As with many retail businesses, the Nero Group has been seriously impacted by the Covid-19 pandemic.
The company is the tenant of 619 stores and in November 2020 the directors proposed a Company Voluntary Arrangement, which is a statutory compromise voted on by creditors. The CVA proposal was principally focused on the company’s landlords, seeking to compromise the terms of the leases as to arrears of rent, future rent, service charges and insurance.
The creditors voted in favour of the CVA in December 2020.
The Act provides that a payment clause will be invalid if it makes payment conditional on:
Prior to the end of the transition period (31 December 2020), U.K. restructuring tools enjoyed universal and automatic recognition throughout the European Union. However, the legal landscape is now tainted with uncertainty and the legal position regarding recognition is more complex. Recognition is important to ensure that a scheme of arrangement, a restructuring plan, or a company voluntary arrangement (“CVA”) is fully binding on parties and to minimise the risk of challenge.
Not only was 4 May Star Wars Day this year, it was also the day The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (referred to in this article as the ‘debt respite regulations’) came into force.
COVID-19
Government Intervention Schemes
Current as of 21 May 2021
Government Intervention Schemes
COVID-19 Government Intervention Schemes 2
Countries around the globe are facing unprecedented and rapid change due to the COVID-19 pandemic. This guide provides a summary of key government interventions around the globe in relation to: EU State Aid Approvals (for EMEA region), foreign investment restrictions, debt, equity and taxation.
Suffering with mental health problems and being in financial difficulty are often strongly linked, with one frequently causing or worsening the other. The introduction of The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (referred to in this article as the ‘debt respite regulations’), which, with very limited exceptions, came into force on 4 May 2021, allows an eligible individual breathing space from any action a creditor may take for a ‘problem debt’.
In brief
The English High Court has sanctioned the restructuring plans proposed by the Virgin Active group following a hearing contested by a group of the gym chain's landlords. The decision represents the first use of the restructuring plan procedure, introduced during the summer of 2020, to restructure a lease portfolio, demonstrating the utility of the tool for debtors when implementing a significant restructuring across the capital structure, and as an alternative to the much-used company voluntary arrangement.
In dismissing Darty Holdings SAS’ (“Darty”) appeal in a recent decision[1], Miles J. has confirmed that an English court will look at the actual relationship between the parties involved, rather than the wider context, when considering whether those parties are connected. This will be the case even where the wider context consists of a transaction that will, immediately following the relevant transaction, sever that relationship.
The input of independent expert evidence has become increasingly critical to successful restructuring, with spring 2021 seeing yet more changes and now compulsory expert input. From 30 April 2021 it is now a requirement to obtain a report from an independent evaluator in certain pre-pack administrations. May 2021 saw several significant court decisions with New Look and Regis concerned CVAs and Virgin Active concerned a restructuring plan. All three judgments highlighted the need for independent expert input in formulating the restructuring plans.