Yesterday the UK Insolvency Service released their quarterly statistics spanning October to December 2019. These confirm that liquidations and administrations in 2019 hit levels not seen for over five years. This signals a potentially serious underlying concern about the UK economy.

This briefing covers Brexit implications of restructuring and insolvency, in particular it discusses the implications on the European Regulation on Insolvency Proceedings and recognition of insolvency judgments and how schemes of arrangement will be impacted by Brexit.

The Pensions Regulator (TPR) has announced that it has withdrawn moral hazard proceedings against Chemtura Manufacturing UK Limited and its US parent, Chemtura Corporation. This follows an agreement being reached by Chemtura with the trustees of the Great Lakes UK Limited Pension Plan (the Plan) over its funding package.

The US Bankruptcy Court has issued a declaratory judgment that the relevant clause flipping priority from the swap counterparty to the noteholders constituted an ipso facto provision and was therefore unenforceable – a judgment that produces a different result under US law to that established by the Court of Appeal in the Perpetual Trustee case from November 2009.

In Bridge Trustees Limited v Noel Penny, Judge Purle QC, sitting as an additional Judge of the High Court, held that the Court could use its inherent jurisdiction to permit an independent trustee to distribute surplus in a scheme that was winding-up. Under the Pensions Act 1995, an independent trustee is appointed to exercise powers otherwise conferred on the employer where an insolvency practitioner begins to act in relation to a company.

The UK's latest quarterly company insolvency statistics, published on 2 August, confirm the trends the restructuring community are seeing so far this year and are expecting to continue as we progress through the year.

The UK's latest quarterly company insolvency statistics, published on 29 October, suggest that the unexpectedly calm seas seen over the last 18 months (and maintained by unprecedented government economic support) may be starting to give way to stormier waters as corporate insolvencies begin to return to pre-pandemic levels.

Background

As widely blogged about, on 26 June 2020 the Corporate Insolvency and Governance Act 2020 (the Act) came into force, introducing both far-reaching wholescale reforms to the UK’s restructuring toolbox as well as temporary measures dealing with COVID-19 impacts on companies. The two most significant temporary measures for companies facing financial difficulties as a result of the COVID 19 pandemic were:

Are you prepared to take advantage if one of your competitors falls into difficult times or enters an insolvency process? Do you know your way around buying from a distressed seller? What are the things you need to know? How can you prepare? What will make your bid most attractive?

Recent high profile collapses such as HMV have highlighted the opportunities that can be found within the distressed space – if you are prepared and know how to act swiftly.