecht, in the Netherlands. Later, as a wide-eyed trainee solicitor in private practice, of just 23 years, I was posted in a niche European firm in Brussels, where part of my role was to interact with partners at my home firm over developments in European law, many of which I perceived to have really helped their clients to compete on a level playing field across national borders. I freely confess that I did not ‘buy into’ the European model to anything like the extent that most of my colleagues in Brussels did. I was always unconvinced by the need for Schengen-style open borders, forever complaining of the perils of “Eurospeak” – my term for the peculiar sort of watered down nonsense English forms the preamble to almost any Directive or Regulation – and trying to cut through what I perceived as unnecessary red tape, even though I knew already from experience that much of the British press reporting of what went on ‘in Brussels’ was pure fantasy.

Another 18 years on, now a partner in private practice acting for both UK-based and overseas clients dealing with UK-based and cross-border insolvency issues, and that experience now seems a world away. The European laws which I once saw unfolding, first-hand, in the European Council, Commission, Parliament and Court (even to the extent of my jumping on a train to Luxembourg at 5am to ensure I was the first one to pick up a stapled, hard-copy of the latest judgment as it was handed down) grew more and more refined over time and are now so embedded in our own legal system that I see English lawyers today practising European law on a daily basis, often without even realising they are doing so. Today we have no need for hard copies of anything from Brussels; it comes to us in our daily feed from PLC, LexisNexis, etc and we simply apply the law and argue our points in the traditional way. We have grown accustomed to its reach and adopted it as our own, as a fact of life in the interaction between legal entities. It is our stock in trade and an important part of the insolvency armoury.

During this time, European law has featured prominently in the development of English insolvency law, in which I have specialised since the turn of the century. I remember very well when, in 2002, the EC Regulation on Insolvency Proceedings came into force and I was asked – as a junior solicitor – to brief my team on its effects. Even before then, however, we had been applying European law in a number of areas, including in the field of the late payment of commercial debts, a European initiative which aimed to address perhaps the single largest cause of businesses becoming insolvent at the time, that of institutional debtors (including emanations of the State) habitually and deliberately delaying payment to their much smaller suppliers and starving them of cashflow. I used such laws to help clients to avoid insolvency, others to establish jurisdiction for a procedure despite having their domicile or registered office outside the EU, and insolvency practitioners to recover assets in other European jurisdictions where hitherto this might have been impossible. One of the most powerful drivers for ‘good’ European law has been the decision of the European institutions to write into European law the protection of the fundamental rights and freedoms enshrined in the European Convention on Human Rights, of which the UK was one of the principal architects during the post-war period. This melding of laws, with European human rights law having helped mould English caselaw on a number of contentious provisions of the Insolvency Act 1986, has brought with it opportunities for UK-based insolvency practitioners to work more closely with their colleagues. In this way we have been able to demonstrate to overseas creditors what the English insolvency regime has to offer beyond these shores, encouraging debtors and creditors alike, across Europe, to avail themselves of one or more of our enviable insolvency solutions.

I continue to use these laws today, and to note the limitation of available options to benefit creditors when dealing with insolvent estates involving assets located outside the EU, even in EFTA countries such as Norway, where local legal input suggests that an English bankruptcy order would not be recognised automatically and, in the context of English bankruptcy court orders over Norwegian real property, probably not at all, even on appropriate application by the IP.


Of course insolvency law does not exist in a vacuum: it is rather like European law in that it pervades almost every area of human interaction. Without question the extent to which the English insolvency market benefits from a decision to Brexit or Bremain will come down to ‘the devil in the detail’ but it is more of an economic question than a legal one. Whilst politicians will continue to speculate ad nauseam about what Britain’s relationship with the EU would look like if the referendum results, after 23 June 2016, in a vote to leave, as lawyers we know that the only certainty there can possibly be about this at this stage is that there would be great uncertainty!

Sure enough, we know that we would have to exercise our right to cease to be a member of the EU under Article 50 (1) of the Treaty on European Union. Beyond that, however, everything would depend upon political will and arrangements which would have to be adopted unanimously by the European Council, in which we would have no right to a voice and would have to rely upon economic influence and soft power to secure some sort of new basis. Any new basis would inevitably require a great deal of time and cost, not only in the public sector but also in private contractual dealings in which risk factors would change and renegotiation and new documentation would be needed. Clearly there could be much to lose from this process, but we simply do not know how much the landscape would actually change, nor how quickly this would happen. There are simply too many variables at this point, none of which are likely to become any clearer by 23 June 2016.


