Making Tax Digital for VAT: A reminder
Many businesses have assets, liabilities, operations, owners or investors in different countries. When insolvency threatens, you must assess the values and risks of these foreign connections, and the local and international laws and practices that apply to them.
Financial distress can often be overcome, but the challenges it presents when a company operates in more than one country multiply rapidly. It is common for businesses to establish local companies to operate in other jurisdictions, although there are many situations where companies operate abroad through branches.
The obvious restructuring issue is the effect of the interaction of different countries’ insolvency laws on the company. Although in principle, most countries have an insolvency system designed to maximise returns to creditors from the value in the company, the detail of the way this is done varies hugely. Increasingly, international law is moving to enhance cross-border insolvency co-operation between branches and also between group companies.
Within Europe, there is a European Insolvency Regulation designed to facilitate co-operation between insolvency regimes in such circumstances. Using such European legislation in conjunction with local insolvency law and practice is one of our particular skills. Across other borders there are a range of other mechanisms, including local implementations of the UNCITRAL Model Law (as in the UK’s Cross-Border Insolvency Regulations 2006 or Chapter 15 of the US Bankruptcy Code).
Although cross-border insolvencies are not uncommon, sometimes there is –as in any case of financial distress– an opportunity to rescue the company. Many jurisdictions have pre-insolvency procedures or practices to facilitate turnaround and rescue, even when a company has run out of cash and has a balance sheet deficiency. As ever, the key for such businesses is to seek early professional advice.
We can identify the issues and advise accordingly on appropriate remedies for cross-border financial distress, both directly and through our international alliances of insolvency professionals (insolvency co-operation partners), accountants (TIAG) and lawyers (TAGLaw).
We are a founder member of The International Accounting Group (TIAG)
TAG Alliances is ranked top three accounting alliances globally by Accountancy Age Magazine
Sector-specific knowledge and experience which we can apply to your business
We can work with you in a timely manner to provide you with the best possible outcome