On 23 June 2016 a 52% majority of the British people voted in favour of leaving the European Union. It seems likely that the immediate effect of the Brexit vote will be a degree of turmoil in the financial markets, involving, for instance a devaluation of Sterling against the Euro and of the Euro against the USD.

This would affect all companies trading across the relevant borders, and may, for UK companies involve sudden price increases for imports, where contracts allow for that. It is also likely to lead to an increased demand for the services of UK and cross-border turnaround and restructuring professionals, after a long period of record low numbers of business failures.

It should be assumed that such vote will result into the UK submitting a termination notice pursuant to Article 50 of the Treaty on European Union to the European Council shortly. Such termination notice will start a two year period (“Sunset Period”) of negotiating an agreement on the details of the withdrawal (“Withdrawal Agreement”); it is likely that alongside of negotiating the Withdrawal Agreement the UK and the EU will negotiate one or more additional agreements in respect of the details of the future relationship between the UK and the EU.

If the Sunset Period is not extended by unanimous agreement of all  Member States of the EU and if no Withdrawal Agreement is entered into within such two years, then the UK will automatically cease to be a Member State of the EU.

During the Sunset Period there will be uncertainty not only in relation to the economic consequences of the Brexit but also in respect of the future regulation and legal rules for all sectors and industries.

We previously considered the possible legal implications of a Brexit for restructuring and insolvency professionals. They face an uncertain future where their skills may be in greater demand than ever but they may have to work without the tools of their trade if the EC Regulation on Insolvency Proceedings 2000 and the Recast Insolvency Regulation which replaces it in 2017 cease to apply to cross border restructurings in the UK.