England and Wales: a Landmark Year for Legislative Reform

In summary

This year will be remembered as one of the most significant in English restructuring practice. From a legislative perspective, the Corporate Insolvency and Governance Act (CIGA), which came into force on 26 June 2020, introduced important changes to the English restructuring toolkit. This chapter considers the key restructuring mechanisms available under English law, with a focus on the changes introduced by the CIGA.

Discussion points

• The CIGA introduced permanent changes to the English restructuring toolkit: a ‘free-standing’ moratorium; a new restructuring plan; and restrictions on the ability of suppliers to rely on termination clauses triggered by counterparty insolvency.
• Other English restructuring tools remain unchanged, namely schemes of arrangement, company voluntary arrangements, administration, receivership and liquidation.
• Further reforms are pending, in particular in respect of pre-pack administrations.

Referenced in this article

• Corporate Governance and Insolvency Act 2020
• Companies Act 2006
• Insolvency Act 1986
• Virgin Atlantic Airways, restructuring plan under Part 26A of the Companies Act 2006
• Pizza Express, restructuring plan under Part 26A of the Companies Act 2006

Background

Following government consultations in 2016 and 2018 on reform to English insolvency frameworks, the onset of the covid-19 pandemic in the first few months of 2020 ensured that reform returned to the top of the legislative agenda. The Corporate Insolvency and Governance Bill was published on 20 May 2020, and it passed quickly through the legislative process with limited amendments, before coming into force just over five weeks later.

Given the speed of implementation of the Corporate Insolvency and Governance Act (CIGA),^[1] areas that are unclear or where the practical application is unsatisfactory may be subject to amendments in the future. In the meantime, the English restructuring community continues to digest the new legislation, and the English courts have started to put the new tools to the test, most notably with the Virgin Atlantic Airways restructuring plan, which was sanctioned in early September.^[2]

Moratorium

The CIGA introduced a new moratorium to provide distressed but viable companies with breathing space from creditor action to facilitate a rescue of the business as a going concern or a restructuring. As a freestanding process, it does not have to be combined with an insolvency or restructuring procedure, and there is no requirement to have a particular outcome in mind when commencing the moratorium.

A moratorium is available to certain companies where:

• the directors provide confirmation in documents filed with the court that the company is, or is likely to become, unable to pay its debts; and
• the ‘monitor’, a licensed insolvency practitioner who supervises the moratorium, confirms that it is likely that the moratorium would result in the rescue of the company as a going concern.

Although the directors remain in control of day-to-day operations, the monitor scrutinises the company and the directors for the duration of the moratorium, assessing whether it is likely that the moratorium will result in the rescue of the company as a going concern. The monitor’s consent is required for certain transactions, including non-ordinary course disposals, any grant of security and payment of certain debts in excess of a de minimis threshold.

Restrictions on creditor actions

While the moratorium is in place, there are restrictions on the enforcement of pre-­moratorium debts (indebtedness incurred by the company before the moratorium) and moratorium debts (indebtedness incurred by the company during the moratorium).

Pre-moratorium debts are subject to a payment holiday except for in the case of listed exceptions. Key exclusions are capital markets arrangements, bank debt and certain other financial obligations, contracts secured by a financial collateral arrangement, rent, goods and services, salary payments and expenses of the monitor.

No administration may be commenced, no winding-up petition shall be presented, and no winding-up order may be made unless initiated by the directors of the company. Unless court permission is obtained, no forfeiture or re-entry rights may be exercised, no steps may be taken to commence or continue a legal process (other than certain employment-related proceedings), no floating charges will crystallise (subject to certain exceptions), and creditors are unable to enforce security over the company’s property (except for certain financial collateral).

Excluded companies

Companies that are subject to either ongoing or recent (within the past 12 months) insolvency proceedings are excluded from using the moratorium, as are companies for which a moratorium is already in force or was in force during the past 12 months. Other companies excluded from the moratorium include, among others, insurance companies, certain financial institutions and any company that is party to a capital market arrangement.

A capital market arrangement is an arrangement in excess of £10 million in value, where a company has provided security to a trustee or agent, guaranteed or secured the obligations of another party, or invested in certain options, futures or other derivatives, in each case under a capital markets instrument. This means that there are many companies, particularly those in the mid- and large-cap sector of the market with a significant amount of outstanding bonds, that will not have access to the moratorium.

