Restructuring

Subscribe to Restructuring via RSS

By Tom Evans, David Walker, Daniel Smith, Aisling Billington, and Catherine Campbell

The location of the data is not sufficient to avoid a disclosure order.

When it comes to personal devices, people increasingly communicate across multiple platforms, often in an informal and unguarded manner. However, high levels of litigation driven by the COVID-19 pandemic (including insolvency and restructuring litigation), the recent M&A boom (including shareholder disputes and other transactional litigation), and the rise of remote/hybrid work mean that PE firms must remain alert to the risk of personal device communications being disclosed in litigation.

As seen in recent cases, the English courts place value in contemporaneous written evidence, and take a pragmatic and targeted approach to disclosure. While English courts are mindful of the privacy rights of individuals, they recognise that employees conduct work on personal devices and non-proprietary third-party apps.

However, the location of the data is not sufficient to avoid a disclosure order, and PE firms should consider how to best protect themselves.

A restructuring plan completed earlier this year by Smile Telecoms notches up a number of firsts.

By James Chesterman and Tom Davies

African telecommunications provider Smile Telecoms Holding Limited, incorporated in Mauritius, successfully completed a restructuring plan (the Plan) under Part 26A of the UK Companies Act 2006 at the end of March 2021.

The Plan features a number of novel actions, including:

  • The first time a non-European company has used the Part 26A restructuring plan since its introduction in June 2020
  • The first time any company has layered in new money on a super-senior basis by way of a cross-class cram-down, a feature of the Part 26A restructuring plan not available under schemes of arrangement
  • The first time that sanction of a restructuring plan had to be adjourned due to the fact that a closing condition, which was subject to the discretion of a third party (namely a development finance institution acting through its representative, the Public Investment Corporation (PIC) of South Africa) rather than the court, remained unsatisfied at the initial time of sanction, which went to the core of the Plan’s effectiveness

This blog post takes a closer look at the implementation of the Plan.

Persisting political and economic uncertainty means awareness of market changes remains crucial.

By Simon Baskerville, Tom Evans, David Walker, Stephanie Dellosa, and Catherine Campbell

The 2008 distress cycle triggered defaults and restructurings for European PE portfolio companies, as maintenance covenant defaults and balance sheet deleveraging forced refinancings and debt-for-equity swaps. While restructuring conditions for PE firms are stronger in 2019 than they were in 2008, persisting political and economic uncertainty means that awareness of market developments remains important.

Permissive Intercreditor Arrangements Impact Schemes of Arrangement

UK loan document developments have made new and more flexible tools available for sponsors to effect debtor-led restructuring processes. In response to the 2008 crisis and a sponsor-driven market, we have begun to see increasingly accommodative intercreditor documentation, reducing the need for court-sanctioned schemes of arrangement in restructuring deals. Previously, a scheme of arrangement (requiring the support of 75% in value and a simple majority in number of affected classes, e.g., lenders) was needed to restructure a company’s debt, where unanimous consent of lenders was not possible. It is now common for intercreditor agreement terms to circumvent the need for a scheme of arrangement and, therefore, the court process for certain forms of restructuring, including debt-for- equity swaps. This allows restructurings to be effected contractually with lower levels of support, such as a simple majority. In our view, this positive development for private equity firms allows portfolio companies to more easily reach agreement with lenders and effect quicker, more cost-effective, and private restructurings.

The court offers guidance on reversing lawful dividend payments and when directors need to take into account creditors’ interests.

By Simon J. Baskerville, Daniel Smith, Anna Hyde, Lisa Stevens, and Vanessa Morrison

On 6 February 2019, the UK Court of Appeal published a judgment in BTI v. Sequana that will impact both creditors and directors of English companies.

The court decided that the payment of a dividend — despite its lawfulness under the Companies Act 2006…

By John Houghton and Marc Hecht

Latham lawyers, John Houghton and Marc Hecht, discuss insights gained from Latham’s work on major schemes of arrangement over the past few years, including Bibby Offshore, PrivatBank, DTEK, and Avangardco.

The Debtwire podcast covers many of the scheme considerations stakeholders face, with particular reference to DTEK’s hat-trick of schemes as well as the recent “loan to own” scheme in Bibby Offshore. The speakers also share their views on trends and potential challenges for…

Ruling confirms majority noteholder should not be disenfranchised from voting

By Simon J. Baskerville, Sophie J. Lamb QC, Bradley J. Weyland, and Eleanor M. Scogings

The English High Court held that it had jurisdiction in a cross-border dispute involving the Norske Skog group (Norske Skog), and confirmed that a majority noteholder did not “control” the debtor companies and was therefore not excluded from being part of the “instructing group”. The case also confirms the ability of the English courts to rule in relation to issues of both New York law and English law. These rulings reassured observers active in European leveraged finance transactions, who have long believed that courts should interpret and approach this suite of contracts in exactly this way.

Case Background

In 2015, Norske Skog, a large Norwegian group of manufacturing companies engaged in the paper industry, issued senior secured notes (the Notes) pursuant to a New York law governed indenture. As is typical with leveraged finance structures, the company also entered into an intercreditor agreement (ICA) governed by English law. The ICA allows the flexibility for multiple secured creditor classes under various instruments to benefit from the security. Further, the ICA governs the relative priority of such creditors and other liabilities, as well as the ability to instruct the security agent in case of a default scenario.

UK-based offshore and subsea oil & gas services company solidifies its position and completes ownership transfer to noteholders in major company milestone.

By John Houghton and Marc Hecht

The recent Bibby Offshore recapitalisation[1] is as fair and equitable a restructuring as the media has seen, offering creditors an example of what an effective restructuring requires. This case study exemplifies the key points that companies facing unpredictable market conditions must consider:

  • The correct restructuring solution
  • Deft management of shareholder dynamics
  • Careful handling of stakeholder expectations

By Andrea Novarese, Marcello Bragliani, Antonio Distefano and Davide Rallo

The so called “Banks Decree” Decree (Law Decree no. 59/2016, hereinafter the “Decree”), published on the Official Gazette and converted into Law no. 199/2016, has recently entered into force.

The main purpose of the Decree is to grant a partial reimbursement to investors of few local banks that were resolved in November 2015. However, the Decree has also introduced additional innovations which represent a further significant step in the Government’s effort of streamlining the credit recovery activities and implementing a more creditor-friendly environment.

By Simon Tysoe

Prior to the recent collapse in oil values, prices existed at over $100 a barrel for over three years. It made the economics of oil exploration, production and sale comparatively straightforward, but embedded costs into the industry.

More recently, a dip in demand and Saudi Arabia’s decision to maintain its production levels saw prices plunge to below $40, making it uneconomical for many oil producers to continue exploration and production. All sub-sectors of the industry have raced to reduce cost and right-size their businesses. New terminologies such as ‘Fit for 50’ circulated as oil majors adjusted themselves to the new reality.

By Ignacio Pallares

Recent piece-meal amendments to the Spanish Insolvency Act 2003 seem to have cumulated into a restructuring solution that is starting to be considered predictable, quick and fair, especially when compared to the pre-amendment system. With its new restructuring approach, which shares many of the same characteristics as an English Scheme of Arrangement, Spanish companies have finally been given much-needed space and time to develop an appropriate restructuring strategy.