Case Study: US-based unsecured creditor proactively protects its position and recoveries from the liquidation of its UK distributor

When a company enters into an insolvency process in the UK, the position of unsecured creditors is typically one of uncertainty. Ranking fifth1 in the insolvency payment waterfall, unsecured creditors frequently find themselves out of the money. Even in cases where there are sufficient realizations to make a distribution to unsecured creditors, they may receive only a minimal amount in respect of their outstanding debts.

Introduction

The Insolvency and Bankruptcy Code, 2016 (Code) has just been passed by both Houses of the Indian Parliament. The key objectives of the Indian government in driving this legislation forward were to improve India‘s poor ranking on the ease of doing business index created by the World Bank Group and to stimulate the growth of the Indian capital markets, and the stated intention of the Code is to replace the relevant insolvency, restructuring and winding up provisions which are spread over a number of Indian statutes.

Our role

In the Q3 2014 edition of Global Insight, we discussed the merits of bankruptcy sales for distressed hospitals in the United States. In many ways, the challenges facing healthcare companies in America have been mirrored in the UK care home sector in recent years. Unlike the US, the majority of health service provision in the UK is via the publicly funded National Health Service. An exception exists however in the provision of residential care to the elderly which has seen large scale private sector involvement.

CONSIDERABLE RISKS FOR PRIVATE INVESTORS