In October 2022, the English High Court delivered a long-awaited judgment1 relating to whether or not certain Bankruptcy Events of Default can be cured under the ISDA 2002 and 1992 Master Agreements ("ISDA Master Agreements") - resolving an issue relating to the suspensory effect of conditions precedent to payments and performance under ISDA Master Agreements raised in the English Court of Appeal earlier in the Lehman administration.
As the UK teeters on the brink of what would appear to be an inevitable recession, new restructuring tools introduced in the UK in 2020 pursuant to the Corporate Insolvency & Governance Act 2020 (“CIGA”) will ensure that issuers and other distressed borrowers can execute more creative and aggressive restructuring strategies than were possible during previous market downturns. A brief summary of the new UK restructuring plan is set out below, together with some examples as to how the restructuring plan is being used in practice.
What is the so-called "creditor duty"?
This is the duty, introduced into English common law by the leading case of West Mercia Safetywear v Dodd1 in 1988, of company directors to consider, or act in accordance with, the interests of the company's creditors when the company becomes insolvent, or when it approaches, or is at real risk of insolvency.
Background
On 22 July 2022, the English High Court sanctioned Houst Limited’s (“Houst” or the “Company”) restructuring plan (the “Restructuring Plan”), which significantly, is the first time a Restructuring Plan has been used to cram down HM Revenue & Customs (“HMRC”) as preferential creditor.1
Background
The High Court recently rescinded an order adjudicating a debtor bankrupt in Ireland because the debtor failed to disclose material facts to the Court in his application for bankruptcy. In doing so, the Court established a duty of full disclosure that debtors must comply with when seeking to be adjudicated bankrupt in Ireland.
This decision will be welcomed by creditors where there is a concern that a debtor may seek to relocate from other EU member states to Ireland to avail of Ireland’s comparatively benign bankruptcy regime.
Background
The High Court has held that disclosure of debts and undertakings given to the Circuit Court in seeking a protective certificate for a personal insolvency arrangement can be relied on in other proceedings.
Background
The McLaughlins were engaged in a long running saga of litigation with Bank of Scotland plc (“BOS”) and, after a loan sale, Ennis Property Finance Limited (“Ennis”).
In 2016 they issued High Court proceedings against Ennis and Tom Kavanagh (the “Plenary Proceedings”).
On 12 January 2022, the English High Court granted Smile Telecoms Holdings Limited’s (“Smile” or the “Company”) application to convene a single meeting of plan creditors (the super senior creditors) to vote on the Company’s proposed restructuring plan (the “Restructuring Plan”). It is the first plan to use section 901C(4) of the Companies Act 2006 (“CA 2006”) to exclude other classes of creditors and shareholders from voting on the Restructuring Plan on the basis that they have no genuine economic interest in the Company.
Background
On the 19th of August 2021, the English High Court sanctioned a Part 26A restructuring plan proposed by the administrators of Amicus Finance plc (in administration) (“Amicus”) for the company’s solvent exit from administration, enabling the company to be rescued as a going concern (the “Restructuring Plan”).
Some of the UK Government’s COVID-19 supports for businesses came to an end, or started to taper off, on 30 September 2021. The UK Insolvency service published statistics yesterday showing that the number of corporate insolvencies has returned to pre-pandemic levels. There is no reason to believe that the Irish position will be substantially different when supports come to an end.
What happened when COVID-19 struck?