Exclusions from the payment holiday

The payment holiday does not apply to pre-moratorium debts arising under contracts for ‘the provision of financial services consisting of lending’. This means that most bank facilities are excluded from the payment holiday.

Most facility agreements (including the Loan Market Association facility agreements) provide that a moratorium is an event of default. Upon an event of default, nothing in the CIGA prevents lenders’ rights to accelerate the debt or claim any rights of set-off. Where excluded debts are accelerated, the company must be in a position to settle these as they fall due; otherwise, the monitor is obliged to end the moratorium, and lenders would be able to enforce their security in accordance with the terms of their financial agreements.

Other financial obligations, such as guarantees, derivatives, factoring and finance leasing, are also excluded from payment holidays. The moratorium does not extend to financial collateral arrangements.

In practice, these exclusions limit the usefulness of the moratorium for many companies.

Super-priority

Unpaid moratorium debts and priority pre-moratorium debts are granted super-priority status in a subsequent liquidation or administration (or protection from compromise in a restructuring plan, company voluntary arrangement or scheme) commencing within 12 weeks of the end of the moratorium. Priority pre-moratorium debts are, generally speaking, unpaid pre-moratorium debts that are not subject to a payment holiday. However, the definition of priority pre-moratorium debts specifically excludes any amount under a financial contract that, between the date of the monitor’s statement regarding the likelihood of rescue and the end of the moratorium, fell due because of acceleration or early termination.

This raises an interesting distinction between the treatment of term loans and revolving credit facilities (RCFs). If a term loan is accelerated or subject to early termination during the moratorium, lenders would not benefit from subsequent super-priority or protection from compromise. In contrast, if a payment falls due under an RCF during the moratorium, and that payment remains unpaid and the RCF is not rolled over, then the lenders would benefit from super-priority or protection.

Duration

The moratorium provides a company with an initial breathing space of 20 business days. Subject to satisfaction of certain conditions (including payment of all moratorium debts and pre-moratorium debts for which the company does not have a payment holiday), the directors may file for an extension of a further 20 business days. For companies seeking an extension, finding the liquidity to repay relevant debts and benefit from this extension may be challenging. Any extension beyond 40 business days will require the consent of the company’s pre-moratorium creditors (among other conditions) or the court. The moratorium may last for up to a year.

The moratorium will terminate if the company enters into administration or liquidation, or if a scheme or plan is sanctioned. The monitor may terminate the moratorium if it concludes that it is no longer likely to result in the rescue of the company as a going concern, that a rescue has been achieved, that the company is unable to pay its debts that have fallen due, or if the monitor is unable to carry out its duties.

Scheme of arrangement

A scheme of arrangement (scheme) is a procedure set out in the Companies Act 2006, pursuant to which the English court sanctions a compromise or arrangement between a company and (i) its creditors, or any class of them, or (ii) its members, or any class of them. The company decides which creditors (whether secured or unsecured), or which members, are to be subject to the proposed compromise or arrangement.

Schemes have become a popular restructuring tool in the English market over recent years and are used by both English and certain non-English companies to implement a broad range of restructuring transactions, from a simple ‘amend-and-extend’ transaction through to a debt-for-equity deal.

Creditors or members who are subject to the proposed compromise or arrangement either vote together in a single class or vote in separate classes. At a convening hearing, which takes place shortly after the scheme process is commenced, the court is asked to consider the question of whether one single class or multiple classes is required. Broadly speaking, the court will follow the principle that stakeholders should vote together in the same class where their rights, both pre-scheme and post-scheme, ‘are not so dissimilar as to make it impossible for them to consult together with a view to their common interest’. Having considered certain questions, including classes, the likelihood of the scheme succeeding and whether the English court has jurisdiction, the court will order that the relevant meeting or meetings are held.

A scheme is approved by a majority in number representing 75 per cent in value of the members or creditors (or of each class of members or creditors) who vote in person or by proxy at the relevant meeting or meetings.

