UK Restructuring A YEAR IN RETROSPECT 2 Contents Introduction Our people UK team Matter Highlights UK Restructuring Employment UK Restructuring Section Header Section Header Contents 3 Robert Russell UK Head of Restructuring +44 (0)161 235 4147 [email protected] 2023 – Continued instability Casting our minds back to January last year, the economic outlook was fraught with uncertainty.

This article was first published in December 2023 by Law360.

English schemes of arrangement have long been used to restructure the debts of both English and foreign companies. This has made the UK a center of cross-border restructurings.

The scheme's more powerful cousin, the restructuring plan, with its ability to cram down entire classes of dissenting creditors, has bolstered the UK's position in the global restructuring market.

The Supreme Court’s judgment in BTI 2014 LLC v Sequana SA and ors^[1] (“Sequana”) is a key decision on the law surrounding directors’ duties.

The High Court was required to consider the Supreme Court’s Sequana judgment in Hunt v Singh (below).

What did we learn from Sequana?

The recently reported decision of ICC Judge Greenwood in Grove Independent School Ltd, Re [2023] EWHC 2546 (Ch) (Grove) provides some clarity on the test to be applied by the court in deciding whether to exercise discretion to grant an order for a Part A1 moratorium. In this case, the company in question was also faced with a winding-up petition, presented by His Majesty's Revenue & Customs (HMRC).

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 Recent publications

Why calculating potential claims under s214 Insolvency Act 1986 can be far from simple

Introduction

An analysis of recent statistics show what the Insolvency and Tax Disputes teams at Mishcon de Reya have long experienced – that HMRC is not in the habit of overlooking an outstanding debt.

Mislabelling a debt instrument as a promissory note can result in unintended consequences

Promissory notes and loan notes are often used in group reorganisations to paper a loan relationship, but because the terms are frequently used interchangeably, there is scope for misuse and misunderstanding.

Businesses worldwide are feeling the pressure of historic inflation and rising interest rates. UK insolvencies have reached their highest level since 2009, while numbers are also increasing in Australia, Canada and China.

This article examines the latest restructuring and insolvency trends – including zombie companies, landmark court decisions, and new legislation in Canada and the EU.

‘Zombie companies’ could lead to a wave of insolvencies

A free-standing moratorium for financially distressed but ultimately viable companies was introduced in 2020. It is sometimes called a Part A1 moratorium, after the part of the Insolvency Act 1986 which provides for it.