Opening the door for the SME market, Sir Alistair Norris has sanctioned the first ever restructuring plan for a “mid-market” company. The plan sanctioned in Amicus Finance PLC (in administration) is also the first restructuring plan proposed by insolvency practitioners and the first to cram down a secured creditor.

The sanction judgment is short, but the adjourned convening hearing that was dealt with by Mr Justice Snowden (the first hearing was before Mr Justice Trowers) gives some insight into the plan.

CVAs are a useful tool in the restructuring tool kit, and may prove extremely helpful to retailers or hospitality companies as a means of supporting those businesses as they emerge from the pandemic. The flexibility of a CVA and the ability to shape the terms of a proposal to meet the specific needs of a business have seen an increasing number of consumer led businesses use CVAs, and they have become popular as a means to restructure businesses that have a significant lease portfolio.

Following our previous alert that considered rent reductions and modifications to lease terms post New Look and Regis, this alert considers what those CVA challenge cases tell landlords about calculating a landlord's claim for voting purposes and the disclosure requirements.

From 30 April 2021, an administrator will be unable to complete a sale of a substantial part of a company's property to a connected person within the first eight weeks of the administration without either:

• The approval of creditors
• An independent written opinion (positive or negative)

This alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place within eight weeks of an administrator's appointment.

When is an evaluator's report required?

What is a pre-pack?

Pre-pack is the term used to describe an arrangement whereby the sale of all or part of a company’s business and/or assets is negotiated and agreed before an insolvency practitioner (IP) is appointed, with the relevant documentation being signed and implemented immediately or shortly after the appointment is made.

Following the demise of receiverships, administration is the insolvency process most commonly used to achieve a pre-pack sale.

Why are pre-packs used?

From 30 April 2021, an administrator will be unable to complete a sale of a substantial part of a company's property to a connected person within the first eight weeks of the administration without either:

• The approval of creditors
• An independent written opinion (positive or negative)

This alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place within eight weeks of an administrator's appointment.

Significant changes will come into force after 31 December if no agreement is reached (or is not finalised and ratified) before the end of the transition period for cross-border insolvency proceedings. Importantly, the changes will alter the grounds for jurisdiction to open insolvency proceedings in the UK and impact the recognition of those UK insolvency proceedings in the EU.

The re-introduction of Crown preference and the resulting change in the order of priority of creditors on insolvency was announced as part of the Autumn budget in 2018, way before anyone had heard of coronavirus or COVID-19, and was originally due to come into force on 6 April 2020. It was delayed until 1 December 2020 in terms of the 2020 budget which was presented to Parliament on 11 March 2020, the same day as the World Health Organization declared the outbreak of COVID-19 a pandemic.

What is a pre-pack?

Pre-pack is the term used to describe an arrangement whereby the sale of all or part of a company’s business and/or assets is negotiated and agreed before an insolvency practitioner (IP) is appointed, with the relevant documentation being signed and implemented, immediately or shortly, after the appointment is made.

The Corporate Insolvency and Governance Bill (the “Bill”) was published on 20 May 2020 and introduced a new debtor-in-possession moratorium to give companies breathing space in order to try to rescue the company as a going concern. The Bill went through the House of Commons on 3 June and passed through the House of Lords on 23 June. The Bill was back before the House of Commons today and is likely to receive Royal Assent next week (at which point the Bill will become law).