The Recognition of an English Scheme of Arrangement in Germany Post Brexit: The Same But Different?Dr Stefan Sax, Partner, and Dr Artur M. Swierczok, Associate, Clifford Chance, Frankfurt am Main, Germany
No other restructuring instrument has shaped the international restructuring landscape in recent years as much as the English Scheme of Arrangement (Scheme). Regulated within secs. 895 et seq. of the English Companies Act 2006 (CA 2006), the Scheme has developed into an international hit for the financial restructuring of struggling companies and especially group of companies. In this regard, German Companies have been key beneficiaries. The Scheme trend has left its mark in numerous cases, such as Tele Columbus, Rodenstock, Primacom, Monier, Apcoa and currently CBR Fashion, in all of which it has impressed. But what are the implications for the recognition of a Scheme in Germany post Brexit?
The political, economic and legal consequences of Britainís vote to leave the EU are even now, more than six months later, difficult to gauge. The only thing that remains certain is that the United Kingdom (UK) remains bound by European laws until its official withdrawal from the EU. In the event that post Brexit, all European legislation ceases to apply and no equivalent mechanisms are put in place, what would be the consequences for the recognition of a Scheme in Germany? The following article shall address this question in great depth. Firstly, with a degree of brevity, a description of the restructuring advantages of a Scheme in comparison with the options available under German law. Thereafter, a classification of the Scheme as it exists within the current legal framework is made, wherein the focal point of the question of recognition lies. Finally, the article shall comprehensively address the issue of the recognition of the effects of a Scheme post Brexit.