On 23 January 2024, the English Court of Appeal set aside the April 2023 order of the High Court sanctioning the English Part 26A restructuring plan (the “Plan”) proposed by AGPS BondCo plc (the “Plan Company”), a subsidiary of Adler Group SA (Adler Group SA and its subsidiaries being the "Adler Group"). The successful appeal was brought by an ad hoc group of holders of the Adler Group's 2029 notes (the "AHG"). The practical consequences of this decision for the Adler Group's restructuring remain to be seen.

Nostrum Oil & Gas PLC’s scheme of arrangement under Part 26 of the Companies Act 2006 (the “Scheme”) was sanctioned on 26 August 2022, with the “scheme effective date” occurring on 31 August 2022.

Judgment has been reserved on the sanction of Houst Ltd’s restructuring plan at a hearing held in front of Zacaroli J on Friday morning (15 July 2022), while the company gathers the further valuation information requested by the court. If sanctioned, the plan will be the first use of the restructuring plan by an SME, and will involve a “cram” of HMRC notwithstanding the tax authority’s secondary preferential creditor status.

The proposed plan

On 8 October 2020, the Insolvency Service published the outcome of its review of industry reforms to pre-pack sales in administration and made recommendations which will impact the way in which pre-pack sales to connected parties in particular operate in the UK in the future.

Speed read

A cross-practice team led by partner Tom Astle has advised a syndicate of c.75 lenders under a bespoke €1.06bn super priority loan to distressed Croatian food producing and retail giant Agrokor (the “SPFA“) on an English law scheme of arrangement proposed by the company. The scheme of arrangement was approved by 97.92% in number of the lenders under the SPFA, representing 99.99% in value of scheme claims, at the creditors’ meeting earlier this week, and was sanctioned by Mr Justice Fancourt this morning.

It has become a common phenomenon that applications are brought to put into business rescue, companies which are already in liquidation – sometimes long after the liquidation commenced.

This raises some interesting questions about whether employees and trade unions remain affected persons for the purposes of such a business rescue application, given that in terms of section 38 of the Insolvency Act (24 of 1936), all employment contracts are deemed to be cancelled within 45 days after the appointment of a final liquidator.

Section 131(6)

It’s an open secret that the commendable goals envisaged by the legislature with the introduction of the business rescue proceedings in Chapter 6 of our Companies Act are being hampered as a result of poorly drafted statutory provisions that govern the business rescue process. Section 141(2)(a)(ii) is however not one of these vague provisions.

There has been considerable controversy about the extent of the powers, and the extent of obligations of a business rescue practitioner in relation to a cession of book debts by the company in rescue.

This is an important issue in business rescue because most financially distressed companies have an overdraft facility with a bank which is secured by a cession of debtors. Many practitioners want or need to use the overdraft facility as working capital.

Cession (generally)

Section 133 of the Companies Act 71 of 2008 provides for a general moratorium on legal proceedings against a company in business rescue.

I wrote an article published in the June issue of Without Prejudice in which this question was considered. I criticised the then binding judgment of Chetty t/a Nationwide Electrical v Hart NO and Another (12559/2012) [20141 ZAKZDHC 9 (25 March 2014), as it was held in that case that arbitration proceedings do not constitute legal proceedings for purposes of section 133 of the Act.

Can a creditor cancel an agreement with a company in business rescue and what is the consequence of a business rescue practitioner suspending an agreement before cancellation?

The lawfulness of cancelling a contract during business rescue