In this article we consider how the current challenging environment is impacting M&A in the insurance sector

We are living in volatile times. As a consequence of the COVID-19 virus, our equity and high-yield markets have witnessed large swings, making it difficult to value assets. Uncertainty over the timing and extent of the recovery has also made it difficult to value income streams. Moreover, debt financing has become more challenging. All of these factors are contributing to a challenging environment for M&A.

For many companies facing financial stress, restructuring liabilities is the only way for their business to survive. Consensual restructuring, or voluntary workout, requires agreement from creditors to reorganise the company’s liabilities, and is typically implemented by agreement between the company and its creditors. Court-based restructuring processes, on the other hand, involve at least some degree of legal coercion of creditors to vary or release liabilities.

The Corporate Insolvency and Governance Bill has been described as an “extraordinary Bill for extraordinary times” . First published on 20 May 2020, it has had a rapid passage through the UK parliamentary process, so it could become law (an Act of Parliament) by the end of June. At the time of writing, the Bill is almost at the end of its parliamentary journey with only one final stage outstanding - a return to the House of Commons for a consideration of amendments - before it is sent for Royal Assent and becomes law.

Two of the classic self-help remedies open to landlords for recovering commercial rent arrears have traditionally been forfeiture and Commercial Rent Arrears Recovery (CRAR), but both of these have been restricted as a result of Government measures to support tenants during the coronavirus crisis. There is also a proposed ban on winding-up petitions for coronavirus-related debts, which is already being applied by the courts.

Amended CRAR Regulations

As most global markets attempt a return to normal (or a new form of normal) business, it is hard to imagine a sector or an industry that isn’t already reeling from the effects of the past three months. Getting back on your feet is hard enough in the current environment, without having to worry about further setbacks impacting your business. But how would you react if your key supplier called tomorrow to let you know that they were insolvent and unable to provide you with goods or services?

The Corporate Insolvency and Governance Bill (the Bill) is being accelerated through Parliament and will soon become the Corporate Insolvency and Governance Act 2020 (the Act).

The Act, intended to give extra support to companies in financial difficulty, is likely to come into effect during July 2020. An overview of the Act can be found in our previous article.

Last week, in Re a Company (Application to Restrain Advertisement) [2020] EWHC 1551 (Ch) the High Court restrained the advertisement of a winding up petition on grounds of the impending changes to insolvency legislation, which are intended to have a retrospective effect.

As shopping centre owner Intu warns it could be forced to shut many of its sites if it can’t resolve its financial issues by tomorrow, 26/06/2020, our real estate and corporate restructuring and advisory experts take another look at what could happen next.

On top of the multiple challenges hitting retail and leisure landlords and occupiers arising from COVID-19, the news that Intu has had to write down the value of its shopping centre portfolio by nearly £2 billion came as further bad news.

Although the challenges brought by the COVID-19 pandemic have, and continue to, put exceptional pressure on supply chains, the reality is that the insolvency of a business partner is a risk even in normal times. When that business partner is on the other side of pending arbitration proceedings, questions arise as to how the insolvency affects the substantive claim as well as the underlying procedure.

Re Akkurate Ltd (in Liquidation) [2020] EWHC 1433 (Ch)

Back in November we reported on the case of Wallace v Wallace [2019] EWHC 2503 (Ch), where the Court grappled with the diverging authorities on the issue of whether section 236 of the Insolvency Act 1986 has extra-territorial effect.

The issue recently came back before the Court in Re Akkurate Ltd (in Liquidation) [2020] EWHC 1433 (Ch).

What did the Court decide?