Summary

On 30 March 2022 the High Court sanctioned a restructuring plan for Smile Telecoms Holding Limited in which the court for the first time allowed the exclusion of all but one class of creditors from voting on a restructuring plan. The sanction hearing considered several salient issues around challenges made to a plan by a creditor or shareholder, questions of jurisdiction and the concept of a "compromise or arrangement" in Part 26A of the Companies Act 2006 ("CA 2006").

Background

A foreign bankruptcy or insolvency decree has no effects on the debtor’s Swiss assets and on court proceedings against the debtor in Switzerland and a foreign bankruptcy administrator must not act on Swiss soil unless the foreign decree is formally recognized by a Swiss court. Such recognition may be initiated by the foreign bankruptcy administration, any creditor or the debtor itself. This three-step guide describes how a foreign bankruptcy decree can be recognized in Switzerland.

Pre-packs, known as an effective restructuring measure from other jurisdictions, are also permissible in Switzerland.

What is a pre-pack?

The English High Court has rejected a challenge to the CVA proposed by Caffè Nero in a decision that provides guidance on the use of the electronic voting procedure for votes on CVAs, the effectiveness of modifications made to a CVA during the process and the duties of the directors and nominees when considering last minute offers for a business in a restructuring scenario. Mr Justice Green rejected all grounds of challenge brought by Mr Ronald Young, a landlord to Nero Holdings Limited ("NHL").

A recent decision of the Swiss Federal Supreme Court clarified the question whether a Swiss ancillary bankruptcy estate has standing to contest a schedule of claims of a bankrupt Swiss third-party debtor if the foreign bankruptcy estate filed the respective claims directly and regardless of the recognition of the foreign bankruptcy decree. In essence, the Swiss Federal Supreme Court denied the standing of the ancillary bankruptcy estate as it may in such cases not be considered a creditor of the respective claims.

Following review and proposal by the UK Government to develop stricter scrutiny of pre-pack administration sales to connected parties, the Government laid the draft Regulations in Parliament on 24 February 2021. These are due to come into force on 30 April 2021. Our previous article summarising the Government’s proposal can be found here.

In the United Kingdom, some of the landmark measures introduced by the UK Government in the wake of the Covid-19 pandemic have recently been extended by the Chancellor of the Exchequer.

We summarise below key milestones relating to those initiatives which have been put in place to support businesses and note how financial stakeholders are impacted. The package of help for businesses is ever-evolving in response to the changing market, and the key dates identified are correct as at 28 October 2020.

In a move to increase confidence in the insolvency regime, the UK Government has proposed new measures to improve transparency in pre-packaged administration sales where there is a disposal in administration of all or a substantial part of the company’s assets and it is made to a connected party within the first eight weeks of the administration.

Foreign bankruptcy and insolvency decrees generally remain without legal effect in Switzerland. A foreign bankruptcy or insolvency decree must first be recognized by the competent Swiss court. In a newly published decision, the Swiss Federal Supreme Court further clarified the recently revised provisions governing the recognition and the following procedure.

Introduction and background

On 20 May 2020, the UK government announced the Corporate Insolvency and Governance Bill (the “Bill”), introducing a mixture of permanent and temporary measures, the latter being in response to the financial challenges companies are facing as a result of the Covid-19 pandemic and lockdown. In the absence of extensive consultation with insolvency practitioners and industry experts, it remains to be seen how effective the measures will be in practice.