While the CIS nations have recently provided a multitude of sizeable restructuring cases, the region’s dominant force, Russia, has stood up reasonably well to lengthy economic decline, economic sanctions and the collapse of oil and gas prices. There are now signs however, that its complex troubles are pushing certain companies towards a restructuring or insolvency position.

In light of the UK’s cram down and director-friendly processes, in particular its scheme of arrangement model, major European economies such as France, Germany and Italy have worked hard to develop regimes that give greater emphasis to pre-insolvency alternatives. These new regimes create cram down mechanisms and encourage debtor-in-possession (DIP) financings, ultimately aiming to make restructuring plans more accessible, more efficient, and crucially more reliable; essentially more in tune with the Anglo-American approach to insolvency and restructuring.

Much like the English Scheme of Arrangement which has become a popular debt restructuring solution for international debtors, the English High Court is an attractive forum for insolvency litigation thanks to the potent combination of wide-ranging powers available to Insolvency Practitioners (IPs) under the Insolvency Act 1986, and the increasing availability of litigation funding arrangements in the London market.

Liability management exercises (“LMEs”) are increasing in the bond and capital market and are often used in relatively benign situations. They are certainly not always a precursor to a full-scale restructuring or insolvency.

Prior to the recent collapse in oil values, prices existed at over $100 a barrel for over three years. It made the economics of oil exploration, production and sale comparatively straightforward, but embedded costs into the industry.

Summary: The Public Administration and Constitutional Affairs Committee's findings in relation to Kids Company serve as a reminder of the risks of insolvency to large charities. The inherent weaknesses in the demand-led 'self-referral' operating model resulted in little to no reserves, and ultimately led to the trustees being required to file a petition to wind up the charity. Trustees of large charities must always be mindful of reserve levels.

Legal & Regulatory

BRRD: FCA publishes modification by consent for Article 55 rules

Second Circuit holds that Bankruptcy Code preempts creditors’ state law constructive fraud claims.

BLP real estate disputes partner Roger Cohen summarises a recent court decision about whether or not a landlord had accepted a lease surrender by the way it handled “jingle mail”, a letter returning the keys, from the administrators of the insolvent tenant. Jingle mail is a tactic used by administrators. The landlord argued successfully that ,on this occasion, the tactic failed.

Finance Bill 2016 includes provisions designed to prevent taxpayers converting profits generated in a company into a capital receipt in the hands of the shareholder(s). Taxpayers may want to consider winding-up their companies or making substantial dividend distributions ahead of 6 April 2016 as a result of these measures and the changes to the taxation of dividends.

Broadly, the intention is that a capital distribution made in the winding-up of a company will be taxed as income if: