During the course of the pandemic we have seen an unprecedented level of government assistance aiming to aid businesses struggling with the effects of the pandemic. This has resulted in consistently low insolvency levels. This year we will see the lifting of certain of the restrictions and the end to some of the support initiatives that have been in place. We have outlined some of the key changes and what might be in store for 2022.

The UK Government has published a Consultation¹ which sets out its proposals for targeted (but significant) amendments to certain aspects of the existing UK insolvency arrangements for insurers.

The English High Court has sanctioned the restructuring plans proposed by the Virgin Active group following a hearing contested by a group of the gym chain's landlords. The decision represents the first use of the restructuring plan procedure, introduced during the summer of 2020, to restructure a lease portfolio, demonstrating the utility of the tool for debtors when implementing a significant restructuring across the capital structure, and as an alternative to the much-used company voluntary arrangement.

Introduction

As reported earlier, a new corporate restructuring law will be enacted in Germany. The new law's centerpiece will be the so-called stabilization and restructuring framework ("SRF"). The German Parliament (the Bundestag) passed the law on 17 December 2020. On 18 December 2020 the law was also accepted by the Federal Council (the Bundesrat). It will come into force on 1 January 2021, already.

Wie bereits berichtet erhält Deutschland ein neues Restrukturierungsrecht für Unternehmen, dessen Herzstück der sogenannte Stabilisierungs- und Restrukturierungsrahmen („SRR“) ist. Der Bundestag hat das entsprechende Gesetz am 17. Dezember 2020 verabschiedet. Am 18. Dezember 2020 wurde das Gesetz auch durch den Bundesrat gebilligt. Es wird bereits am 1. Januar 2021 in Kraft treten.

Introduction – the framework

The Corporate Insolvency and Governance Act 2020 (“CIGA“) ushered in a flexible restructuring compromise or arrangement for companies in financial difficulty (the “Restructuring Plan“). The legislation governing the Restructuring Plan sits alongside that for schemes of arrangement and is included in a new Part 26A to the Companies Act 2006.

The Restructuring Plan does not apply to companies that are solvent with no risk of insolvency; rather it only applies to companies where two conditions have been satisfied:

The Corporate Insolvency and Governance Act 2020 is far-reaching with its implications extending to pension schemes. Pension scheme employers and trustees should ensure that they are familiar with the provisions of the Act, and the potential impact that they could have on schemes, employers and savers.

Introduction

The Act received royal assent on Thursday 25 June. The Act passed through Parliament very quickly, so that its provisions can be used by companies experiencing financial difficulty as a result of the COVID-19 pandemic. The Act contains:

On 25 June 2020, the Corporate Insolvency and Governance Bill (the “Bill”) received Royal Assent and on 26 June 2020 CIGA came into force. The restructuring team in Mayer Brown’s London office has previously commented on the different elements of the Bill in a series of blog posts and podcasts.