The input of independent expert evidence has become increasingly critical to successful restructuring, with spring 2021 seeing yet more changes and now compulsory expert input. From 30 April 2021 it is now a requirement to obtain a report from an independent evaluator in certain pre-pack administrations. May 2021 saw several significant court decisions with New Look and Regis concerned CVAs and Virgin Active concerned a restructuring plan. All three judgments highlighted the need for independent expert input in formulating the restructuring plans.
The ruling confirmed that Section 423 of the Insolvency Act 1986 has extensive international reach, and does not require a transaction at an undervalue to leave the debtor with insufficient assets.
Background
The court found that it could not sanction the scheme, despite the requisite majority of creditors having voted in favour of it. The intervention by the FCA at the sanction hearing marks an interesting development in assessing the extent to which the regulator's views will be aired and considered.
In this issue:
Welcome to our corporate and commercial disputes update, a new bi-annual publication in which we summarise some of the most significant cases over the last six months or so in the corporate and commercial dispute resolution market:
On 12 May 2021, in the first opposed cross-class cram down case, the English High Court sanctioned Virgin Active's restructuring plans, the first to bind landlords to lease compromises.
The decision
While the opposing landlords challenged the valuation evidence advanced by the companies, they did not advance evidence of their own. The court accepted the companies' evidence that:
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:
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”).
Almost everyone knows the tale of Kodak. After over 100 years of market dominance in film and camera production, it was forced into bankruptcy in 2012 after Kodak’s management failed to understand the threat of digital photography on their business.
A similar story befell Blockbuster. A market leader in the late 1990s, by 2010 its business was in tatters as Netflix and online streaming soared in popularity.
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.