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On 17 July 2014, the regulation creating the European Account Preservation Order ("EAPO") came into force. This regulation will serve as an alternative to domestic remedies and relates to the freezing of bank accounts across participating EU Member States. The EAPO Regulation will be applicable from 18 January 2017.  It will automatically apply to all Member States except the UK and Denmark which have opted out of the EAPO; therefore, it will not apply to assets located in those countries.

What's New?

We ended 2019 wondering whether Brexit would remain as allconsuming as it had been the previous three years. Cue the COVID-19 pandemic. We hope this newsletter finds you, your colleagues and your family in good health and adjusted to the new 'normal'. We look back at the first three months of 2020, unforgettable in more ways than one, and how current developments may impact our future.

The UK government’s response to COVID-19 has already taken the economy into new territory, and whilst measures put in place may delay or alter the approach of companies seeking insolvency-based protections, a large number of (contentious) restructurings and insolvencies is inevitable.

We anticipate three phases, each of which creates various risks:

(i) The current phase, during which companies are able to take advantage of government support, or relaxed laws or rules around insolvencies, to continue to operate during the COVID-19 lockdown.

Directors of English companies that entered into insolvency proceedings in Germany could be liable to reimburse the company under German law for payments made after the company became insolvent.

This is a two-part article on ways to restructure debt taken up by a German company. The first part looks at financings under English law, the second refers to German law-governed debt.

Part I – Financings governed by English law (restructuring through schemes of arrangement)

In recent years a number of German companies such as Tele Columbus, Rodenstock and Primacom have used English law scheme of arrangements to restructure their debt.

An element of the restructuring toolbox

English schemes of arrangement under the Companies Act 2006 (Schemes) have been increasingly used by non-English companies as a powerful tool to restructure their financial indebtedness. Recent prominent examples of German companies that have utilized Schemes to cramdown non-consenting or “holdout” creditors in order to restructure the company’s balance sheet include TeleColumbus, Rodenstock and Primacom.

There are several reasons for this trend:

On 14 December 2010 the English Court sanctioned four connected schemes of arrangement for German companies in the Tele Columbus group.

The English High court has approved a scheme of arrangement for a company incorporated in Germany which had its centre of main interests in Germany, no establishment in the UK and no assets in the UK likely to be affected by the scheme.

This case is one of a number of recent cases where restructurings of foreign companies have been effected by English schemes of arrangement. The court set out its reasoning in this case in some detail in view of the possibility that the European Court of Justice would consider some of the relevant issues in a forthcoming appeal in another case.

the recent equitable life case, decided by the higher regional court of celle (the olg celle), is the first example of a german court considering the recognition of a uk creditors' scheme of arrangement.