The English High Court has exercised its cram down power and sanctioned the Part 26A restructuring plans proposed by four of Cineworld’s UK operating companies, in face of significant opposition from its landlord creditors, including a novel injunction application by two landlords to exclude their leases from the plans. In sanctioning the plan, Cineworld’s UK Group avoided administration at the end of September.

The Galapagos Group has secured comprehensive affirmation of its 2019 debt restructuring (the “Restructuring”) from the English High Court. This decision is a significant step towards resolution of the highly contested restructuring, and provides market participants with further clarity and certainty when it comes to implementing lender-led transactions in future.

Introduction

Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.

The new Slovakian preventive restructuring framework aims to provide companies with a viable toolkit to deal with financial distress at an early stage and to counter the fact that the majority of Slovak companies enter an insolvency process having been insolvent for more than a year.

Main characteristics

On Wednesday 24 March, the government confirmed that it will be extending the current temporary restrictions on statutory demands and winding-up petitions and the temporary suspension of directors’ liability for wrongful trading put in place under the Corporate Insolvency and Governance Act 2020, until 30 June 2021.

The extensions, set out in the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021, laid before parliament on 24 March, will come into effect on 26 March 2021.

The Slovak parliament recently passed a new law – The Temporary Protection of Distressed Undertakings Before Creditors – which came into effect on 1 January 2021. It replaces the current temporary protection (moratorium) adopted at the outset of the COVID-19 crisis.

The new regulation will only be granted where a majority of the unrelated creditors involved agree with the stay. This marks a departure from the COVID-19 moratorium, which could be easily accessed by all debtors impacted by the coronavirus pandemic.

Today the Department for Business, Energy and Industrial Strategy announced that certain temporary measures put in place under the Corporate Insolvency and Governance Act 2020 (“CIGA”), which came into force on 26 June, will be extended.

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 were laid before the UK Parliament today and will come into force on 29 September 2020. Pursuant to these regulations, statutory demands and winding-up petitions will continue to be restricted until 31 December 2020.

The new UK legislation for companies in financial difficulty represents a fundamental shift in approach to restructuring in Europe and adds an important new tool to the UK restructuring framework. The availability of a plan proposed under the new Part 26A of the Companies Act 2006 (a “Restructuring Plan”) will undoubtedly change how many distressed companies seek to address their financial difficulties. However, until case law is developed, there will remain considerable uncertainty as to how the Restructuring Plan will work in practice.

Today, the Government published the highly anticipated Corporate Insolvency and Governance Bill (the “CIGB”).  It legislates for the landmark changes to the UK’s corporate insolvency regime and the temporary suspension of the statutory provisions on wrongful trading announced by the Business Secretary on 28 March 2020 (see Weil’s European Restructuring Watch update of 30 March 2020).

Since the outbreak of COVID-19 in Europe, the Slovak Parliament has adopted a series of new laws aiming predominantly to support employment, to provide financial aid and tax relief (particularly to SMEs) and to preserve and regulate legal enforcement.

The insolvency law related measures include mainly:

Debtor's filing

The statutory time limit for debtors to file for bankruptcy due to over-indebtedness (balance sheet test) that occurred between 12 March and 30 April 2020 has been prolonged from 30 to 60 days (and is expected to be prolonged further).