Background and Summary

The English scheme of arrangement (“Scheme”) has found particular utility throughout the European Union (the “EU”) and internationally as a restructuring tool for both foreign and UK companies alike. Providing creditors with access to a court sanctioned compromise procedure (which can be used prior to formal insolvency), the Scheme has combined flexibility with a high degree of commercial and procedural certainty for all involved, including creditors.

However, there is the question of whether the appeal of the Scheme looks to be threatened by the outcome of the UK’s 2016 referendum to withdraw from the EU (“Brexit”). Departure from the EU will only occur in the spring of 2019 following two years of exit negotiations, but at this stage, the exact Brexit model remains distinctly unclear. This post shows that whilst Schemes will face challenges they should survive the impact of Brexit and maintain the UK’s position as a key restructuring jurisdiction.