Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Insolvency definition

What does Insolvency mean? In practice, insolvency describes a financial state where a debtor cannot meet liabilities when due, triggering remedies such as administration, liquidation or bankruptcy and informing directors’ duties and avoidance claims. For companies in England & Wales, Scotland and Northern Ireland, the Insolvency Act 1986, s 123 sets two alternative tests: - Cash‑flow insolvency: an inability to pay debts as they fall due. The inquiry is practical and forward‑looking, not confined to today’s bills (Re Patrick & Lyon Ltd [1933] Ch 786; BNY Corporate Trustee Services Ltd v Eurosail [2013] UKSC 28). - Balance‑sheet insolvency: liabilities (including contingent and prospective liabilities) exceed assets on...

UK recognition of foreign insolvency practitioners and proceedings post-Brexit: CBIR 2006, IA 1986 s 426, common law and treaties; saving provisions, French example and the Gibbs rule

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Introduction

The UK ceased to be an EU Member State on Exit day (31 January 2020). Pursuant to the Withdrawal agreement, it then entered an implementation period during which EU law continued to apply. In short, EU rules continued to bind the UK throughout that interval, before the period finally ended there. That period has concluded, and the Insolvency (Amendment) (EU Exit) Regulations 2019 (Brexit SI 2019/146), SI 2019/146 altered the Recast Regulation on Insolvency with effect from 11 pm on 31 December 2020, stripping out the principal operative provisions on automatic recognition. The policy underpinning Brexit SI 2019/146 was that leaving the EU should not curtail access to the UK courts (so certain jurisdictional rules are preserved), yet keeping unilaterally the substantial remainder of the EU Recast Regulation on Insolvency would have been unsuitable because it rests on reciprocity (therefore its future incorporation into UK law under section 3 of the European Union (Withdrawal) Act 2018 is undone). Brexit SI 2019/146 also withstood the automatic sun-setting mechanism in the Retained EU Law (Revocation and Reform) Act 2023, as it did not appear in Schedule 1 (see News Analysis: Government publishes schedule of REUL to be revoked by 31 December 2023—LNB...

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Web page updated on 21/05/2026

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