Where a shareholder has redeemed his shareholding following a failed investment without objection some months prior to the initiation of a voluntary liquidation, the Court will not permit him to use the statutory deferral provisions relating to voluntary liquidations for an abusive or improper purpose. This includes using such proceedings as leverage to exert undue pressure in proposed claims against the company or directors.

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:

On 28 June 2021, Zacaroli J declined to sanction a restructuring plan (the “Plan”) in respect of Hurricane Energy PLC (the “Company”) under section 901F of the Companies Act 2006 (“CA 2006”). The Company is part of a group whose business is extracting oil stored within fractures in solid rock beneath the sea.

Mr Justice Snowden’s recent judgment sanctioning the Virgin Active restructuring plans is significant for several reasons. Not only is it the first judgment to consider the cram down power of the 2006 Companies Act, but it is only the third instance that the cross-class cram down mechanism has been used. It is also the first time it has been used to cram down classes of dissenting landlords.

Spring 2021 has seen the input of independent expert evidence become increasingly critical to successful restructuring. May 2021 saw several significant court decisions from concerning CVAs and restructuring plans. Two cases – New Look and Regis – concerned CVAs and Virgin Active concerned a restructuring plan. All three judgments highlighted the need for early independent expert input in formulating the CVA or restructuring plans.

CVAs – New Look and Regis

In what is likely to be the most significant change to the UK restructuring and insolvency market since the Enterprise Act 2002, the Court has yesterday¹ paved the way for restructuring plans under Part 26A to the Companies Act 2006 ("RPs") to be used to compromise the rights of landlords, financial creditors and other unsecured creditors provided the company shows that those creditors are "out of the money". There may even be no need to ask those compromised creditors to vote on the RP.

From 6 April 2021, a new regime for witness statements in the Business and Property Courts will come into force. Practice Direction 57AC will introduce significantly tighter requirements that will apply to all trial witness statements signed on or after 6 April 2021, including those in claims that have already been issued.

Purpose of the new regime

The UK’s reformed restructuring regime shows its force with the first successful cross-class cram-down following the introduction of the new restructuring plan. A quick legal update on the key features of the restructuring plan and the analysis of the recent cases can be found in the infographic below.

Contributors to this update were Howard Morris, Amrit Khosa, Jai Mudhar, Joe Donaghey, and Haania Amir.

In March 2020, Business Secretary Alok Sharma announced that provisions on wrongful trading would be suspended. The move came as part of a wider package of measures that sought to provide assistance to businesses – and their beleaguered boards – experiencing financial distress due to Covid-19.

Now set out in the Corporate Insolvency and Governance Act 2020 (CIGA), which was passed on 26 June 2020, the provisions adapt the wrongful trading regime making directors’ liability for the “relevant period” unlikely.

Why does it matter?

It is not uncommon for a person's job title to include the word "director", such as "Finance Director" or "Marketing Director". While such roles will carry a high level of responsibility, the individuals in these positions are not always formally appointed to the company's Board of directors. Even though such persons are not formally appointed as directors, they may still owe all (or at least some) of the same directors' duties as an appointed director.