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.
Hogan Lovells’ London restructuring team led by partner Alex Kay has acted as lead transaction counsel and advisor to the ad hoc committee of Noteholders in the successful, landmark US$1 billion restructuring of Mriya Ago, the Ukrainian agricultural conglomerate.
Completion of the restructuring is the culmination of a multiyear process which has resulted in the first example of creditors taking control of a Ukrainian corporate.…
Hogan Lovells’ London restructuring team led by partner Tom Astle assisted our clients, lenders of a €1.06bn priority funding loan, with distressed Croatian retail giant Agrokor’s proposed restructuring settlement plan which was voted for unanimously at a meeting of key creditors in Zagreb this week on 19 June 2018.
Having an agreed settlement plan is a breakthrough stage in the process and paves the way for one of the biggest restructurings in the world so far this year. The settlement plan will now be put to the wider creditor vote, requiring 66⅔ by value to approve, before being submitted to the Commercial Court of Zagreb for approval prior to 10 July 2018.
The English High Court has decided that collapsed retailer British Home Stores cannot challenge its own company voluntary arrangement as an unenforceable contractual penalty and must repay rental discounts to its landlords (Anthony John Wright and Geoffrey Paul Rowley as joint liquidators of SHB Realisations Limited (formerly BHS Limited) (in liquidation) v The Prudential Assurance Company Limited , decision handed down on 6 March 2018)
The case, in which Hogan Lovells represented the successful landlord, provides important guidance on the operation of company voluntary arrangements (CVAs), particularly after termination, and the payment of rent as an expense of a company’s administration in priority to other debts.…
In January 2018 the English High Court considered whether it had jurisdiction under the Cross-Border Insolvency Regulations 2006 (CBIR) to extend a temporary stay on the commencement of enforcement action in respect of English law debt obligations owed by a foreign debtor so that in effect the stay became permanent, or whether such a permanent stay would breach the long established rule in Gibbs(which provides that the discharge of an English law governed debt under the insolvency laws of a foreign jurisdiction outside of England and Wales is not a valid discharge of such debt). Ultimately, the court found that ordering a permanent stay would substantively affect the creditors’ rights and amount to a discharge of the English debts, in breach of the rule in Gibbs, and that the CBIR could not be used to modify that rule.
On 9 November 2017, in a rare example of a contested recognition hearing, His Honour Judge Paul Matthews granted recognition of Agrokor’s extraordinary administration (EA) as a foreign main proceeding under the Cross-Border Insolvency Regulations 2006 (CBIR).
Agrokor d.d. is the holding company for a group of companies specialising in agriculture, food production and related activities in Croatia. Before its financial difficulties, the group’s annual revenue was estimated to amount to around 15% of Croatia’s GDP. On 6 April 2017, the Law on Extraordinary Administration Proceeding of Companies of Systemic Importance for the Republic of Croatia (the Law, also known as Lex Agrokor) became effective. On 10 April 2017, following an application by Agrokor, an order for extraordinary administration (EA) was made in respect of Agrokor itself and 50 of its affiliates. In July 2017, Agrokor applied to the English court for recognition of the EA as a foreign proceeding under the CBIR. A proceeding will be a foreign proceeding if it is “…a collective judicial or administrative proceeding in a foreign State…pursuant to a law relating to insolvency in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganisation or liquidation” The recognition application was challenged by one of Agrokor’s largest creditors, who had also brought arbitration proceedings in the English courts, on a number of grounds, all of which were dismissed by the court.
A Hogan Lovells team led by partner Tom Astle is acting for an adhoc committee of bondholders, and providers of a c€1bn super senior DIP facility to the Agrokor Group.
On 24 October 2017 the Court of Appeal handed down its decision in what has become known as the Waterfall IIA and B litigation (Burlington Loan Management Limited and others v Lomas and others  EWCA Civ 1462). The decision also covered an appeal of one point from the High Court Waterfall IIC decision. A number of the issues originally intended to be covered in the appeal fell away following the earlier Supreme Court decision in Waterfall I (see the joint administrators of LB Holdings Intermediate 2 Ltd v the joint administrators of Lehman Brothers International (Europe)  UKSC 38). The remaining issues concerned the calculation of, and the entitlement of creditors to, statutory interest, in accordance with Rule 2.88 under the Insolvency Rules 1986. By way of background, as it relevant for a number of the issues forming the subject of the appeal, under Rule 2.88(9) statutory interest accrues either at the rate specified in s.17 Judgments Act 1838 or the “rate applicable to the debt apart from the administration”, whichever is the higher.
Litigation over statutory interest is rare because statutory interest is only payable once all provable debts have been paid in full. However, following the payment in full of all provable debts, there remains in the LBIE estate a surplus of c.£7.9bn. There are, accordingly, significant amounts at stake in the litigation.
In Re Lehman Brothers Europe Ltd (in administration)  EWHC 2031 (Ch) a proposal by joint administrators to appoint a director to a company already in administration (LBEL), in order to distribute surplus funds to its sole member (Lehman Brothers Holdings plc (LBH)), as opposed to a creditor, was held to be legally permissible, as…
In a decision that will be welcomed both by second-ranking secured creditors and by administrators, the Court of Appeal recently held that a second-ranking floating charge (SRFC) was still capable of being a qualifying floating charge for the purposes of Schedule B1 of the Insolvency Act 1986 despite the earlier crystallisation of a prior-ranking floating charge (PRFC). In addition, the SRFC was capable of being enforceable notwithstanding the fact that there were no assets of the chargor which were not covered by the PRFC. Accordingly, the appointment of administrators by the holder of the SRFC was valid. Case: Saw (SW) 2010 Ltd v Wilson  EWCA Civ 1001