Distressed preferred shares are an important weapon in the arsenal of a restructuring lawyer. They allow distressed companies to reduce their borrowing costs by restructuring their debt in a way that gives a taxable Canadian resident corporate lender a tax-free return. This means that the lender can accept a dividend rate that is less than the interest rate on the debt it holds and receive the same economic return without losing the priority that came with holding secured debt.

The British Columbia Provincial government recently passed the Economic Incentive and Stabilization Statutes Amendment Act, 2008 (the “Act”). The Act was aimed at protecting RRSPs to afford self-employed individuals the same protection from creditors as those individuals who have planned for their retirement through a registered pension plan.

To achieve this purpose, the Act amends a number of statutes in British Columbia.

On 26 January 2011 the European Commission declared the so-called Restructuring Clause (Sanierungsklausel) (Sec. 8c (1a) of the German Corporate Income Tax Act (CTA)) as inconsistent with EU funding guidelines. The decision of the European Commission is criticized by national experts and stresses the German economy with a hardly tolerable uncertainty as regards tax issues in restructurings.  

Due to the ongoing financial crisis and the economic downturn accompanied therewith, many German companies are or will be struggling with default and insolvency problems.

Tax treatment in the hands of the creditor

Market participants welcome a clarification extending equitable subordination exemptions granted Sareb to those subsequently purchasing debt from Sareb.

On November 30, 2013, the Spanish legislator approved a recent amendment to Spanish insolvency law, introduced in March 2013, to clarify that a claim transferred to Spanish “bad bank” Sareb, and subsequently sold by Sareb to a third party, will also be exempt from equitable subordination risk.

Background

Following consultation last autumn, the Government is once again changing the Regulations under s75 Pensions Act 1995.

The changes1 take effect on 6 April 2010. They are intended to facilitate corporate restructurings. They also address some minor technical issues. The Government has postponed any more fundamental rewriting of the Regulations, saying that “this is a complex area that deserves closer consideration”.

Restructurings

Where a landlord forfeits its lease, subject to any available relief or exemption, the landlord is liable to business rates in respect of the premises.

Empty premises business rates exemption will provide time-limited relief to a landlord who has re-entered premises. However, a landlord should be cautious of exercising its right to forfeit a lease in cases where it does not have another tenant "waiting in the wings".

The ratepayer

Business rates are paid by occupiers and, in certain circumstances, owners of premises.

Re Trident Fashions PLC: Exeter City Council v Bairstow [2007] EWHC 400 (Ch)

In March 2007 the High Court ruled that that non-domestic rates are payable as an expense of the administration as a “necessary disbursement” under Rule 2.67(1)(f) Insolvency Rules 1986 (IR), in priority to payment of the administrator’s remuneration.

Under newly issued guidance, the IRS has made it easier for many tax-exempt organizations to restructure.

The IRS will now continue to recognize as exempt, those organizations that:

•             change their structure from an unincorporated association to a corporation;

•             reincorporate from one state to another;