The past two months have seen a further plethora of regulatory and legislative changes. We sum up some of the more significant ones.

Pre-pack pool open for business

Two recent court decisions may result in a broadening of the range of options available to an equity sponsor in respect of an insolvent portfolio company. The first decision may provide increased flexibility in structuring asset sales in certain chapter 11 settings, by utilizing escrows and other techniques to potentially avoid the need to apply asset-sale proceeds strictly in accordance with creditor priorities under the U.S. Bankruptcy Code.

The Enterprise Investment Scheme (EIS) can provide very significant tax relief for investors in unlisted companies but a recent case in the First Tier Tribunal (“FTT”) shows how strictly the rules of the Scheme are interpreted.

One of the many conditions of EIS relief is that the shares issued to the investor must not have any preferential right to a company’s assets on a winding up. The requirement is included so that an investor cannot obtain the tax advantages of EIS relief while being shielded from the economic risk of the investment.

The facts

Real Estate Disputes Case Review 2015 In case you have missed the last 12 months’ most significant property cases, or would like a reminder, listed below is our monthly review of this year’s important cases. Briefing Real Estate December 2015 December 2014 Landlord protecting tenant’s deposits A landlord’s ability to seek possession of residential premises under section 21 of the Housing Act 1988 was considered when the tenant’s deposit had not been protected in an authorised scheme at the time of service of the notice.

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In September 2014 administrators were appointed over Strada restaurants (trading under SSRL Realisations Limited). The restaurant was tenant of a unit in a shopping centre in Bloomsbury.

It is a basic feature of sales under section 363 of the U.S. Bankruptcy Code, that the purchaser takes free and clear of all claims and interests, such claims and interests attach to the proceeds of the sale in accordance with their priorities.

When a portfolio company underperforms, a sponsor may consider various options to address the perceived performance issues, including changes to a portfolio company’s management team, cost structure, capital structure or other parameters, depending on the nature of the issue(s) at hand. When changes in capital structure may be desirable, often in the context of excessive debt and related liquidity issues, a sponsor’s choices may include a consensual workout outside of bankruptcy, or a court-supervised restructuring under Chapter 11 of the U.S.

Bankruptcy courts in the U.S. are widely viewed as favorable fora for debtors, trustees and creditors’ committees to pursue creative and difficult causes of actions against deep-pockets lenders and others in an attempt to augment the resources available for distributions to creditors. In yet another case, however, the District Court for the Southern District of New York (after withdrawing the litigation from the bankruptcy court), recently dismissed many of the claims asserted by the Lehman debtors against J.P. Morgan Chase Bank, N.A.

There will only be minor changes in the levy rules for 2016/17. They will be practical or technical adjustments.

The PPF remains less than content with the covenant strength behind numbers of contingent asset guarantees. The guidance for 2016/17 will have more on the due diligence it expects.

The consultation document also covers: