Vol 14 (2017) - Issue 5

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The Proposed EU Directive on Preventive Restructuring Frameworks

Introduction
In November 2016, the European Commission issued a proposal for a Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge (the 'Proposed Directive'). This article seeks to (i) explain the policy aims underlying the Proposed Directive; (ii) summarise the Proposed Directive's key elements, in particular, the proposals for restructuring frameworks across Member States to share certain core elements and minimum standards; (iii) consider the areas in which the Proposed Directive may require some further work; and (iv) consider the likely impact of the Proposed Directive on the UK both in terms of its obligations as an EU Member State (for the time being) and, following the UK's exit from the EU and implementation of the Proposed Directive by the remaining Member States, on the UK's prospects of remaining a global restructuring hub.

The UK may well never have to implement the Proposed Directive due to the legislative steps which still need to be completed. However, the UK is nevertheless still likely to face increased pressures to reform its own restructuring frameworks, particularly the creditors' voluntary arrangement and the scheme of arrangement jurisdiction, the latter of which has stood largely unchanged for over a century.

Pressures for reform do not stem solely from the EU's latest proposals. The Proposed Directive should be seen in its international context, in which a number of jurisdictions have already made moves to overhaul their existing restructuring regimes. Recently (and most notably) Singapore enacted the Companies (Amendment) Act 2017 which, in addition to incorporating the UNCITRAL Model Law on Cross-Border Insolvency, has made extensive amendments to the Singaporean scheme of arrangement jurisdiction under Part VII of the Companies Act (Cap 50 of the 2006 Revised Edition)(the 'Revised SCA').