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The reforms, which are the result of the transposition of the EU’s Restructuring Directive, should come into force in October.

Key Points:

Introduction

The UK Supreme Court has today handed down a significant and highly anticipated decision on the interpretation of liquidated damages clauses.

The decision provides new judicial guidance for determining the boundaries of cross-class cram down tests. 

On 28 June 2021, the High Court declined to sanction a restructuring plan proposed by Hurricane Energy plc (Hurricane), an AIM listed oil drilling company, under Part 26A of the Companies Act 2006 (Act). The plan would have seen shareholders diluted to 5% of Hurricane’s equity, with the remaining 95% issued to bondholders as consideration for a partial debt-for-equity swap. 

The ruling confirmed that Section 423 of the Insolvency Act 1986 has extensive international reach, and does not require a transaction at an undervalue to leave the debtor with insufficient assets.

Background

The decision confirms that company voluntary arrangements remain a flexible tool for restructuring leasehold portfolios.

• No rigid test exists for “basic fairness” that requires a landlord to receive at least market rent, or that contractual rent should be interfered with to the minimum extent necessary.

• If a landlord is entitled to terminate the lease and receive a better outcome than in the alternative, any automatic unfairness from changes to the terms of the lease is negated.

• Whether a CVA is unfairly prejudicial depends on all the circumstances of the case.

The second webinar in our series brought together WFW Real Estate Partner , George Nicholas, Global Head of Hotels at Savills, Felicity Black-Roberts, VP Acquisitions and Development – Europe and North Africa at Hyatt and Yannis Ermilios, Managing Director – Portfolio Management at Colony Capital. The panel debated the potential for M&A in the hotel sector, as it lined up to be the fastest-recovering of the real estate segments.

BITE SIZE KNOW HOW FROM THE ENGLISH COURTS

The Commercial Disputes Weekly will be taking a short break, returning on 6 April.

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With an increase in airline restructuring activity caused by the Covid-19 pandemic, aircraft financiers, lessors and their lawyers around the world have been analysing whether a restructuring plan under Part 26A of the Companies Act 2006 (a ‘Plan’) can be used by debtors to modify, without the creditors’ consent, their obligations under certain leases and security agreements to which the Cape Town Convention applies.

Landmark decision holds that the SFO does not have the power to procure documents from foreign companies outside the jurisdiction.