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 UK Supreme Court today delivered an important decision on the meaning of the so-called 'balance sheet insolvency test' in s.123(2) of the Insolvency Act 1986 (UK) (BNY Corporate Trustee Services Limited v Eurosail 2007-3BL PLC [2013] UKSC 28 ("Eurosail")).

The UK Financial Services Authority (“FSA”) confirmed on 31 Oct. 2011 that MF Global UK Limited (“MF Global UK”) will be subject to the new Special Administration Regime (“SAR”).^[1] This is the first time that the new regime, set out in The Investment Bank Special Administration Regulations 2011 (“SAR Regulations”)^[2] has been invoked.

Background

The U.K. Court of Appeal (the “Court of Appeal”) on Aug. 2, 2010, handed down a long-awaited decision regarding an appeal related to the scope of, and eligibility to receive distributions from, the Lehman Brothers Europe (International) (“LBIE”) pool of client money. Lehman Bros. Int. (Europe) (In Administration) v CRC Credit Fund Ltd. & Ors, [2010] EWCA Civ 917 (appeal taken from the Chancery Division) (U.K.).

The Joint Administrators (the “Administrators”) of Lehman Brothers International (Europe) (“LBIE”) have issued a notice, dated December 4, 2009 (the “Notice”), pursuant to Rule 2.95(1) of the U.K. Insolvency Rules 1986, announcing their intent to make a distribution (by payment of an interim dividend) to preferential creditors (if any) and unsecured, non-preferential creditors of LBIE. The Notice was authorized on December 2, 2009, by an order of the High Court of Justice (Companies Court) in London (the “U.K. Court Order”).

As previously described in our Alert of Oct.

The Joint Administrators (the “Administrators”) of Lehman Brothers International (Europe) (“LBIE”) announced on Oct. 5, 2009, that they are developing a contractual (i.e., non-judicial) alternative to their proposed Scheme of Arrangement, which is the subject of an appeal following a decision by the High Court in London that it lacks jurisdiction to implement the scheme.

The Prior Proposed Scheme of Arrangement