The U.K. Financial Services and Markets Act 2023
Whilst AI is leading the agenda when it comes to the future of technology, fintech still remains the ace in the pack for investors. In fact, fintech businesses contribute more than £10 billion to the UK economy every year – supporting 76,000 jobs.
Fintechs also tend to outperform firms in other sectors too, with an annualised growth rate of 16% over the past decade, against 1.3% for the average SME.
The U.K. government has published its much-anticipated proposals for regulating the cryptoasset industry. These proposals, currently in the form of a consultation, will see many (but not all) cryptoasset-related activities being brought within the regulatory perimeter for financial services in the U.K.
There has been much commentary recently on the treatment by lenders of individuals and small and medium sized enterprises (SMEs). Indeed, the FCA has made its expectations very clear – that lenders should fully support those experiencing financial difficulty.
As a restructuring professional and insolvency practitioner, and a former regulator, I have some competing views and thoughts on what this means and whether it is the optimum approach in the longer term.
In 1907, Robert Baden-Powell, an English soldier, devised the Scout motto: Be Prepared. Upon hearing the Scout motto, someone asked Baden-Powell the inevitable follow-up question.
“Prepared for what?”
“Why, for any old thing,” he replied.
In Scouting for Boys (published in 1908), Baden-Powell wrote that to ‘Be Prepared’ means “you are always in a state of readiness in mind and body to do your duty.” More than a century later, preparedness is still a cornerstone of Scouting.
Celebrated WWII leader, General George Patton, once said “Do not try to make circumstances fit your plans. Make plans that fit the circumstances.” Unfortunately, it’s advice that is not being fully heeded, according to the FCA’s latest thematic review on wind-down planning The FCA has concluded that “significant further work” is needed to ensure wind-down plans are credible and operable, and has urged all firms to ensure adequate procedures and resources (both financial and non-financial) are in place.
In Shameeka Ien v. TransCare Corp., et al. (In re TransCareCorp.), Case No. 16-10407, Adv. P. No. 16-01033 (Bankr. S.D.N.Y. May 7, 2020) [D.I. 157], the Bankruptcy Court for the Southern District of New York recently refused to dismiss WARN Act claims against Patriarch Partners, LLC, private equity firm (“PE Firm“), and its owner, Lynn Tilton (“PE Owner“), resulting from the staggered chapter 7 bankruptcies of several portfolio companies, TransCare Corporation and its affiliates (collectively, the “Debtors“).
Joining three other bankruptcy courts, Judge Thuma of the District of New Mexico recently held that the rules issued by the Small Business Administration (“SBA“) that restrict bankrupt entities from participating in the Paycheck Protection Program (“PPP“) violated the Coronavirus Aid, Relief, and Economic Security Act, H.R. 748, P.L. 115-136 (the “CARES Act”), as well as section 525(a) of the Bankruptcy Code.
The Southern District of New York recently reminded us in In re Firestar Diamond, Inc., et al., Case No. 18-10509 (Bankr. S.D.N.Y. April 22, 2019) (SHL) [Dkt. No. 1482] that equitable principles in bankruptcy often do not match those outside of bankruptcy. Indeed, bankruptcy decisions often place emphasis on equality of treatment amongst all creditors and are less concerned with inequities to individual creditors.