The recentThomas Cook refinancing and Cortefiel scheme of arrangement offer contrasting examples to investors of the risks and rewards of adopting a hold-out position in complex multijurisdictional restructurings.

Ever since the establishment of the U.K. Pensions Regulator (the "Regulator") by the U.K. Pensions Act 2004 (the "Act"), the Regulator's exercise of its authority has been of major importance to the U.K.'s restructuring and rescue business. The first judicial review of the Regulator's powers, however, hints that some of the procedures it has adopted may be curbed in the future.

The Pensions Regulator and the Restructuring Environment

Pre-pack administrations are becoming more common. Four Holdings' purchase of Agent Provocateur illustrates the attraction of pre-packs — the ability to cherry-pick the best assets, acquire the goodwill of a well-known business that continues to trade, and retain its key staff without having to take on liabilities to creditors —and why existing management is likely to be supportive.

Reverse cross border mergers could become a popular device for UK companies seeking to maintain and preserve “passporting” or other EU rights.

The mechanism of a reverse cross-border merger (in this context whereby a UK parent company merges with their continental European subsidiary) has not historically been permitted under English law. However the provisions of an EU directive implemented in the UK in 2007 changed that position giving UK company groups that option.

The English High Court in Lehman Brothers International (Europe) (In Administration) [2016] EWHC 2417 (Ch), in one of a series of cases arising from the Lehman insolvency, has had to consider (among other issues) the meaning of “Default Rate” under the ISDA Master Agreement.

Editor’s Note: Our good London colleague Ed Marlow recently published this as a Bryan Cave client advisory.

Including an unsecured creditor  in an agreed payments waterfall does not by itself confer on that unsecured creditor  the benefit of a mortgagee’s usual duties on enforcement of security, or a direct claim against the sale proceeds.

The English High Court in Fondazione Enasarco v Lehman Brothers Finance S.A. and Anthracite Rated Investments (Cayman) Limited [2015] EWHC 1307 (Ch) applied a common sense approach in the circumstances to the determination of Loss under the 1992 ISDA Master Agreement. The judgment of the judge (Mr Justice David Richards) is useful reading for those involved in structured products and derivatives.

Background

The English Court of Appeal decision in Caterpillar v John Holt & Company, and its analysis of “retention of title” and “no set-off” clauses, will be of interest to commodity traders, compliance officers and legal counsel in industries dealing with energy and natural resources internationally.

Over recent years in this economic climate, it has been increasingly common for distressed companies to be sold in an effort to rescue the entity. On first blush, this seems a relatively simple exercise although care is required to ensure that no unexpected tax charges arise, especially if there is restructuring of the debt. The taxation rules governing the end of business life are varied and complex and the sooner that thought is given to taxation in respect of the insolvent company the better this will be for the seller, the remaining group and for any buyer.