Restructuring Plans (RPs)
2024 was a year of firsts for RPs, and as case law in this area continues to evolve, there is little doubt that this will carry through into 2025.
It would be remiss not to expect to see more RPs in 2025. News of Thames Water's restructuring is "splashed" all over the press and Speciality Steel's plan might see the first "cram up" of creditors, but there seems a long way to go to get creditors onside.
Categorisation of a charge as fixed or floating will have a significant impact on how assets are dealt with on insolvency and creditor outcomes.
Typical fixed charge assets include land, property, shares, plant and machinery, intellectual property such as copyrights, patents and trademarks and goodwill.
Typical floating charge assets include stock and inventory, trade debtors, cash and currency, movable plant and machinery (such as vehicles), and raw materials and other consumable items used by the business.
As practitioners we pour over notices of intention to appoint (NOIA) and notices of appointment of administrators (NOA) to make sure every detail is accurate. Why? Because no one wants to risk an invalid appointment because there was a minor mistake or error that was overlooked. Understandably errors occur, particularly when the appointment of administrators often happens at speed, with all parties inevitably juggling many balls. Prescribed information may have been missed, or incorrectly stated and procedural steps may have been inadvertently forgotten.
Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.
Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.
WeWork
For those that are that way inclined (which includes us at #SPBRestructuring!), the 500 plus page Wright v Chappell judgment which sets out the BHS wrongful trading claim against its former directors makes for an interesting read. It paints a colourful picture of the downfall of the BHS group, from the point that it was sold for £1 to its eventual demise into administration and then liquidation. You can make your own mind up about the characters involved, but the story is a sorry one, with creditors ultimately suffering the most.
No, it isn’t. We now have two cases where the Court has confirmed that insolvency practitioners do not need the consent of paid secured creditors when extending an administration under para. 78 of Schedule B1 of the Insolvency Act 1986 (the “Act”).
Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.
Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.
WeWork
This question was considered in the recent case of Pindar where the judge concluded that an administration had been validly extended where the consent of one of the secured creditors (who had been paid) was not obtained.
On May 31, 2024, the chief judge of the U.S. Bankruptcy Court for the Southern District of New York (SDNY) entered General Order M-634, adopting guidelines for combining the processes for Chapter 11 plan confirmation under Section 1129 of the Bankruptcy Code and disclosure statement approval under Section 1125 of the Bankruptcy Code.
The UK Financial Conduct Authority (FCA has issued a consultation about proposed changes to its Guidance for Insolvency Practitioners. The aim is to clarify existing guidance and provide more information to insolvency practitioners (IPs) on how to deal with regulated firms.