Over the past decade, Europe has been captivated by restructuring. Cross-border insolvency, initiated in the first decade, mainly overarched national insolvency systems. It was developed as a system of private international law. For restructuring the main drivers are discussions, recommendations and reports, ultimately leading to the EU 2019/1023 Preventive Restructuring Directive. One of the first books on this Directive (Paulus/Dammann (eds.) I reviewed last year, see https://bobwessels.nl/blog/2021-03-doc5-first-book-on-european-preventive-restructuring/. In the EU, most member states need to fully overhaul their existing national insolvency systems. Not only within the limits and borders of traditional insolvency proceedings, rather restructuring opens the door to contractual notions, limits the courts’ grip on the process, involves more stakeholders in a solution to be chosen, and introduces the debtor-in-possession model. In short, a significant change in theory and practice.
UK and Ireland. In the UK, already since 2006 the scheme of arrangement has several alike functions. In addition, in 2020 with Part 26A of the Companies Act a ‘restructuring plan’ (RP) was introduced. In the book shortly announce here the author (with four other contributors) and editor Geoff O’Dea sets his full focus on UK’s main restructuring tools (scheme, RP) and (surprise) the Irish scheme of 2018. It is organised in seven parts and seventeen chapters.
Scheme of arrangement, RP and Irish scheme. Part A (with eight chapters, around 60 percent of the whole book) explains the law and practical application of the main types of creditor schemes of arrangement and restructuring plans in the UK. It analyses the tools available to market participants and other key stakeholders by reference to the capital structures most commonly seen in middle market and top tier European financings. Topics covered here are, after an introduction, among others jurisdiction and the type of companies that may propose one a scheme of arrangement, a RP or an Irish scheme, the meaning of terms and concepts to those instruments, with a focus on RPs, and matters like court hearings, procedural issues, creditor meetings, disclosure requirements, and creditor schemes, including their tax considerations. The treatment is very clear, with a wide coverage of court cases and sometime lengthy quotations from these or from legislation’s history. A wealth of court cases are used as illustration, mainly UK cases and some ten of the CJEU. The author/editor (at 2.264) is a very strong defendant of the UK courts a very wide (international) jurisdiction, not on ‘a more technical of rule-based approach’, but a ‘reasonableness / fairness-based approach’, making it a court’s job ‘… to have regard to the broader context and the effect of the judgement for the restructuring market in the UK’. This clinging ‘our law is the best law’ approach lost its supporters already in the last century. It saddles a court with a semi-political role (what is best for the UK market) and sacrifices legally defensible interests to the pure economic interests of the UK market. The book does not deserve this blemish.
Other topics. The following parts provide a comparative analysis between company voluntary arrangements, schemes and RPs. It allows the reader to deepen its understanding of the implications and differences of the various instruments. Then follow chapters covering administration and receivership sales and appropriations under the Financial Collateral Arrangements Regulations for private and public companies. The final chapters touch upon matters such as intercreditor agreements, liability management transactions, pension issues and practical aspects of restructuring documentation, including Lockup Agreements.
Is the book OK? For UK (and Ireland) insolvency practice this work will be useful reading for all insolvency and debt finance lawyers advising on financial restructurings. It certainly allows for greater understanding of the consequences of restructuring structuring and their commonly negotiated features (including debt incurrence regimes and other covenants, controls, and carve-outs), and is a welcome tool with practical and procedural illustrations and explanations, typical timelines and documents for a scheme or an RP, a wealth of drafting tips, and documentation with over ten practical tables (e.g. a summary of the Virgin Active restructuring terms) and figures. The comprehensive analysis of the new RP, for instance, will certainly also be of benefit for EU professionals.
Geoff O’Dea, Restructuring Plans, Creditor Schemes, and other Restructuring Tools, Oxford University Press 2022. ISBN 978-0-19-884474.
Note: this book I received free of charge from the publisher with the request to announce it or to review it on my blog at www.bobwessels.nl.