In March 2020, the UK government announced that changes will be made to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency.
The legislation implementing this has now been laid before Parliament in the Corporate Insolvency and Governance Bill. This includes measures intended to tide companies through the COVID-19 pandemic, as well as far-reaching wholesale reforms to the UK’s restructuring toolbox.
Adopting the analysis of the United Kingdom Jurisdictional Task Force ('UKJT") on the proprietary status of crypto currencies, a recent decision of the English High Court, AA v Persons Unknown,[1] has found that crypto assets such as Bitcoin are "property" and therefore capable of being the subject of a proprietary injunction or freezing order.
You can read the infographic version of our guide here.
Scheme of Arrangement (Section 86)
A Court approved compromise entered into between a company and its creditors or members or any classes of them. "Arrangement" is construed extremely broadly making a scheme a very flexible restructuring tool.
Are you prepared to take advantage if one of your competitors falls into difficult times or enters an insolvency process? Do you know your way around buying from a distressed seller? What are the things you need to know? How can you prepare? What will make your bid most attractive?
Recent high profile collapses such as HMV have highlighted the opportunities that can be found within the distressed space – if you are prepared and know how to act swiftly.
How would your business be impacted if one of your critical suppliers entered insolvency proceedings? What losses could you suffer, and how would you maintain continuity of supply?
Recent high profile collapses such as Carillion have highlighted this issue, with counterparties suffering significant disruption upon its failure. In the context of increasing financial uncertainty – not least because of Brexit – companies should take a hard look at their supply chain in order to assess and mitigate counterparty risk.
Over the Bank holiday weekend, the UK government announced that it intends to introduce new legislation to implement certain measures (detailed below) as soon as parliamentary time permits.
The High Court yesterday held that a Chairperson of a shareholder scheme meeting may reject votes cast against a scheme of arrangement in circumstances where the shares were acquired through an artificial share-splitting exercise designed to frustrate the scheme. It is the first English case to consider this issue and while it arose in the context of a shareholder scheme, the impact is also significant for debt restructurings implemented by way of a creditor scheme of arrangement.
Background
This briefing covers Brexit implications of restructuring and insolvency, in particular it discusses the implications on the European Regulation on Insolvency Proceedings and recognition of insolvency judgments and how schemes of arrangement will be impacted by Brexit.
In the much anticipated decision of Belmont Park Investments PTY Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38 the Supreme Court has unanimously dismissed the appeal of Lehman Brothers Special Financing Inc (“LBSF”) and in so doing provided clarification as to the scope and application of the anti-deprivation rule (the “Rule”).