Given that nobody will be able to tell us with any real conviction what Brexit will mean for us in economic terms, I turn instead to less tangible considerations. After all, voters in 1975 did not have the evidence of 40 years of relative economic stability and access to a single market, nor to any fancy on-line graphics, to help them vote ‘yes’. The older people I have spoken to about that vote remember voting for the hope of political and economic stability and being ‘stronger together’ on the world stage, rather than a sense of identifying with a common European mentality. They had only been ‘in’ for a very short space of time – too short really to have felt many of the benefits – and so they had to take a certain amount of what it meant to be in the club over the longer term on faith. Apart from the fact that we can now see many examples across the spectrum of industry of British business and individuals having thrived over a generation by expanding their businesses across the continent, it seems to me the decision we all face in June will involve very similar considerations. Indeed, once you take economic crystal ball-gazing out of the equation, it really all comes down to our individual perception of sovereignty and self-determination. But which of the two ‘camps’ represents the best fit with the future prosperity and integrity of the English insolvency market? Is Brexit capable of changing things for the better? Would we make a better fist of it by ‘going alone’?

My own view (not endorsed in any way by Paris Smith LLP) is that where our government has thus far enjoyed the relative freedom of action which the Brexit camp so heartily desires, such as in justice and home affairs, we have – of late – not made much of that opportunity at all. I would go further, and say that our elected government has set us on a course which is likely to do serious damage to the reputation of English insolvency and its ability to deliver the sort of creditor returns upon which (amongst other things) it will be judged internationally. We know already that the UK has recently slipped in the World Bank rankings, and continuing on this course is likely to see us fall further, suggesting that we are a less attractive jurisdiction in which to place investment.

To begin with, government policy since the 2015 general election has resulted in the cost of access to justice being placed out of the reach of many. Court closures, massive hikes in issue fees, the disproportionate raising of the creditor bankruptcy threshold, the promise of a British Bill of Rights replacing the ECHR under English law and the end of the insolvency proceedings exemption to the Jackson reforms are just five examples, among many, of measures which tend to encourage debtors and directors to avoid payment to creditors and/or to abuse English insolvency laws with relative impunity. If it were not for the fact that the wider economy has been slowly improving, I believe this would already have resulted in a significant number of avoidable cash flow insolvencies. Whether or not insolvency numbers do go back up, such insolvencies as there are will almost certainly bring a much diminished returns to creditors, which I believe is likely to impact upon business confidence more generally.

I suspect the cycle will complete itself in a few years’ time, and that it will only take one or two very high profile collapses which leave voters out of pocket and a properly mobilised Opposition to bring the political will back towards the prioritisation of the administration of justice; if not, it will perhaps take the further growth of the UK’s personal debt mountain into a behemoth which can no longer be ignored by successive administrations. In the meantime (and we would have to acknowledge that economic policy and political reality are unlikely to change in the short to medium term) all the indicators are that the exercise of legislative freedom and government discretion in the UK has been, and will continue to be, disadvantageous for the UK insolvency market. The net beneficiaries to date have been rogue directors, who will presumably go back into the marketplace as serial offenders, and claims purchasers who are plugging a natural funding gap but who are not themselves answerable to creditors.

This is not to say, of course, that if the UK remains in the EU this position would necessarily be reversed. What I would suggest, however, is that within the framework of a stable and established supranational legal system those of us willing to try – over time – to address this worrying trend are far more likely to be offered the right tools and levers to effect that change. So long as new UK laws have to be made and/or read by UK courts in keeping with prevailing European standards and jurisprudence, particularly where those European standards and jurisprudence have themselves to fit with international treaty obligations including the European Convention on Human Rights, there is hope for influencing the exercise of elected power otherwise than through a fragmented UK Parliament and the blunt mechanism of a general election after 5 years. As with individual rights which are protected against lack of observance by Member States in Strasbourg, so too commercial interests may well best be served by having national governments answerable to supranational standards, in Brussels and Luxembourg.

