The impact of Covid-19 is clearly the big talking point for 2022, with several questions arising: will new variants emerge, what steps will governments take to limit the spread, and what impact will it have on industries? To date, enforcement actions, insolvencies and restructurings have been relatively light, but with new restructuring legislation reforms on the horizon, and creditors starting to ramp up speed to enforcement, it appears likely that there will be an increase in winding up and cross-border restructuring work.

In our last blogpost (here) we reported how the court had, for the first time, exercised its power under s. 901C(4) Companies Act 2006 to exclude a company’s members and all but one class of its creditors from voting on a restructuring plan under Part 26A. The facts of this case are set out in more detail in that blogpost.

Summary

For the first time, the court has exercised its power under s. 901C(4) Companies Act 2006 to exclude a company’s members and all but one class of its creditors from voting on a restructuring plan under Part 26A. The court was satisfied that only one class of creditors had a genuine economic interest in the company and noted that “this was not a marginal case”.

Key drivers for the court’s decision (see more detail below) were:

The National Security and Investment Act 2021 (the Act) comes into force on 4 January 2022. The Act sets out the UK’s new national security screening regime. The Act replaces, and significantly extends, the UK government’s power to investigate and intervene in transactions which pose, or could pose, threats to the UK’s national security (see our earlier related blog post).

A new Act, which received Royal Assent on 15 December 2021, extends the existing directors’ disqualification regime to the directors of dissolved companies.

In August 2021, Sir Alistair Norris sanctioned the restructuring plan of Amicus Finance PLC (Amicus) (as we wrote about at the time). On 15 November 2021, the judge handed down his reasoning for sanctioning the plan.

Background

The High Court has rejected a landlord's challenge to the Caffè Nero CVA, giving support to the ongoing usefulness of CVAs in high street restructurings. The case raised issues around the use of the electronic decision procedure set out in the Insolvency Rules for CVAs, nominee and director decision-making during the CVA process, CVA modifications and provision of information to CVA creditors.

Background

As part of the overall scaling down of the COVID-19 support provided to UK businesses, the UK government has announced changes to the regime for winding-up petitions, with effect from 1 October – withdrawing, at least in part, some of the protections currently afforded to businesses.

Current position

The Channel Islands of Guernsey and Jersey did not introduce emergency insolvency legislation as a result of the Covid-19 pandemic and do not presently have measures equivalent to those found in the UK’s Corporate Insolvency and Governance Act, 2020 (“CIGA”).

On 28 June 2021, the UK High Court declined to sanction Hurricane Energy Plc’s restructuring plan. This was the first time a restructuring plan seeking to achieve a debt-for-equity swap against the wishes of existing shareholders had come before the court.

Background