Aware,
This subject has been debated on here on a previous thread titled '1999 UK ATPL(A) Exams: Theory credit still valid?'
I believe the outcome was that so long as the IR didn't expire by more than 7 years then UK CAA ATPL's would still remain valid under EASA.
Also on the CAA FCL website there is a section titled 'European Legislation - The Expected Effects On The Licensing Of Pilots In The UK'. On here there is an Annex which tables the requirements for the conversion of european licences to EASA licences, and it states that if you have passed ICAO ATPL exams in the state of licence issue then you will still be issued with a CPL/IR with ATPL theory credit under EASA. It does not mention that the ATPL exams can only be JAA.
Hope that might help your Instructor friend.