Summary of ‘European Insolvency Regulation Debate’ at The Supreme Court
Motion defeated – the message was clear, let the UK get on with getting it right
Conflicting views and passionate discussions marked INSOL Europe’s debate on the European Insolvency Regulation at the UK’s Supreme Court on Friday 6 July 2012, chaired by Chris Laughton, a restructuring and insolvency partner at Mercer & Hole, Chartered Accountants, which concluded that “if it ain’t broke, don’t fix it”.
Over 50 leading insolvency experts from the UK and a variety of other European countries participated in the debate. INSOL Europe’s proposals for significant change to the Regulation garnered modest support from the largely British audience, who favoured the flexibility of the Regulation in its current form, albeit with some minor technical improvements.
The debate reflected a shift in the now old news criticism of the UK being seen as the 'insolvency brothel' of Europe. ‘Bad’ forum shopping, where a debtor is trying to disadvantage creditors, is as disliked in the UK as in continental Europe.
Recognising the consensus that the European Insolvency Regulation is fit for purpose, Laughton said: “Strengths of the Regulation are its brevity and flexibility. The continental lawyer’s preference for black letter law does not work well in a cross-border context.”
The existing framework in the Regulation is a balance between the interests of debtors, creditors and other participants in cross-border insolvency. “A few minor tweaks will make the Regulation even better, but we need evolution, not revolution” said Laughton.
The consensus was that the value was in having the debate rather than determining the result. “It was a great event that helped to increase people’s understanding of the principles of the Regulation,” said Laughton. “But I’m delighted that participants rejected the suggestion that a company’s centre of main interests (and therefore which country’s insolvency law applies) should be determined an arbitrary 12 months before the opening of insolvency proceedings.”
Date: 9th July, 2012
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