The post-Brexit reality of cross-border insolvency

If your business is in financial distress and trades in both Northern Ireland and the Republic, or has creditors based in both jurisdictions, there’s something important you need to be aware of.

Pre-Brexit, entering restructuring as a cross-border business was straightforward. When both the UK and Ireland operated under EU legislation, companies in distress benefited from shared recognition of insolvency proceedings. For example, a company that went into administration in Newry, which traded in Ireland, could simply engage a Northern Ireland Insolvency Practitioner (IP), who would manage all aspects of the proceedings, without having to enter the Republic of Ireland courts system.

However, since Brexit, that landscape has changed dramatically. There is now no automatic recognition of cross-border insolvency proceedings between the UK and Ireland (or any EU member), and that has huge implications for businesses facing corporate restructuring or insolvency.

“Post-Brexit, the focus on trading operations meant insolvency changes were largely overlooked. Many businesses don’t realise the extent of the complexity until they are forced to enter the process,” said Seamas Keating, Restructuring & Recovery Partner, AAB.

Here, we outline the key considerations you need to be aware of if your business is in difficulty and operates in both jurisdictions — and why acting early and enlisting the right cross-border expertise is more important than ever.

Understanding the legislative change for cross-border insolvencies

Pre-Brexit, cross-border insolvencies between the UK and Ireland benefitted from the European Insolvency Regulation (EIR), which ensured proceedings in one Member State were recognised and enforceable in another. However, the EIR no longer applies between the UK and Ireland, and what was once a single, straightforward process is now two — each with its own legal requirements, court systems, timelines, and creditor hierarchy.

Navigating NI and ROI

If you have a business that trades in both the UK and Ireland, or has creditors based in both jurisdictions, and your business requires a restructuring process, it is important to note that the UK and Irish processes have very different requirements and impacts, including how creditors are treated and recognised. Furthermore, Insolvency Practitioners are typically only licensed to operate in one jurisdiction, forcing businesses to engage support on both sides of the border, increasing costs, time, and complexity.

Creditor Recognition

HMRC and Revenue Commissioners are both considered preferential creditors in their own jurisdiction. However, where they fall in the creditor priority list and how much influence they have differ when they are creditors in restructuring processes outside of their home jurisdiction.

Commercial creditors are also affected. Because formal restructuring processes are now not automatically recognised cross-border, it can be difficult to enforce the terms of a UK process on Irish creditors, and vice versa.

What this means in practice is that creditors in the North V’s the South may expect a different outcome, even where the business is part of a single group. As you can imagine, this creates real complexity.

Our real-world scenario post-Brexit

Returning to our Newry-based business with Irish trading. If the Newry business entered administration today, UK law applies. Creditors are ranked and paid according to UK law. Revenue Commissioners will be an unsecured creditor under the UK process, as opposed to their potentially preferential treatment in an Irish process. Critically, Irish creditors, including Revenue Commissioners, will not automatically be bound by the restructuring process, and they could continue to pursue enforcement through Irish courts.  To prevent this, an application will have to be made to the Irish High Court to obtain legal recognition of the UK restructuring process in Ireland – a process that’s now a routine part of cross-border cases.

So, What Should You Do?

• Engage Early — Don’t wait until the situation deteriorates. The earlier you get advice, the more options you’ll have.
• Avoid Unqualified Advice — Acting on incorrect advice can worsen the situation and impact your financial and professional outcome.
• Be Transparent — Disclose your company’s full position to all advisers involved, including considering the impact of cross trading or creditors.

“Ignoring the situation or taking unqualified advice can be detrimental to the outcome. Speed is everything – so, getting qualified experts involved early and having access to cross-border insolvency advice is crucial,” mentioned Gary Digney, Restructuring & Recovery Partner, AAB.

How AAB can help

At AAB, we specialise in cross-border insolvency and restructuring. Within our dedicated team, you’ll find qualified Insolvency Practitioners who are highly experienced in both jurisdictions- ready to guide you through complex cross-border rescues quickly and effectively. If you have any queries about cross-border insolvency and restructuring, please do not hesitate to get in contact with Gary Digney, Seamas Keating or a member of our Restructuring & Recovery team.

AAB are proud to be winner of both Large Firm of the Year and Tax Team of the Year at the Accounting Excellence Awards 2025.