On January 23, 2024, the Court of Appeal in England and Wales (the "Appeal Court") upheld a challenge launched by dissenting creditors to overturn the UK Restructuring Plan (the "RP") of the Adler Group previously approved by the High Court under Part 26A of the Companies Act 2006 (Strategic Value Capital Solutions Master Fund LP and others v AGPS BondCo PLC [2024] EWCA Civ 24).

In Short

In Short

The Situation: Directors in England and Wales owe duties to the companies to which they are appointed (and may face personal liability for breaching such duties). Although the Companies Act 2006 obliges directors to maximise value for a company's shareholders, case law has suggested that directors should act in the interests of a company's creditors if a company becomes distressed.

In Short

The Situation: As businesses continue to grapple with realising the value of business and assets which are potentially impacted by sanctions related to Russia's war in Ukraine, an English company recently utilised an insolvency process to seek court approval for a proposed divestment.

Pre-pack sales have long been criticized by certain stakeholders for allowing the phoenix to rise from the ashes having shed its liabilities. However, they remain a popular restructuring tool, and given the current economic climate, we are likely to see an increased number of pre-pack insolvency sales in the next few years. In brief, a pre-pack sale involves the marketing of a business prior to its insolvency and the sale of the business and assets of the company by an insolvency practitioner immediately following his or her appointment.

The UK government has published draft regulations providing that sales by administrators to connected persons will be subject to compulsory scrutiny.

On 25 June 2020, the new Corporate Insolvency and Governance Act (the "Act") received Royal Assent. We anticipate that the changes introduced by the Act will have a significant impact on the future direction of the UK restructuring market.

Restructuring an international group of companies in Europe continues to be challenging. While companies can transact business freely across European borders, coordination between the stakeholders involved in a cross-border restructuring has proved to be difficult. The cross-border restructuring of a corporate group is often complicated by a multitude of individual liquidation proceedings spread throughout the various countries in which the group is active.

For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.

Recent Developments

Summary

On 26 July 2012, the Pensions Regulator (the 'Regulator') issued a statement on financial support directions (FSDs) with the intention of providing further guidance and comfort with regard to the circumstances in which it will issue an FSD after a company has been placed into administration.