On 18 September 2025, the Chancellor of the High Court, the Rt. Hon. Sir Julian Flaux announced the long-awaited publication of the updated Practice Statement in relation to schemes of arrangement and restructuring plans (the "New Practice Statement"). Revision of the existing Practice Statement was, in large part, driven by the rise in contested schemes and restructuring plans which, in turn, has put significant pressure on the Court system.
Currently, the British Virgin Islands has no legislative framework for regulating third party litigation funding. Until recently, the absence of such a framework led many to believe that the rules against maintenance and champerty still operated so as in practice to prevent litigants from raising funds from third parties to prosecute or to defend claims. In Crumpler v Exential Investments Inc (BVIHC(COM) 2020/0081; 29 September 2020) Jack J clarified that third party funding arrangements were enforceable in the BVI.
The English High Court has sanctioned a restructuring plan in respect of EUR 3.2 billion of bonds issued by the German real estate business, Adler Group. The main objective of the plan was to avoid Adler's imminent insolvency by facilitating access to EUR 937.5 million of new money funding and thereby providing a stable platform from which Adler Group can pursue a solvent wind-down by asset sales over time in recovered market conditions. This represents a novel use of the restructuring plan procedure, which has previously been seen exclusively as a corporate 'rescue' tool.
Facts
Insolvency Act 2003
Comment
In the Three Arrows case,(1) the BVI Court has endorsed what is believed to be its first extra-territorial order summoning directors of a BVI company (in liquidation) to appear for private examination by joint liquidators.
Introduction
Where a British Virgin Islands company is struck off the register, its directors and members cannot carry on the company's affairs, commence or defend legal proceedings in the name of the company, or deal with the assets of the company.
Pre-packaged administration sales (where a sale of key assets is agreed prior to the appointment of administrators and then implemented by the administrators immediately following their appointment), have been a widely-used and highly successful tool to rescue businesses, or parts of businesses, that may otherwise have languished in administration interminably.
Introduction
The economic impact of the COVID-19 pandemic led to a wave of creditor schemes of arrangement ("schemes") and restructuring plans ("RPs") in the second half of 2020, which shows no sign of abating in 2021. For the uninitiated, the scheme (a long-established tool) and the newer RP process are court led UK restructuring options that a company can use to bind a minority of creditors into a restructuring. An RP can also be used to "cram down" an entire dissenting creditor class into a deal where certain conditions are met.
HEADLINES
- In March 2020, credit insurer Euler Hermes forecast a 43% increase in insolvencies in the UK in 2021, as well as a 26% uptick in France and 12% in Germany
- By December 2020, ratings agency S&P was forecasting European defaults rising to as much as 8% by the end of 2021
There have been fewer European insolvencies and restructurings than anticipated during the COVID-19 pandemic, but distressed deal activity may accelerate as soon as economies are finally able to reopen.