The UK Government recently responded to The House of Commons Transport Committee’s Report, titled “UK aviation: reform for take-off”. The Report makes a number of recommendations to address ongoing problems facing the UK aviation sector as it moves towards post-pandemic recovery. Alongside other issues, it raises the idea of reform to the airline insolvency procedure and passenger protections to be addressed by way of an Airline Insolvency Bill.
Judicial comments cast doubt on the ability to compromise US law-governed debt effectively based on Chapter 15 recognition alone.
Insolvency officeholders may need clearance upon appointment to entity in an affected sector.
The forecast for the English scheme and plan looks set fair despite concerns around Brexit turbulence.
The restructuring market’s appetite for Part 26 schemes of arrangement and Part 26A restructuring plans shows no signs of diminishing, with some debtors (Smile Telecoms and ED&F Man) even taking a second bite of the cherry. In this article, we explore recurring themes identified in the market throughout the past 18 months.
Out of the money, out of the room
Debtors and investors have an enhanced choice of restructuring venues as the EU Restructuring Directive is rolled out in Member States
- Commercial rent arrears continue to accumulate as a result of the pandemic, such that arrears are estimated to reach £9 billion by March 2022 and comprise a much larger slice of the typical debt stack than they did pre-pandemic.
- The UK government has proposed a binding arbitration scheme to help resolve the arrears and further extend the existing protections from enforcement and insolvency procedures that
- Brexit ripped up the rules on automatic cross-border recognition of formal insolvency proceedings and restructuring tools between the UK and the EU.
- Recognition will now depend on a patchwork of domestic legislation, private international law and treaties and may lead to different outcomes depending on the jurisdiction.
- Cross-border recognition is still achievable but involves careful navigation and a more tailored approach in individual cases to selection of the most effective process and its route to recognition.
Legal landscape
The decision raises new questions about whether cross-border insolvency recognition and assistance between mainland China and Hong Kong will be a two-way street.
The consequent distress in the market is evident with 9 supplier insolvencies in the last few weeks alone, including Avro Energy, Utility Point and People’s Energy.
Today, 1 October 2021, is important as Ofgem is due to increase tariff caps from that date. This is also the date when the restrictions on petitioning for the winding up of companies on the basis of insolvency will be eased.
Legal landscape – energy regulations
In distressed situations, there are a number of issues to navigate, including:
A restructuring plan completed earlier this year by Smile Telecoms notches up a number of firsts.
African telecommunications provider Smile Telecoms Holding Limited, incorporated in Mauritius, successfully completed a restructuring plan (the Plan) under Part 26A of the UK Companies Act 2006 at the end of March 2021.
The Plan features a number of novel actions, including: