Brussels sprouts a new order: the Banks and Building Societies (Priorities On Insolvency) Order 2018
In this report, Partner and Licensed insolvency practitioner Robert Paterson, examines the Order in the context of Brexit and the looming exit date.
- The Bank Creditor Hierarchy Directive (EU) 2017/2399 came into force on 28 December 2017. In the UK, the Banks and Building Societies (Priorities on Insolvency) Order 2018 implements this Directive and came into force on 19 December 2018.
- In relation to a specified category of financial institutions, the Order alters the ranking of unsecured debt, and creates a new class of secondary non-preferential debt.
- It represents a good – if narrow – example of the EU harmonising local finance and insolvency law across the member states. What remains uncertain is whether any withdrawal agreement approved by Parliament or indeed a hard Brexit would repeal its effect in the UK.