The characterisation of a charge as fixed or floating can have significant ramifications for the chargee on chargor’s insolvency. This is because the holder of a fixed charge enjoys significant advantage, in terms of the order of priority of distributions to creditors, over a floating charge holder.
The English Court has refused to sanction two separate restructuring plans proposed by Nasmyth Group Limited (Nasmyth) and The Great Annual Savings Company Ltd (GAS). Both companies sought to use Part 26A of the Companies Act 2006 to “cram down” His Majesty’s Revenue and Customs (HMRC). Whilst neither decision is the first time that Part 26A has been used in this way1, they are the first to involve any active participation by HMRC in the sanction hearing2.
The UK Government has announced changes to the regime for winding-up petitions. With effect from 1 October 2021, some of the protections currently afforded to businesses against aggressive debt recovery action are being phased out.
The changes are intended to avoid a 'cliff edge' for debtor companies when the current measures lapse at the end of September 2021, and have a tapering effect to avoid the flood of winding-up petitions that might otherwise be expected.
What are the current restrictions (in place until 30 September 2021)?
A week is often described as a long time in politics, and so also (it seems) with the restructuring market.
Last week, we saw significant strides forward with:
The UK Restructuring Plan took its first foray down the well-trodden path of lease restructuring over the last week. The Restructuring Plan has been used through to court sanction in five cases so far: however, none has sought to compromise landlord claims, the preferred tool for which has until now been the CVA.
The new Part 26A Companies Act Restructuring Plan procedure, dubbed the “Super Scheme”, (summarised here) was gathering pace in the English courts since its introduction in June last year. Last week’s judgment in gategroup presents a potential speed bump in terms of its implementation as the restructuring tool of choice in European cross-border restructurings.
The new UK Restructuring Plan
The Corporate Insolvency and Governance Act, which received Royal Assent on 25 June 2020, contains a range of significant reforms, not least of which is the introduction of a new Restructuring Plan process. Together with the sweeping changes that the Act has in its sights, the Restructuring Plan and associated changes are aimed at improving the tools for companies to be effectively and efficiently rescued.
Key takeaways
Pre-packed administration sales, or pre-packs, remain a useful tool in the tool box for quickly and discreetly achieving a rescue of a business. However, that must always be balanced with the need to protect the veracity of the restructuring process and thereby the interests of creditors. In response to criticism of pre-packs, and a recent review of existing industry measures, the Insolvency Service has proposed draft regulations (the Administration (Restrictions on Disposal etc.
The Corporate Insolvency and Governance Act, which received Royal Assent on 25 June 2020, contains a range of significant reforms, not least of which is the introduction of a new Restructuring Plan process dubbed the super scheme. The first such Restructuring Plan, used in the financial restructuring of Virgin Atlantic Airways (VAA), was sanctioned by the High Court on 2 September 2020 representing a new landmark in the UK restructuring landscape.
The Corporate Insolvency and Governance Act, which received Royal Assent on 25 June 2020, contains a range of significant reforms, not least of which is the introduction of a new Restructuring Plan process dubbed the Super Scheme. The first such Restructuring Plan, used in the financial restructuring of Virgin Atlantic Airways (VAA), was sanctioned by the High Court on 2 September 2020 representing a new landmark in the UK restructuring landscape.