Introduced by the Corporate Insolvency and Governance Act 2020, the restructuring plans regime set out in Part 26A of the Companies Act 2006 (Plans) has quickly proven a popular route for corporate financial rescue. This is in large part due to the fact that it allows for a plan to be imposed upon dissenting creditor classes in certain circumstances. This is known as "cross-class cramdown".

Welcome to the first issue of Insolvency Matters, our round-up of recent legal developments affecting insolvency and restructuring.

Case round-up

Teacher Retirement System of Texas plans to reduce its private equity target allocation to 12% from a current exposure of 16.7% starting in October. The planned reduction, which may be implemented over a number of years. For now, the change in target allocation likely means reduced new commitments, while some of the rebalancing could be accomplished by fund AUM growth.

At the bottom of the stack in investment fund structures, there are generally “real” assets—things like equity interests in portfolio companies, mortgage loans, commercial receivables, maybe even bricks and mortar. Fund finance transactions, though, are by design crafted to be at several levels removed from such underlying assets. With such ultimate assets remote from the transaction, it may seem to fund finance practitioners that concerns about changes in the Uniform Commercial Code (“UCC”) relating to the nature of collateral assets are just as remote.

This article was first published by Insol World Magazine in Q1 of 2024.

Insolvency office-holders in the UK and elsewhere frequently rely upon litigation funders to finance their legal proceedings and, accordingly, developments in the funding market are of keen interest to insolvency professionals.

There's been a flurry of regulatory activity in the UK and Europe over the past few weeks. Here's a look at the highlights.

One of the most important aspects in arranging any fund finance transaction is structuring the security package. As anyone that has ever looked at a complete structure chart for a fund financing transaction knows, even a “simple” private fund structure typically involves a number of different entity types (limited partnerships, limited liability companies, etc.) organized in several jurisdictions (Delaware, the Cayman Islands, Luxembourg, etc.).

In its recent opinion in Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040, 2024 WL 339101 (5th Cir. Jan. 30, 2024), the Fifth Circuit held that a confirmed bankruptcy plan enjoined a party from asserting certain indemnification counterclaims against a plan trustee because the party did not file a proof of claim.

Background

Breathing Spaces and Mental Health Crisis Moratoriums (MHCM) were introduced by the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the "2020 Regulations").

Whether a solar system is a “fixture” sounds like a mundane legal issue – but it has significant implications for the residential solar industry and for the financing of residential solar systems. If a system is regarded as a “fixture” of the house to which it is attached, then the enforceability and priority of the finance company’s lien on the system will be subject to applicable real estate law.