The court found that it could not sanction the scheme, despite the requisite majority of creditors having voted in favour of it. The intervention by the FCA at the sanction hearing marks an interesting development in assessing the extent to which the regulator's views will be aired and considered.
Restructuring & Insolvency analysis: The creditors of New Look Retailers Ltd (NLR) approved a company voluntary arrangement (CVA) that disproportionately impacted on a number of NLR’s landlords. The compromised landlords challenged the CVA on numerous grounds. In dismissing the application, Mr Justice Zacaroli held that the CVA was valid, notwithstanding that it sought to treat various creditors in different ways, and that challenges pursuant to section 6 of the Insolvency Act 1986 (IA 1986) failed.
This case is a reminder to both debtors and nominees that corporate law formalities must be respected and that the insolvency lens may affect the treatment of connected party transactions in future valuations and restructuring processes.
The Regis landlords made multiple complaints regarding the disclosure and valuation of connected party transactions and the large uniform discount applied to multiple landlords for voting purposes (75%). The only argument found in their favour was the mistreatment of one of the intercompany loans.
Key takeaways -
An important judgment by Snowden J yesterday, sanctioning Virgin Active's restructuring plans after a contested sanction hearing, which included a cram down of several landlord classes that did not approve the plans by the requisite majorities in those classes.
The decision is important as among the many points covered, it considers certain key issues including:
An important judgment handed down by Zacaroli J yesterday in the New Look CVA challenge. The New Look CVA proposal involved treating landlords of different leases in various different ways, including (i) resetting rent to a turnover percentage (ii) keeping rent intact and (iii) reducing rent to nil. Landlords are given the flexibility to terminate leases within a prescribed period where they identify a tenant prepared to pay better rent (important to ensure the landlord's proprietary right is not interfered with). In a CVA, all unsecured creditors are invited to vote.
The UK's accession to the Lugano Convention has become somewhat politicised, with the EU stating that it is not minded to allow the UK to accede, as that will then set a precedent for other third party states.
This will impact certain UK restructuring tools.
These case summaries first appeared in LexisNexis’ Insolvency Case Alerter. They represent some of the more interesting insolvency decisions to have been published recently.
This summary covers:
Corporate Insolvency and Governance Act 2020 regulations come into force on 26 March 2021 extending the duration of COVID-19 related temporary measures, including:
Some interesting recent scheme and plan law of late, proving that schemes and plans continue to be popular restructuring tools for all types of companies and international groups.
DeepOcean companies (Part 26A plans) – January 2021
This was the first time that the court had to consider the application of the new ‘cross-class cram down’ procedure under Part 26A. Trower J approved the plans proposed by three DeepOcean companies but had reserved judgment and in late January handed down a written judgment with important guidance for future plans.
These case summaries first appeared in LexisNexis’ Insolvency Case Alerter. They represent some of the more interesting insolvency decisions to have been published recently.
This summary covers: