On 1 July, the Court of Appeal overturned the High Court’s decision1 to sanction the restructuring plans proposed by two Petrofac group companies as they did not consider that the benefits of the restructuring had been fairly allocated.
The Courts, practitioners and leading textbooks have always assumed that the Limitation Act 1980 (the Limitation Act) does not apply to claims for relief from unfair prejudice under section 994 of the Companies Act 2006 (the Companies Act).
In THG Plc v Zedra Trust Company (Jersey) Limited [2024] EWCA Civ 158, the Court of Appeal examined the basis for that assumption and unanimously decided that:
On Thursday 9 November, Macfarlanes hosted a webinar which focused on the role of directors and in particular navigating those stresses and strains placed upon them in the uncertainties of the current markets.
The webinar was given by an expert panel comprising of finance partner and head of Macfarlanes’ restructuring and insolvency group, Jat Bains, finance partner and qualified insolvency practitioner, Paul Keddie, and litigation partner, Lois Horne.
The panel discussed the following three principal themes.
On 13 October 2023, the Insolvency Service (IS), acting on behalf of the Secretary of State for Business and Trade, discontinued the disqualification proceedings which it had initiated against five former non-executive directors (NEDs) of Carillion plc, the construction and outsourcing giant that collapsed into liquidation in 2018.
The Court of Appeal in Hunt v Ubhi has confirmed that insolvency practitioners seeking freezing orders are subject to the default requirement of providing an unlimited cross-undertaking in damages.
On October 17, 2022, Justice Andrea Masley of the NY Supreme Court issued a decision and order denying all but one of the motion to dismiss claims filed by Boardriders, Oaktree Capital (an equity holder, term lender, and “Sponsor” under the credit agreement), and an ad hoc group of lenders (the “Participating Lenders”) that participated in an “uptiering” transaction that included new money investments and roll-ups of existing term loan debt into new priming debt that would sit at the top of the company’s capital structure.
On October 14, 2022, the Fifth Circuit issued its decision in Ultra Petroleum, granting favorable outcomes to “unimpaired” creditors that challenged the company’s plan of reorganization and argued for payment (i) of a ~$200 million make-whole and (ii) post-petition interest at the contractual rate, not the Federal Judgment Rate. At issue on appeal was the Chapter 11 plan proposed by the “massively solvent” debtors—Ultra Petroleum Corp. (HoldCo) and its affiliates, including subsidiary Ultra Resources, Inc.
On July 6, Delaware Bankruptcy Court Judge Craig T. Goldblatt issued a memorandum opinion in the bankruptcy cases of TPC Group, Inc., growing the corpus of recent court decisions tackling “uptiering” and other similar transactions that have been dubbed by some practitioners and investors as “creditor-on-creditor violence.” This topic has been a hot button issue for a few years, playing out in a number of high profile scenarios, from J.Crew and Travelport to Serta Simmons and TriMark, among others.
1. State of the Restructuring Market
1.1 Market Trends and Changes
State of the Restructuring and Insolvency Market
There were 27,359 insolvencies in France as of the end of September 2021, down 25.1% from the same period in 2020, and down 47.9% from September 2019. Such reduction is relatively stable across all sectors, including those most severely affected by the health-related restrictions, such as accommodation and food services (down 44.2% year-on-year) and trade (down 28.1% year on year).
Fewer Insolvencies for More Opportunities
At the end of 2021, corporate bankruptcies (for most company sizes and in most sectors) were at their lowest level compared to the pre-COVID-19 figures from 2019, with a 50% drop in insolvency proceedings and a 10% decrease in pre-insolvency situations. This was largely due to the temporary impact of government emergency measures and support, including: