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The Pension Schemes Bill [HL] 2019-20 (Bill) was re-introduced before Parliament on 7 January 2020. Among its proposed amendments to the Pensions Act 2004 (Act) are new criminal  offences for failing to comply with a contribution notice, avoiding employer debt, conduct risking accrued scheme benefits, an expansion of the moral hazard powers and an extension of the ‘notifiable events’ framework. The Government’s stated intention is to “ensure that those who put pension schemes in jeopardy feel the full force of the law“.  Unfortunately, scope of the amendments is such that if enacted without amendment, they are very likely to deter responsible directors from attempting to restructure financially distressed employers facing significant exposure to defined benefit pension scheme liabilities.
Continue Reading Rocking the boat – Pension Schemes Bill proposals may risk destabilising future restructurings

In a recent decision, the Ontario Superior Court of Justice recognised the English law schemes of arrangement of the Syncreon group under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 (“CCAA“). This was the first time a Canadian court was asked to determine whether proceedings under Part 26 of the Companies Act 2006 (the “Companies Act“) could be recognised as “foreign proceedings” under Part IV of the CCAA. The schemes, which included third party releases in favour of the Canadian operating entity of the Syncreon group, were given full force and effect in Canada.  
Continue Reading First English Scheme of Arrangement Recognised in Canada under the CCAA

On 19 September 2019, Norris J handed down judgment in the challenge brought by six landlords against the Debenhams Retail Limited (Debenhams) company voluntary arrangement (CVA) which was approved by 94.71% of Debenham’s unsecured creditors on 9 May 2019. The challenge been watched with significant interest, particularly by the landlord community, which has for some time expressed increasing concerns regarding the use of CVAs as a mechanism to commute leasehold liabilities while other unsecured creditors’ rights remain unaffected. While CVAs have been the subject of legal challenges previously, the Debenhams challenge is the first time certain key elements of CVAs in play in the market have been tested before the court.  Norris J’s decision provide welcome clarification on a number of key issues concerning the treatment of leases in retail CVAs.

Continue Reading CVAs – retail’s flexible friendship continues

The development of new powertrain technology; challenges within established markets, such as diesel emissions issues; and falls in automotive production – production in the United Kingdom has fallen during the last 12 consecutive months – have all had a significant impact on the automotive and mobility industry.  The rapid increases in demand for connected, electric, and hybrid vehicles – together with the associated infrastructure – means that effective cooperation among OEMs, suppliers, regulators, and other stakeholders is now more important than ever. The cost of this new technology, aligned with shocks to production, such as the ongoing uncertainties around Brexit and China trade tariffs, means that more than ever, fortune will favor the innovative and the well prepared innovator.

Hogan Lovells partners Joe Bannister (UK), Heiko Tschauner (Germany), and Chris Donoho (U.S.) are part of the firm’s Business Restructuring and Insolvency practice. Bannister and his colleagues have a wealth of experience acting for original equipment manufacturers (OEMs) and suppliers in some of the most complex and intractable automotive cases of the past decade.  In this article they discuss the challenging issues that arise when an OEM is faced with a distressed supplier, and what can be done to mitigate the resultant risks.


Continue Reading Chain reaction: Managing financial risk and exposure in the automotive supply chain

The recent Debtwire European Mid-Market Forum opened with a presentation from Paul Johnson of the Institute of Fiscal Studies. He warned the delegates of storm clouds gathering over the economy, suggesting that we may begin to see an increasing number of distressed credits – perhaps not as significant as in the aftermath of the financial crisis, but that the general mood suggests an imminent turning of the credit cycle.

This was the backdrop to the “When direct lending turns distressed” panel, moderated by Mariana Valle of Debtwire, in which Hogan Lovells restructuring partner, Tom Astle took part. The other panellists were Steve Morris from Beechbrook Capital, Tristan Nagler from Aurelius Investments and Ciara O’Neill from DC Advisory.
Continue Reading When direct lending turns distressed

Upstream guarantees and security by foreign subsidiaries of a U.S. corporate borrower may now be available without adverse U.S. federal income tax consequences to the U.S. parent.
Continue Reading Will changes to US regulations make it easier to obtain upstream security from foreign subsidiaries?

Recently finance partners Paul Mullen, Jo Robinson, and Tom Astle sat down with Joelle Jefferis, Debtwire to discuss what has happened so far in distressed direct lending scenarios and what can be expected in the future.  The short podcast covers areas such as how many unitranches have already been at restructuring stage, to how distressed

A recent High Court case (Fairhold Securitisation Limited v Clifden IOM No 1 Ltd) has affirmed that in debt issuances involving a trustee, noteholders have only limited rights to take direct enforcement action.  The case confirmed that:

  • trustees do not need to act on holders’ instructions until holdings have been verified;
  • on receipt of instructions, a trustee is not bound to act until it has had a reasonable time to verify holdings, review instructions, take advice and obtain satisfactory indemnification;
  • where a trustee holding a floating charge is obliged to take enforcement action, its failure to do so does not entitle noteholders to step into the shoes of the trustee and appoint administrators.


Continue Reading When the shoe does not fit: direct action clauses – can investors step into the Trustee’s shoes to enforce?