In this respect, I would applaud the vision of R3 (the Association of Business Recovery Professionals) in making European co-operation a major theme of their policy agenda this year, starting by facilitating discussions on likely EU insolvency legislative action to address differing legal frameworks and practices, initially within the context of the Capital Markets Union (CMU) initiative, thereby to encourage the free flow of investment capital across borders. Within this initiative is a recognition that for a true single market to operate successfully there needs to be at least a basic level of harmonisation of national measures in order to reassure investors and contracting parties that it is safe for them to step outside their national markets. I also note that in April of this year the joint R3 and INSOL Europe annual conference will address, amongst other things, the conversion of the EU’s recommendations on pre-insolvency proceedings into a Directive.

Whatever else we may think of European law, it is largely predictable, with Regulations such as the European Insolvency Regulation being reviewed on pre-set dates over time by independent bodies looking at the bigger picture, hence it has taken 15 years to come up with the recast Regulation, which comes into effect next year. I would like to think that, come 2017, there is some point in my training my team on the impact of the recast Regulation, as opposed the uncertain prospect that, following a Brexit vote, there may very well be no further integration of national insolvency regimes, meaning in effect that only IPs with the resource to make appointments in multiple jurisdictions subject to widely differing laws will be able to advise effectively on cross-border insolvencies (even those involving just one or two assets and/or employees abroad). If we are not able to shape European policy on insolvency, we may well find ourselves at a competitive disadvantage and unable to work with our European partners to, for example, reduce the potential impact on British debtors of national laws in other Member States which may seem to us to be counter-productive to the rescue culture (e.g. German laws which impose strict personal liabilities on directors of German companies trading the UK).

At its lowest, I would distil the points I am making here into two interlinked propositions:

  1. The insolvency profession produces best results when the applicable law is clear and predictable (thus reducing the scope for legal argument and maximising the prospects of IPs being able to give accurate advice upon which recipients can rely, and to estimate the costs of administering an insolvent estate accurately for creditors); and
  2. Without the constraints of a clear, long-term framework of agreed policy objectives offered by overarching European legislation (which only active, reformist and continued EU membership brings), British governments can and will change insolvency law regularly, often without adequate consultation and often by subordinate legislation without reverting to Parliament, to suit their changing political whims, meaning that the law will be unclear and unpredictable.


The perceived effect of a possible Brexit upon the UK’s insolvency market is, self-evidently, unlikely to have much bearing upon the result of the referendum in June. As a profession, we are perhaps neither natural thought leaders nor bellweathers for the British electorate as a whole. For those of us within that market whose business and ability to make a difference to those we interact with on a professional basis are things we care about deeply, however, I would suggest that the likely impact of Brexit on our profession is not something we can conscionably ignore in our deliberations. No doubt arguments will continue to be made on both sides, playing upon our fears and insecurities, and by June we will all be thoroughly sick of them (if we are not already). Nevertheless, the choice we make on the day will have very serious consequences.

I shall leave you, therefore, on a lighter note, with another childhood memory, this time of a musical character. No doubt the sharp-eyed reader (if anyone has read this far) will have been waiting for this explanation since the title of this article. I was only 7 years old when The Clash first released what eventually became their only No.1 hit single. I like to think I heard it at the time, but in truth my household was not particularly into the punk rock scene so I probably did not have a chance to listen to it properly until after it was re-released in 1991. Coincidentally this was the same year in which a European Council was convened which drafted the Treaty of Maastricht, the instrument which created the pillar structure of what we now know as the European Union. I for one hope the famous lyrics which inspired this blog are not playing in people’s heads too loudly on 23 June:

Should I stay or should I go now?
Should I stay or should I go now?
If I go there will be trouble
And if I stay there will be double
So you gotta let me know
Should I stay or should I go?

For my part, I find it inconceivable (on the evidence of last week’s appallingly unenlightened Question Time debate at least) that I am going to ask any politician, economist or journalist, no matter how well informed they may claim to be, to ‘let me know’ how I should vote. I shall vote, rather, with my own instincts, having weighed carefully the evidence as to (amongst other things) which body of laws I feel are most likely to serve the interests of our profession. As things stand, for me, that (albeit inevitably very narrow) analysis points very firmly in the direction of the UK remaining in the EU. At the moment the bookies agree with me, but they also think Boris is the second most likely person to become the next Prime Minister!

I should be pleased to hear any views on this blog, particularly if you think you or your business might be affected by the prospect of Brexit. Please either leave a comment, direct message me or email me.