The High Court has in the past month ruled on two challenges to company voluntary arrangements (CVAs) on the grounds of unfair prejudice and material irregularity,  reaching a different conclusion in each case. 

The SFC has applied to the High Court for an order directing Lehman Brothers Asia Ltd to comply with a SFC notice to produce certain records in connection with its investigation of the offer and marketing of Minibonds. The SFC notice required Lehman Brothers to produce to the SFC all documents relating to the assessment of Minibonds by an internal Lehman Brothers committee. Lawyers for Lehman Brothers objected to the production of certain documents on the ground that such documents were the subject of a claim of legal professional privilege.

In the case of Andrew Fender v National Westminster Bank PLC Judge Purle QC set aside a deed of release that had been executed in the mistaken belief that the company was no longer indebted to the bank.

On 30 March 2022, the English court sanctioned the most recent restructuring plan proposed by Smile Telecoms Holdings Limited (Smile).

Before 1st October 2021, French law did not provide for the possibility to cram down shareholders, other than under Article L. 631-19-2 of the French Commercial Code, which sets conditions which are so stringent that it is not used in practice.

Directive 2019/2023 has let EU member states decide whether shareholders should be a class of “affected parties” subject to cross-class cram down or whether other measures should be implemented to avoid shareholders preventing, or making it difficult, in an unreasonable manner, the approval of a restructuring plan.

There has been much debate in recent years around the use made of certain UK restructuring tools – the company voluntary arrangement and, more recently, the new restructuring plan – to restructure commercial property leases. Commercial tenants argue that compromise is necessary to address high fixed costs that are no longer sustainable, but landlords have often been critical of the approach taken. This debate has become more acute in the context of the pandemic, as many High Street businesses subject to mandatory closure have built up significant rent arrears that need to be addressed.

Over the last 12 months, global markets have been amazingly resilient, indeed even buoyant, aided in large part by governments around Europe and the world providing seemingly unlimited funding and extensive financial stabilisation measures, such as quantitative easing.

This, coupled with protective legislation for companies to prevent insolvency filings and to ensure continued trading – for example, moratoriums, relaxations on insolvency filing obligations and restrictions on creditor actions – has given businesses significant breathing space and prevented widespread failures.

Covid-19 has had a staggering impact on the U.S. economy in just eight months. Businesses large and small are struggling to stay afloat, with over 3,600 Chapter 11 bankruptcy filings in the first half of the year.[i] By the third quarter of 2020, the number of Chapter 11 bankruptcies of companies with assets over $1 billion had doubled from the same period in 2019[ii] and the U.S. GDP had fallen 2.4%.[iii] Given the uncertainty surrounding the pandemic, economists predict that a full economic recovery is likely to take years.[iv]

We reported in our previous blog published on 15 June 2020 (“The Corporate Insolvency and Governance Bill – a pensions perspective”) that a number of pensions concerns had been raised about the Corporate Insolvency and Governance Bill (the Bill). As a result, the Bill was subject to significant amendment and debate from a pensions perspective in the House of Lords.

The COVID-19 pandemic has wreaked havoc on the global economy. The equity markets, the travel and tourism industry, and retail establishments of all stripes have been hit hard. In addition to manufacturing, shipping, and other operational and supply chain disruptions, companies will need to address their borrowing requirements. Likewise, lenders, bondholders and alternative capital providers will need to consider what their rights and obligations are under their financing documents.