The Dutch legislator has published a bill for a new pre-insolvency tool, which seeks to combine the best of the UK scheme of arrangement and the US Chapter 11 procedure. The new legislation will be formally called 'The Act regarding the binding approval of debt restructuring agreements'. Among restructuring professionals it is already widely referred to as the WHOA (Wet homologatie onderhands akkoord) or the "Dutch Scheme". Currently, the WHOA is pending final approval by the Dutch parliament and is expected to enter into force on 1 July 2020.

There have been a number of smoke signals in the last few months around the increase of consumer debt in the UK and a focus on those firms providing consumer credit across the credit spectrum but particularly in the "sub-prime" or "near-prime" space.

Since the credit crunch, a number of consumer credit businesses have stepped in to fill a gap in the lending market. They give sub-prime or near-prime borrowers, who may find it difficult to obtain credit from traditional sources, with high-cost, short-term credit - instant access to funds.

On the Horizon

Welcome to the second edition of the On the Horizon newsletter - a regular update on upcoming cases and anticipated regulatory developments by the DLA Piper Banking and Finance Litigation team.

AUTUMN 2016

Cases to watch

Understanding and managing the risks of an insolvent acquisition

OPPORTUNITY ARISES OUT OF ADVERSITY

The recent global financial crisis has seen consumers tighten their belts and the retail industry as a whole has faced increasing pressure. Profits warnings have peppered the financial pages and fashion retailers, in both the budget and luxury sectors, have been subject to formal insolvency processes.

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.

You must have been in isolation if you haven’t heard or read about the Supreme Court’s decision in Bresco v Lonsdale. It has been hailed by some as opening the floodgates to adjudications by insolvent companies. But as a series of recent judgments show, there remain a number of obstacles that will need to be overcome by insolvent entities seeking to enforce an adjudication award.

The background

In a world of multinational businesses, ever-changing consumer trends and political uncertainties, insolvencies and financial restructurings of a cross-border nature are a common occurrence. Officeholders therefore frequently need to consider options that allow, at the very least, recognition of their appointment in the jurisdictions where the insolvent debtor has (or had) operations, assets or other relevant connections.

The INSOL International Channel Islands Seminar took place on 13 September 2017 in Guernsey, where tensions rose high as jurisdictions battled it out for the crown of the "go-to" jurisdiction for cross border restructurings.

The aim of a payment action is to recover monies due. Obtaining a positive judgment from the court is just the first step in that process. The party with the benefit of the judgment still needs to enforce the order if payment is not made. This guide describes what enforcement means in practice and the approach to enforcement in Scotland.

Getting started

To enforce a court decree in Scotland, creditors need to do the following:

In our “Insolvency in the fashion retail sector: the risks and opportunities” article in the Q2 edition of Global Insight, we looked at the challenges the fashion retail industry faces today and the opportunities available for both existing players and new market entrants in the context of insolvent business acquisitions. In this article we comment in more detail on these opportunities and consider some of the factors and risks to be aware of when purchasing an insolvent fashion retail business and its assets.

OPPORTUNITY ARISES OUT OF ADVERSITY