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The Shifting Sands report of cross border insolvencies

Kevin Hellard Kevin Hellard

Given the nature of recent world events, choosing what jurisdiction in which to begin cross border insolvencies can seem like a guessing game. Kevin Hellard and Margot MacInnis from our insolvency and asset recovery team and Richard Fisher QC, of South Square, introduce our latest report on the situation.

Our Shifting Sands report was produced with our colleagues at South Square, a leading set of commercial law barristers, and explores the changing dynamics of international jurisdictions in insolvency proceedings.

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This report follows the Discord To Harmony paper we produced with South Square in 2015. At that time, we highlighted the growing prominence of offshore jurisdictions in international insolvencies and the move towards greater harmonisation.

Much has changed since then. The past five years has seen a series of unprecedented shocks:

  • the decision on Brexit
  • the election of the Trump administration and the events surrounding its removal
  • the ongoing COVID-19 situation and related restrictions on the market

For the report, we surveyed 150 lawyers and market participants in more than 25 on and offshore jurisdictions. Of these, 47% anticipate an increase in insolvency activity in the next three years, and that was before the full ramifications of COVID-19 were understood. Their views paint a picture of a changing cross border insolvency landscape, and this was all before the arrival of COVID-19.

The UK was the most-effective insolvency regime amongst the global participants surveyed. This is some consolation given the potentially adverse implications that Brexit may have on the UK's share of the global restructuring market.

Offshore access to funding, and the cost and speed of hearings remain challenging. These issues were cited as challenges back in 2015 and remain the areas where offshore jurisdictions are rated less strongly.

Although our research reveals a general preference to instruct local advisors, 60% of respondents said the presence of cross border aspects would have a significant influence on their decision to instruct counsel or insolvency practitioners based onshore.

Written by Mike Saville

For further insights into cross border insolvencies, download the full report [ 4734 kb ].