The High Court has, for the first time, sanctioned a restructuring plan exercising the power to cross-class cram down. The court handed down its sanction order but noted that, as the first decision to use cross-class cram down, a reasoned judgment will follow in due course.

On 13 January 2021, the court sanctioned three interconditional restructuring plans ('the restructuring plans') for three subsidiaries of DeepOcean Group Holding BV (together with all of its subsidiaries, 'the DeepOcean Group'):

At 11pm on 31 December 2020, the UK-EU Trade and Cooperation Agreement (TCA) came into effect implementing the UK’s exit from the single market. The TCA covers some important things in great detail and some things more scantly. Unfortunately for insolvency practitioners, it is largely silent on almost all issues relating to insolvency, meaning that, despite not technically having a ‘no-deal’ Brexit, for insolvency practitioners it may certainly feel that way.

Recognition of insolvency proceedings

On 17 December 2020 the German Parliament has passed the rules on the further development of the German restructuring and insolvency law and it will now enter into force on 1 January 2021. An essential part of the law is the introduction of a corporate stabilisation and restructuring regime, which establishes a legal framework for out-of-court restructurings in Germany on the basis of the EU Restructuring Directive of 20 June 2019 (Directive (EU) 2019/1023) (the Preventive Restructuring Framework).

The ability of a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to obtain credit or financing during the course of a bankruptcy case is often crucial to the debtor's prospects for either maintaining operations pending the development of a confirmable plan of reorganization or facilitating an orderly liquidation designed to maximize asset values for the benefit of all stakeholders. In a chapter 11 case, financing (and/or cash infusions through recapitalization) also is often a key component of the reorganized debtor's ability to operate post-bankruptcy.

As widely blogged about, on 26 June 2020 the Corporate Insolvency and Governance Act 2020 (the Act) came into force, introducing both far-reaching wholescale reforms to the UK’s restructuring toolbox as well as temporary measures dealing with COVID-19 impacts on companies. The two most significant temporary measures for companies facing financial difficulties as a result of the COVID 19 pandemic were:

Introduction
Disallowance of Claims of Avoidable Transfer Recipients
Firestar Diamond
The Bankruptcy Court's Ruling
Outlook

On 8 October 2020, the UK Government published draft regulations applying to sales in administration by way of a 'pre-pack' to a connected party purchaser.

UK pre-pack administrations

A pre-pack administration is where:

The U.S. Bankruptcy Court for the Southern District of New York recently added some weight to the majority rule on a hot-button issue for claims traders. InIn re Firestar Diamond, Inc., 615 B.R. 161 (Bankr. S.D.N.Y. 2020), the court ruled that a transferred claim can be disallowed under section 502(d) of the Bankruptcy Code even if the entity holding the claim is not the recipient of a voidable transfer. According to the court, claim disallowance under section 502(d) "rests on the claim and not the claim holder."

On 6 September 2020, the England and Wales High Court approved the second scheme of arrangement proposed by Codere (an international gaming group) in a little over five years, following a fully contested convening hearing spread over three days.

In the convening judgment ([2020] EWHC 2441 (Ch)), the Court concluded that the various fees payable to the members of an ad hoc committee of scheme creditors did not fracture the single class proposed by Codere.

On 26 June 2020 the Corporate Insolvency and Governance Act 2020 (the Act) came into force. The Act included far-reaching wholescale reforms to the UK’s restructuring toolbox, including the introduction of the restructuring plan, which has the potential to be a gamechanger for restructurings.

It also included temporary measures dealing with COVID-19 impacts on companies. The two most significant temporary measures for companies facing financial difficulties as a result of the COVID 19 pandemic were: