Reorg Blog

The U.K. applied to join the Lugano Convention in April 2020, a time when the Brexit deadline was fast approaching. The convention governs the jurisdiction and the enforcement of judgments in civil and commercial matters between EU member states and Norway, Iceland and Switzerland. If Britain were allowed to join, a Part 26A restructuring would gain automatic recognition across EU member states. However the European Commission has stated that it is of the view that the U.K. should not be able to join the Lugano Convention, following Brexit. The English court, in Gategroup’s Part 26A plan, held that the Part...

Virgin Atlantic became the first company to use the Part 26A restructuring tool, in September 2020, when its restructuring plan was sanctioned by the English High Court. The U.K. airline used the tool to implement a financial restructuring valued at £1.2 billion over 18 months. The group’s creditors were split into four classes: RCF plan creditors, operating lessor plan Creditors, connected party plan creditors and trade plan creditors, the latter of which had not committed to vote in favor of the plan at the time the restructuring was proposed. Eventually, the group won the support of all classes, but if...

Germany was the first jurisdiction to act after the pandemic hit, with the introduction of new European restructuring regulations which suspended the obligation under the country’s bankruptcy code for businesses to file for insolvency within three weeks of discovering illiquidity or over-indebtedness. German lawmakers also allowed companies to hold shareholder meetings virtually, loosened the clawback and lender liability regime, and prevented landlords from terminating leases because of non-payment. Spain also suspended filing deadlines for directors whose businesses were insolvent, while France said that in its insolvency proceedings sauvegarde, redressements judiciaire, liquidations should not be treated as urgent and can be...

At the outbreak of the Covid-19 pandemic, European lawmakers raced to modify their restructuring regime in response to the crisis. On March 20, 2020, independent research group the Conference of European Restructuring and Insolvency Law (CERIL) called on all EU member states to suspend the duty of directors to file for insolvency proceedings based on over-indebtedness and inability to pay. It also urged governments to offer interim financing to struggling businesses, “hibernation” periods for small businesses and support for entrepreneurs and their staff. In the months that followed, jurisdictions across the Continent mobilized practitioners, academics and legislators to introduce a...