German real estate group restructuring plan sanctioned in London
Having failed to get its restructuring solution through in its home jurisdiction, beleaguered German real estate group, Adler, turned to London. After substituting a UK plc as issuer of six series of notes in order to propose an English restructuring plan, and in the face of fierce opposition from an ad hoc committee of 2029 noteholders (AHG), the group successfully forced the plan through just in time.
Yesterday saw the end of a three-day sanction hearing for the restructuring plan (the “Plan”) of the Great Annual Savings (GAS) company, with Justice Adam Johnson reserving his judgment and importantly, his decision on whether to exercise cross-class-cram-down to sanction the Plan for a later date.
Nicola Sharp of Rahman Ravelli outlines a case where an individual’s knowledge of a tax evasion scheme was key
A cellphone company director lost his bid to challenge a £1.7 million-plus award against him for VAT fraud when the High Court said he had actual knowledge of his firm's tax evasion scheme.
In Bhatia v Purkiss [2023] EWHC 775, the High Court rejected an appeal from Deepak Bhatia, the company director of the now-defunct phone company JD Group Ltd, against a ruling from the Insolvency and Companies Court (ICC).
The judgment of the Court of Appeal (Newey, Males and Snowden LLJ) in Hunt v Ubhi [2023] EWCA Civ 417 demonstrates the importance of the adequacy of any undertaking in damages given in support of an application for a freezing order and underlines the need for full and frank disclosure.
What Happened
As of 17 April 2023 new creditors winding up petitions can be presented in accordance with the Insolvency (Amendment) Rules (NI) 2023. This means that the restrictions faced by creditors in filing winding up petitions will be lifted, and ultimately more companies will be open to pursual.
‘If, at first, you don’t succeed, then try and try again’ is a fitting description for HMRC’s recent approach to restructuring plans, with its opposition of plans proposed by The Great Annual Savings Company (GAS) and Nasmyth Group Limited (Naysmyth).
The GAS sanction hearing (which is due to take place this week) will be the first time that HMRC has taken an active role contesting a restructuring plan at sanction following the case of Houst where the Court exercised its discretionary power to “cram down” HMRC.
It is widely anticipated that the next twelve months could be a challenging period for many businesses in the UK and that there could be a significant rise in the number of companies in financial distress.
Where this is the case, the directors of those companies will need to be increasingly mindful of the duties they have to the company's creditors, as well as to its shareholders.
Looking at the most recent figures on corporate insolvencies makes for worrying reading for landlords and occupiers alike, with overall numbers now exceeding pre-pandemic levels. Overall, corporate insolvencies increased by 17% in England and Wales since February 2022 and were a third higher than in February 2020.
Matthew Czyzyk, Natalie Blanc, Natalie Raine and Emily Ma, Ropes & Gray
This is an extract from the 2023 edition of GRR's Europe, Middle East and Africa Restructuring Review. The whole publication is available here.