Brexit could change century-old UK insolvency rule

Author: Olly Jackson | Published: 21 Feb 2018
The UK High Court had the opportunity to overturn the Gibbs rule in January, a long-established principle that provides that a debt governed by English law cannot be discharged or compromised by a foreign insolvency proceeding. But it decided not to do so. 

As such, the Gibbs insolvency rule is coming under increasing scrutiny and Brexit provides an opportunity to change course.

In Bakhshiyeva v Sberbank of Russia the court ruled that it was prohibited from ordering the discharge of the creditor’s claim. The case has moved on to the Court of Appeal, which will decide if the moratorium of restructuring provisions decided in Azerbaijan should be extended to the UK. The decision has sent a signal to creditors with English law claims supposedly extinguished by foreign insolvency proceedings to hold out as they could be protected by English law. But as the UK leaves the EU and its...