This note provides an overview of the English restructuring plan, giving insight into when a foreign company might be able to restructure in England, an overview of the process and the advantages that a restructuring plan offers over other processes.

It should not be relied on as legal advice. Should you require legal advice in relation to your specific circumstances, please contact one of our team members whose contact details are at the end of this note.

What Is a Restructuring Plan ?

When Covid hit in March 2020 and the country went into lockdown with an associated dip in economic activity and consumer confidence, the viability of many small and medium sized enterprises was called into question. Many directors will have had cause to consider their obligation to place their company into an insolvency proceeding in order to insulate themselves from personal liability, and in particular liability for wrongful trading (continuing to trade when they knew or ought to have known there was no reasonable prospect of the company surviving).

On 2 December 2021, the Court of Appeal handed down its judgment in Windhorst v Levy [2021] EWCA Civ 1802, which concerned a challenge against the registration of a German judgment and an application for a stay of execution. Notwithstanding Brexit, the decision is relevant to cases involving (i) judgments in proceedings instituted before 31 December 2020 and (ii) insolvency proceedings opened before 31 December 2020.

Ken Baird, Mark Liscio, Michael Broeders, Marvin Knapp, Samantha Braunstein and Katharina Crinson, Freshfields Bruckhaus Deringer

This is an extract from the 2022 edition of GRR's the Americas Restructuring Review. The whole publication is available here.

In summary

In the year leading up to lockdown in March 2020, there were 18,000 corporate insolvencies. The year following lockdown, this figure dramatically dropped by over a third to 11,000.

With the significant reduction in corporate insolvencies, it could be suggested that the Government support has actually been too effective and companies which ought to have entered an insolvency process have avoided doing so due to a mixture of financial support and restrictions on creditors, in particular landlords.

According to a recent decision by the High Court in R (on the application of Palmer) v Northern Derbyshire Magistrates Court, an Administrator is an officer of a company in administration for the purpose of collective redundancy rules.

This means an Administrator can be prosecuted personally for failing to notify the Insolvency Service of collective redundancies being made by the company in administration.

Background law

In certain sectors, in particular in technology and life sciences, it is common for companies to combine forces in order to maximise business opportunities. Only rarely can a single company undertake every aspect of (for example) invention, development and exploitation by itself. A company may decide to contract out such activities, or to collaborate with a third party with different skills or resources. Such a collaboration may take the form of a joint venture.

Claims are just another asset of the insolvency practitioner: to gather in and realise for creditors’ benefit.

Success in managing insolvency estate claims however, is all about effective risk management. As a speculative contingent asset, the risks involved in handling claims as assets are greater and this risk requires constant evaluation as the claim progresses. Here are 6 issues to have under control throughout.

1. RECOVERABILITY – WHERE IS THE MONEY?

In the October 2021 edition of IBA Insolvency and Restructuring International, Peter Hayden and Jonathan Moffatt explain recent decisions in the UK and the Cayman Islands on the narrowing of the rule in Prudential and its implications for shareholders and creditors considering litigation.

Introduction

As has been widely reported, the recent energy price volatility (coupled with the price cap limiting suppliers’ ability to pass increased costs on to consumers) has caused a number of energy supply company failures. Yesterday saw the announcement of the collapse of Bulb, one of the UK’s largest energy suppliers, with it being due to be placed into special administration very shortly.

This is the first energy special administration we’ve seen. So how are the insolvency rules different for energy companies? What is a special administration, and why is this the first one?