With the fallout from the pandemic hitting many businesses, those considering insolvency should look at the broad gamut of options on offer to avoid winding up the company. Matthew Padian, managing associate, explains.
The proposed new regulations to safeguard the proprietary of pre-packs have caused alarm in the profession, one of the areas of concern being the requirement that the Evaluator central to the process requires no professional qualifications but thankfully are qualified if they think they are (yes, you did detect some sarcasm).
The Regulations will mean that an administrator cannot execute a pre-pack if the following applies:
After a somewhat leisurely start, case law regarding the new restructuring plan in Part 26A of the Companies Act 2006 now seems to be picking up pace.
On 13 January 2021, the English High Court sanctioned three interconditional Part 26A restructuring plans for the subsidiaries of DeepOcean Group Holding BV.
The plans for two of the companies were approved by the required 75% majority. While the third plan received 100% approval by secured creditors, only 64.6% of unsecured creditors voted in favour.
Consequently, at the sanction hearing the court was required to consider whether the cross-class cram down mechanism in the restructuring plan should be engaged for the first time in the UK.
On 11 February 2021, the English High Court confirmed in gategroup Guarantee Limited that restructuring plans are insolvency proceedings so are not covered by the Lugano Convention.
One of the debt instruments subject to the gategroup restructuring plan contains an exclusive Swiss court jurisdiction clause. Under the Lugano Convention, proceedings relating to "civil and commercial matters" must generally be brought in the jurisdiction benefitting from the exclusive jurisdiction clause.
In what is the third, sanctioned restructuring plan since the introduction of Part 26A Companies Act 2006 in June 2020, the previously untested “cross-class cram-down” mechanism has now been applied for the first time. Cross-class cram-down being the ability to impose a restructuring plan on dissenting stakeholders whether or not those dissenting creditors form part of the same class as the approving creditors.
The team’s spirits have soared this week; not only have we been able to book a garden table at our favourite restaurant for 13th April, it looks as if we might not need to take the 1CL umbrellas with us. Yes, it’s Spring, and the new season brings renewed vigour and optimism to the gang.
In the final part of our predictions for 2021 for the UK insolvency market we look at pensions, the National Security and Investment Bill and cross border matters.
With an increased number of businesses experiencing financial difficulties in the current economic climate, lender-led debt restructurings are becoming more prevalent. Such restructurings are commonly achieved by the lender releasing, capitalising or amending its debt, each of which will have tax consequences for the borrower group.
This note sets out a brief summary of some of the key UK tax points to be aware of, and pitfalls to avoid, when undertaking these debt restructurings.
Debt waivers
Although the Trade and Cooperation Agreement (TCA) arrived in time to prevent a wholesale “no deal Brexit,” issues of cross-border cooperation and recognition in relation to insolvency and restructuring proceedings were not included in the agreement.