In the current economic environment, there are a number of entities that are being restructured. Our current experience has been that such restructurings fall into two areas, namely a debt for equity swap or a release of “toxic” assets from a group structure in order to minimise exposure to this asset class.
Debt for Equity Swap
Introduction
The credit crunch has put pressure on a wide range of structures and, as a result, lenders, borrowers and other counterparties are looking more closely at the impact of possible insolvency proceedings. As Jersey companies have often been used in cross-border finance transactions, it is important to be aware of the differences between Jersey and English insolvency procedures for companies.
What are the main Jersey insolvency procedures for a Jersey company?
These are:-
In light of the COVID-19 crisis, a Grand Ducal Regulation was published on 25 March 2020 (the Regulation)[1] that suspends certain procedural deadlines applicable in civil and commercial matters during the Luxembourg state of crisis. The Ministry of Justice has clarified that this suspension also relates to insolvency matters.
INTRODUCTION
Luxembourg is one of the leading domiciles worldwide for international investment vehicles. This leading position has arisen from the combination of the following core factors:
RESTRUCTURING - COURT PROCEDURES
Formal, court-driven restructuring proceedings are available into Luxembourg law, but for practical reasons, these are rarely used in practice.
Reprieve from payment procedure (sursis de paiement)
Usual Luxembourg security package
Luxembourg is one of the leading domiciles worldwide for international investment portfolio acquisition vehicles.
Acquisition financing are usually secured against the assets and cash flows of the target company as well as of the buyout vehicle.
In practice, given that a Luxembourg holding company generally does not have any operational activities, shares, receivables and cash on bank are the most important assets to cover.
Introduction
Luxembourg’s sophisticated financial services infrastructure, global brand recognition, full EU single market access and extensive double tax treaty network has lead to its development as a core jurisdiction for non-regulated investment structures. This has resulted in the domiciling of several tens of thousands of investment holding companies, many of which form part of globally recognised corporate groups or hold the portfolio investments of leading international investment funds.
RUBIN V EUROFINANCE SA
New Cap Re v Grant
[2012] UKSC 46
The recent decision of the English High Court in the case of Fry v Sherry [2012] (In the matter of Ruscoe Ltd (In Liquidation)) serves as a timely reminder of the potential personal liabilities faced by directors should they breach their fiduciary duties.
Summary of the facts