After the meetings are held, the company returns to the court to seek its sanction of the scheme. At this ‘sanction hearing’, the court will consider a broad range of issues, including whether the scheme is fair and reasonable and whether the majority that has approved the scheme has acted in a bona fide manner. If sanctioned by the court at the sanction hearing, the scheme is binding on all creditors and members, or classes of creditors and members, who were convened to vote on the scheme.

A scheme does not have an automatic stay or moratorium, although it can be combined with the moratorium discussed above or used in parallel with an administration, giving the company the protection of the administration’s moratorium.

The process requires a period of at least six weeks from the date upon which application is made to the court for the convening hearing. This date is preceded by a preparatory phase, during which the company and stakeholders negotiate the terms of the scheme, documentation is finalised, and supporting stakeholders enter into a lock-up or restructuring support agreement.

Non-English companies

Non-English companies can access the scheme process by demonstrating ‘sufficient connection’ with the jurisdiction. This can be achieved in a number of ways, most commonly by compromising English law debt (or amending the governing law of debt to English law), the accession of an English co-borrower or co-issuer, or moving the centre of main interests (COMI) of a company to England.

Recognition of schemes overseas

When considering whether to sanction a scheme, the English court assesses evidence on the likelihood of the scheme being recognised in relevant jurisdiction; if recognition is unlikely, the court may decide against sanctioning the scheme.

Seeking Chapter 15 recognition in the United States is common, for example, where New York law governs certain compromised debts. Schemes are not automatically recognised by EU jurisdictions under the European Insolvency Regulation.^[3]

Restructuring plan

The CIGA introduced the restructuring plan (the Plan) to assist eligible companies in reducing, preventing, mitigating or eliminating actual or anticipated financial difficulties.

The Plan is similar to the scheme in many respects, including in respect of process, class composition and timeline, which has led to certain commentators referring to the new procedure as the ‘super-scheme’. As in the case of a scheme, it is not an Insolvency Act procedure but instead is included in the Companies Act 2006. However, there are a number of key differences.

• The Plan introduces cross-class cramdown, inspired by US Chapter 11 proceedings. This means that, subject to meeting two conditions, stakeholders in dissenting classes are bound by the Plan, even if not voting in favour. To ‘cram down’ the dissenting classes, at least one class that would receive a payment under the Plan, or would have a genuine economic interest in the context of the ‘relevant alternative’, must have voted to approve the Plan. No member of the dissenting classes should be any worse off under the Plan than they would otherwise be under the relevant alternative.
• Whereas a scheme requires approval by 75 per cent in value and a majority in number of creditors or members in each class, the Plan does not have the majority in number requirement. This means that, compared with the scheme, it is less likely that a high volume of creditors with low-value debt can block a Plan. However, the 75 per cent threshold is higher than the 66.66 per cent threshold under Chapter 11, or under the forthcoming ‘Dutch Scheme’.
• The company proposing the Plan should have experienced, or be likely to experience, financial difficulties that affect, or will or may affect, its ability to continue operations as a going concern.

Cross-class cramdown is an important development as supporting creditors can now work with the company to flush or dilute existing equity or certain classes of creditors. Under Chapter 11 proceedings, the absolute priority rule ensures that the claims of a dissenting class must be satisfied in full before a more junior class can make a recovery. This feature has not been included in the CIGA, which means that it should be possible to ‘cram up’ whereby junior classes of stakeholders could work with the company to cram down a senior class; however, in practice, this may be difficult as the court will need to be satisfied that the senior class is no worse off than in the relevant alternative, and that the junior class has a genuine economic interest in respect of the relevant alternative.

Any creditor or shareholder whose rights are affected by the proposed Plan is permitted to vote at the meeting of the relevant stakeholder class. Crucially, creditors or shareholders can be excluded from the voting process if the court is satisfied that they do not have a genuine economic interest. This means that out-of-the-money stakeholders, such as shareholders in a deeply distressed business, are not required to approve a Plan.

Determination of whether a stakeholder has a genuine economic interest will require the court to consider what is the appropriate relevant alternative (ie, the scenario that the court considers most likely to occur in the absence of a court-sanctioned Plan). The court may be presented with differing alternatives by opposing stakeholders, and it must determine which scenario is the most appropriate.

