A balancing act

Creditors with legitimate grounds to challenge scheme or restructuring plan proposals and who assist the court in so doing should not be unduly discouraged by the costs regime. At the same time, frivolous arguments should not be supported with the promise of a costs award without consideration of party’s interests and other factors.

Virgin Active restructuring plans

The impact of Covid-19 has been felt across the commercial property sector; nowhere more acutely, perhaps, than in "bricks and mortar" retail and hospitality.

Even pre-pandemic, the high street was being forced to adapt to the growth of eCommerce. But consecutive lockdowns have expedited the shift; for some, that change will be irreversible.

The Court of Appeal has struck out Quincecare duty and dishonest assistance claims brought by the liquidators of a company running a Ponzi scheme against a correspondent bank that operated various accounts for the company.

The UK's accession to the Lugano Convention has become somewhat politicised, with the EU stating that it is not minded to allow the UK to accede, as that will then set a precedent for other third party states.

This will impact certain UK restructuring tools.

These case summaries first appeared in LexisNexis’ Insolvency Case Alerter. They represent some of the more interesting insolvency decisions to have been published recently.

This summary covers:

The Pension Protection Fund’s (PPF) restructuring and insolvency team has issued interim guidance on its approach to the new moratorium and restructuring plan (RP) provisions that came into force in the UK in 2020.

The PPF has statutory step in rights, meaning it can vote on certain aspects of both the moratorium and RPs to the exclusion of scheme trustees. This guidance represents the PPF’s take on use of RPs and what they expect to see.  However this is only the PPF’s position – this article looks to critically evaluate whether the guidance is tenable. 

As the focus on ESG issues intensifies in the financial markets, we have seen institutional investors demand more in these areas, in terms of both disclosures and concrete targets, from banks and funds. Meanwhile, emerging regulations, and reforms designed to help meet climate change targets and to enhance corporate governance, sustainability and environmental and social responsibility are underway. How will refinancings and restructurings of the significant amount of corporate debt coming out of COVID be affected by such winds of change?

EXECUTIVE SUMMARY

Background to the Restructuring Plan

The UK has introduced the Restructuring Plan; a new, flexible court supervised restructuring tool. The Restructuring Plan draws upon features of the existing Companies Act 2006 scheme of arrangement procedure (which remains available) but includes features which are new to the UK but similar to those under U.S. Chapter 11 bankruptcy proceedings.

Pre-packs sales are an important arrangement within Administrations and insolvency law. However, their usage has sometimes been considered “controversial”. In response to criticism and following a recent review of existing industry measures, the Government introduced The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (“the Regulations”). Coming into force on 30 April 2021, the Regulations will provide a new legal framework for pre-packs.