The Investment Banking Insolvency Panel of the FMLC has responded to Treasury’s consultation on developing effective resolution arrangements for investment banks. The response is wide-ranging and looks at clarity, transparency and access before setting out views on client assets and insolvency processes.
The European High Yield Association (a trade association representing participants in the European leveraged finance market) is calling for new restructuring laws, warning that the existing regime makes it more likely that a company in financial difficulties will collapse.
Libby Elliott looks at the proposals, which are designed to create a formal procedure for restructuring distressed companies.
The need for change
Treasury has published two orders made under the Insolvency Act 1986 and the Banking Act 2009. The orders are:
Treasury has made a new set of Financial Markets and Insolvency Regulations that change the insolvency regime that applies to RIEs and RCHs. The Regulations amend several existing pieces of legislation including Part VII Companies Act 1989 and the 1991 Regulations. The changes include:
The Banking Bill recasts key aspects of bank supervision and insolvency. With such wide-ranging changes to digest, financial institutions and other companies could be forgiven for ignoring the seemingly obscure clauses relating to financial collateral. But these provisions could remove legal uncertainty for those taking collateral particularly in traded markets (like energy trading) where banks are not always the main players.
The US Court has approved a bankruptcy settlement under which a US-listed parent company is liable for the buy-out deficits in its UK subsidiary's pension schemes. Key to the court's considerations was the issue of Financial Support Directions (FSDs) by the UK Pensions Regulator against the US parent company.
The court decided that:
A business you are buying or selling, if reorganised for sale, may be less valuable if you do not avoid tax pitfalls. This note highlights the most common pitfalls, including those related to an insolvency. You can avoid most with planning.
Reorganisations
Many businesses will now be considering transactions involving corporate reorganisations. They might want to take advantage of market conditions to buy or be considering the sale of business units to refocus strategy. Or they might become involved in an insolvency or reconstruction.
A business you are buying or selling, if reorganised for sale, may be less valuable if you do not avoid tax pitfalls. This note highlights the most common pitfalls, including those related to an insolvency. You can avoid most with planning.
Reorganisations
Many businesses will now be considering transactions involving corporate reorganisations. They might want to take advantage of market conditions to buy or be considering the sale of business units to refocus strategy. Or they might become involved in an insolvency or reconstruction.
Like any other business, law firms sometimes fail. While the failures of large law firms are well-publicized, smaller law firms can be just as or even more susceptible to failure, as the unexpected departure of the firm’s most profitable partner can be devastating to a small firm.
Facility agreements almost always contain events of default based on a borrower's insolvency. Defining insolvency is therefore key. In this article published in July 2013 we discussed how, following Eurosail1 , the common law was beginning to move the statutory tests of insolvency towards a more commercial view.