On 17 May 2021, in the third of a trio of landlord challenge cases, the English High Court revoked Regis UK Limited's company voluntary arrangement (CVA) on one ground of unfair prejudice, but ruled against landlords seeking repayment of fees against the nominees.
The facts
On 10 May 2021, the English High Court rejected landlords’ challenge to the company voluntary arrangement (CVA) of fashion retailer, New Look. The New Look decision was the first in a trio of highly significant judgments focused on a distressed tenant's ability to compromise landlord's claims (our coverage of the Virgin Active and Regis decisions is available below).
The challenge
The landlords' challenge focused on jurisdiction, unfair prejudice and material irregularity as a result of the following:
On May 11, 2021, the United States Bankruptcy Court for the Northern District of Texas (“Court”) issued a decision[1] dismissing the chapter 11 cases of the National Rifle Association of America and its affiliate (“NRA”) for cause pursuant to section 1112(b) of the Bankruptcy Code.
The Court (Mr Justice Miles) has refused to sanction a scheme of arrangement (the “Scheme”) between ALL Scheme Limited (the “Company”) and its creditors. The Company is an entity within the Amigo group of companies (the “Group”).
A recent matter which came before a strong Court of Appeal panel demonstrates that the BVI Court will continue to come to the aid of creditors pursuing unpaid debts and that they should not necessarily be deterred from pursuing a debt in the BVI even if the security over the debt is in issue.
“[B]ankruptcy inevitably creates harsh results for some players,” explained the U.S. Court of Appeals for the Third Circuit on May 21, 2021, when it denied a film producer’s claim for contractual cure payments. In re Weinstein Company Holdings, LLC, 2021 WL 2023058, *9 (3d Cir. May 21, 2021).
Even prior to the COVID-19 pandemic, most retail bankruptcy cases involved at least some effort to maximize value by selling real estate holdings. The Bon Ton Stores, Forever 21, Sears, and Toys ‘R’ Us cases, among others, are perfect examples. These cases have, for the most part, achieved such sales under section 363(f) of the Bankruptcy Code with minimal resistance, typically on expedited time-frames.
This article first appeared in ThoughtLeaders4 FIRE Q1 2021 magazine.
It is important that trustees understand their obligations if their trust structure comes under financial stress. Helpfully, the Jersey courts have provided guidance on the principles applicable to 'insolvent' trusts, which is likely to be highly persuasive in other jurisdictions.
When is a trust insolvent?
Earlier today, 26 May 2021, the final condition to the restructuring plan for the Norwegian Air Shuttle group was met, allowing the Examiner’s scheme to become effective: confirmation that the business has successfully raised 6bn NOK.
The High Court dismissed landlords’ challenges to the terms of New Look’s company voluntary arrangement (CVA) last week in a ruling that has sparked lively debate within both the landlord and restructuring sectors.
The landlords challenged the CVA by way of three main limbs: