The Law and Practice of Restructuring in the UK and US

Cover......Page 1
Contents......Page 8
List of Contributors......Page 16
Table of Cases......Page 24
Table of Legislation......Page 38
1. Introduction......Page 46
2.1 Introduction......Page 52
2.2.1 Distressed sales in the US......Page 53
2.2.2 Distressed sales in the US outside bankruptcy......Page 54
2.2.3 Distressed sales in the US in bankruptcy......Page 57
2.3.1 Introduction......Page 65
2.3.3 Sale process......Page 66
2.3.4 Importance of valuation......Page 67
2.3.7 Limited contractual protection......Page 68
2.3.10 Purchaser perspective......Page 70
2.3.11 Seller perspective......Page 71
2.3.13 Directors’ duties......Page 72
2.3.15 Vulnerable transactions......Page 75
2.3.16 Preferences......Page 76
2.3.17 Protective measures......Page 77
2.3.18 Role of stakeholders......Page 78
2.3.19 Shadow directorship issue......Page 79
2.3.21 Shareholders......Page 80
2.3.22 Listed company shareholders......Page 81
2.3.23 Employees......Page 82
2.3.24 Pensions......Page 83
2.3.25 Regulators and competition authorities......Page 84
2.3.26 Sales within insolvency proceedings......Page 85
3.1 Introduction......Page 88
3.2.1 General issues and considerations......Page 89
3.2.2 Cash repurchases of outstanding securities and tender offers......Page 92
3.2.3 Registered, section 3(a)(9), and section 4(2) exchange offers......Page 97
3.2.4 Amendments of outstanding debt securities......Page 105
3.2.5 Prepackaged plans of reorganization......Page 106
3.2.6 Bankruptcy Code provisions and rules relating to prepackaged chapter 11 plans......Page 107
3.3.1 General issues and considerations......Page 117
3.3.2 Repurchase of publicly listed debt......Page 119
3.3.3 Cramming down using debt tender offers and covenant strips......Page 125
3.4 Conclusion......Page 131
4.1 Introduction......Page 132
4.2.1 Common buyback structures......Page 134
4.2.2 Documentation issues......Page 136
4.2.3 Other legal and practical considerations......Page 144
4.2.4 Buyback methods......Page 147
4.2.5 Alternatives to buybacks......Page 148
4.2.7 Industry group developments......Page 150
4.2.8 Recent cases......Page 152
5.1 Introduction......Page 154
5.2 Fiduciary duties of corporate directors within the context of insolvency in the UK......Page 156
5.2.1 Who owes the general duties?......Page 157
5.2.2 Determining when duties may be owed to creditors......Page 158
5.2.3 Directors’ duties at common law......Page 160
5.2.4 Directors’ statutory duties under the Companies Act 2006......Page 163
5.2.5 Directors’ statutory duties under the Insolvency Act 1986......Page 166
5.2.6 Antecedent transactions......Page 171
5.2.7 Disqualification of directors......Page 174
5.3 Fiduciary duties of directors in management of distressed corporations in the US......Page 175
5.3.1 Duty of loyalty......Page 177
5.3.3 Duty of disclosure......Page 178
5.3.4 Alternate entities......Page 179
5.3.5 The business judgment rule......Page 180
5.3.6 Fiduciary duties in the zone of insolvency......Page 181
5.4 Conclusion......Page 193
6.1.1 Waivers—temporary fixes......Page 194
6.1.2 Amendments—short- or long-term fixes......Page 195
6.1.4 Legal considerations......Page 196
6.2.1 Unanimous/super majority matters......Page 197
6.2.2 Majority lender/holder matters......Page 199
6.2.3 Negative control......Page 200
6.2.4 Disenfranchisement of certain debt holders......Page 201
6.3.2 Yank the bank......Page 202
6.4.1 Syndicated loans UK/US......Page 203
6.4.2 Bonds......Page 204
6.4.3 Fees......Page 205
7.1 Introduction......Page 208
7.2 English law......Page 209
7.2.1 Contractual compromise......Page 210
7.2.2 Voluntary arrangements......Page 212
7.2.3 Schemes of arrangement......Page 222
7.3.1 Introduction......Page 241
7.3.2 Out of court agreements between borrower and creditor(s)......Page 245
7.3.3 Prepackaged bankruptcies......Page 250
7.3.4 Chapter 15, section 304 and schemes of arrangement......Page 254
7.4 Conclusion......Page 257
8.1 Introduction......Page 258
8.2.1 Why use a formal insolvency process?......Page 260
8.2.2 An overview of chapter 11......Page 262
8.2.3 The plan confirmation process......Page 271
8.2.4 Prepackaged, prenegotiated, and free-fall chapter 11 cases......Page 274
8.3 UK prepack administration......Page 275
8.3.1 What is a prepackaged insolvency sale or ‘pre pack’?......Page 276
8.3.2 Who drives the strategy in a restructuring?......Page 277
8.3.3 Formal insolvency process......Page 278
8.3.4 Considerations for the office holder......Page 280
8.3.6 Why do stakeholders use pre packs?......Page 281
8.3.7 What is the purpose of a pre pack?......Page 284
8.3.8 What are the disadvantages of a pre pack?......Page 285
8.3.9 Issues arising in the retail sector......Page 286
8.3.11 Employee issues......Page 287
8.3.12 Regulation of pre packs......Page 289
8.3.13 Sip 16 consultation and reporting......Page 290
8.4 Conclusion......Page 291
9.1 Introduction......Page 292
9.2.1 Debt-for-debt exchanges, and significant modifications of debt......Page 294
9.2.2 Debt repurchases and related party acquisitions of debt......Page 299
9.2.3 Debt-for-equity exchanges......Page 300
9.2.4 Cancellation of debt income exceptions......Page 302
9.2.5 Change in ownership limitations on tax attributes......Page 307
9.2.6 Additional planning considerations......Page 313
9.3 UK tax......Page 314
9.3.2 Loan relationships......Page 316
9.3.3 Debt restructuring—specific cases......Page 321
9.3.4 Debt repurchases......Page 326
9.3.5 Tax consequences of a change in control......Page 327
9.3.6 Conclusion......Page 328
10.1.1 Upheaval in the global capital markets......Page 330
10.1.2 Structured finance restructurings are opportunistic......Page 332
10.2.1 Practical issues......Page 334
10.2.2 Legal issues......Page 337
10.3.1 The rise and fall of structured investment vehicles......Page 342
10.3.2 Collateralized debt obligations......Page 350
10.3.3 Commercial mortgage-backed securities......Page 363
10.4 Conclusions......Page 369
11.1 Introduction......Page 370
11.2 US......Page 371
11.3 UK......Page 373
11.3.1 Who are the shareholders?......Page 374
11.3.2 Economic interest......Page 375
11.3.4 Situations requiring a compromise of shareholder rights......Page 376
11.3.6 Balance sheet restructuring......Page 378
11.3.7 Implementation techniques......Page 379
11.3.8 Shareholder rights......Page 386
11.4 Conclusion......Page 395
12.1 Introduction......Page 396
12.2.1 Bildisco and section 1113......Page 397
12.2.2 Standards for rejection of collective bargaining agreements......Page 401
12.2.3 Effects of rejection......Page 407
12.3.1 Advantages of a strategic approach......Page 411
12.3.2 Insolvency......Page 412
12.3.3 TUPE Regulations 2006......Page 418
12.3.4 Employment relations and consultation......Page 425
13.1 Introduction......Page 436
13.2.1 Introduction......Page 437
13.2.2 Pensions legislation affecting insolvency and restructuring......Page 438
13.2.3 Apportionment arrangements and withdrawal arrangements......Page 439
13.2.4 The Pension Protection Fund......Page 440
13.2.5 The Pensions Regulator......Page 445
13.2.6 Pension scheme restructuring......Page 448
13.3 US......Page 458
13.3.1 Pensions legislation affecting insolvency and restructuring......Page 459
13.3.2 Pension termination insurance program......Page 460
13.3.3 Termination of single employer plans—involuntary or distress termination......Page 461
13.3.4 Rights of the PBGC following any plan termination......Page 469
13.3.5 363 Sale of assets by debtor......Page 471
13.3.6 Termination in violation of a collective bargaining agreement is not allowed......Page 472
13.3.8 Restoration of terminated plans......Page 473
13.4 Conclusion......Page 474
14.1 Introduction......Page 476
14.2.1 EC Regulation on insolvency proceedings......Page 479
14.2.2 Implementation of the UNCITRAL Model Law on Cross Border Insolvency Proceedings (the ‘Model Law’) in Great Britain......Page 486
14.2.3 Cross-border jurisdiction under the Insolvency Act 1986......Page 494
14.2.4 English common law......Page 496
14.3.1 Cross-border insolvencies prior to the Bankruptcy Reform Act of 1978......Page 497
14.3.2 Section 304 of the Bankruptcy Code......Page 501
14.3.3 Chapter 15 of the US Bankruptcy Code......Page 504
14.4 Conclusion......Page 519
B......Page 520
C......Page 521
E......Page 523
F......Page 524
M......Page 525
P......Page 526
R......Page 527
S......Page 528
U......Page 530
W......Page 533
Z......Page 534