A thorny question facing a company when considering a Restructuring Plan is how to deal with HMRC particularly following HMRC’s opposition to recent plans.
Creditors now have some assistance in these deliberations thanks toguidance published by HMRC setting out how they will approach discussions with companies considering a Restructuring Plan.
In the recent decision of FamilyMart China Holding Co v Ting Chuan (Cayman Islands) Holding Corporation [2023] UKPC 33 (FamilyMart),[1] the Judicial Committee of the Privy Council (the Board) found that, although an arbitral tribunal does not have the power to determine whether it is just and equitable to wind up a company nor to make a winding u
The Grand Court of the Cayman Islands has recently dismissed a petition for the appointment of restructuring officers pursuant to the restructuring regime introduced in the Cayman Islands in August 2022. The case provides helpful clarification of the nature of evidence that is required to be put before the Court to engage its jurisdiction to appoint restructuring officers and will allow companies to be better prepared when seeking to utilise the Cayman Islands restructuring regime with the benefit of the automatic moratorium.
Misled or defrauded shareholders may rank equally with creditors in liquidations of insolvent funds
A floating charge debenture holder has the advantage that they can enforce their security by appointing their choice of administrators. This is a powerful and useful tool for lenders but is subject to the caveat that the debenture has to be “qualifying”.
As far as they go, restructuring plans have worked well since they were first introduced 3 years ago. This is reflected in the most recent review of CIGA published by the Insolvency Service which reflects favourably on this new insolvency measure. However, there are still some barriers to its use.
The three year review of CIGA (the Corporate Insolvency and Governance Act) published by the Insolvency Service suggests that we might see changes to the corporate moratorium process – will these address concerns about the process and encourage more insolvency practitioners to recommend its use?
It’s now level pegging for HMRC on cram down – twice it has been crammed down, and twice it has not.
In the most recent restructuring plan proposed by Prezzo, the court sanctioned the company’s restructuring plan and crammed down HMRC as both preferential and unsecured creditor. Unlike Houst’s restructuring plan, where HMRC was also crammed down, HMRC fiercely contested the plan proposed by Prezzo.
Snapshot
The Restructuring Plan (Plan) was introduced as part of the UK Corporate Insolvency and Governance Act 2020, which introduced a new part 26A into the Companies Act 2006 (CA 2006). The part 26A Plan provisions are largely based on the existing scheme of arrangement rules detailed under part 26 of the CA 2006, and it is often referred to as the “super scheme”.
Plans now sit alongside schemes of arrangement and company voluntary arrangements (CVAs) to provide a further restructuring option for companies and insolvency practitioners alike.