In considering which is the relevant alternative, the court considers relevant valuation evidence. Having established the relevant alternative and appropriate valuation, the court can ascertain which stakeholders have a genuine economic interest. Although it is common for US courts to make valuation determinations in Chapter 11 cases, this is relatively unchartered territory for the English courts, which have rarely been required to consider valuation evidence in detail.

As with schemes, non-English companies can use the Plan if they can demonstrate that they have a sufficient connection to the English jurisdiction. Following scheme practice, the English court assesses evidence on the likelihood of the plan being recognised in relevant jurisdictions. This means that, at the time of writing, the Plan shares the same uncertainties as the scheme in respect of recognition in EU member states after the end of the Brexit transition period.

Company voluntary arrangement

Unlike a scheme, or a restructuring plan, both of which are Companies Act procedures, a company voluntary arrangement (CVA) is an insolvency process pursuant to the Insolvency Act 1986 (the Insolvency Act). A CVA involves an arrangement between the company, its shareholders and certain of or all its unsecured creditors. A licensed insolvency practitioner supervises a CVA, but no court involvement is required unless there is a challenge.

Although a CVA can be used to write down debt, extend maturities or reach some other form of debt compromise or arrangement, it cannot be used to compromise secured creditors (except with their express consent), meaning that it is rarely used for financial restructurings. However, it is often used to compromise leasehold obligations and, in recent years, has been a popular means for retailers and hospitality chains to reduce their leasehold liabilities to sustainable levels. As these sectors have been disproportionately impacted by the pandemic, this trend looks set to continue.

A CVA is proposed by the company for approval by the relevant unsecured creditors and members. Unlike a scheme or restructuring plan, there is no class separation. A CVA requires 75 per cent of creditors in value to vote to approve the arrangement, but the resolution will be invalid if creditors representing more than 50 per cent of creditors unconnected to the company voted against the proposal. The CVA binds all unsecured creditors that were entitled to vote on the arrangement. Creditors can challenge a CVA on grounds of material irregularity or unfair prejudice within 28 days of reporting approval of the CVA to the court.

To be eligible for a CVA, a company should:

• be registered under the Companies Act 2006 in England, Wales or Scotland;
• be incorporated in a member state of the European Economic Area with an English establishment; or
• if not incorporated in an EEA member state or registered under the Companies Act 2006, have its COMI in an EEA member state (other than Denmark).

A CVA is an insolvency process for purposes of the EU Insolvency Regulation, meaning that until the end of the Brexit transition period (which runs to 31 December 2020), a CVA is automatically recognised in EU member states. However, the withdrawal agreement anticipates that at the end of the Brexit transition period, the Insolvency Regulation will no longer apply, meaning that CVAs will not benefit from automatic recognition.

Administration

Administration is a rescue procedure available under the Insolvency Act, pursuant to which a qualified insolvency practitioner, known as the administrator, is appointed to take control of the relevant company. Once appointed, the administrator aims to achieve one of the objectives set out in the Insolvency Act.

The first objective is to rescue the company on a going concern basis. If this is unachievable, the second objective is to achieve a better result for the creditors of the company as a whole than the result that would likely be achieved by putting the company into liquidation. If this is also unachievable, the third objective is to realise the company’s property for distribution to the company’s creditors.

To enter administration the company must be insolvent or likely to become insolvent (unless the administrator is appointed by the holder of a qualifying floating charge). To be eligible, a company must be a company:

• registered under the Companies Act;
• incorporated in an EEA member state with an English establishment; or
• not incorporated in an EEA member state but having its COMI in an EEA member state (other than Denmark).

It is also possible for companies incorporated in former Commonwealth jurisdictions to access the process.

A company enters administration either by court order, which can be at the request of certain persons, including a creditor, the company, a director of the company and certain insolvency officials under other insolvency processes, or through an out-of-court procedure by filing a notice of intention to appoint an administrator. The latter can be filed by the relevant company, the director of the company or the holder of a qualifying floating charge.

An automatic moratorium freezing creditors’ rights, including security enforcement rights, is imposed for the duration of the administration process, starting from the application to court for the appointment of an administrator or notice of intention to appoint an administrator.

The Insolvency Act grants a statutory power to holders of a qualifying floating charge to have an administrator appointed without needing a court order. A qualifying floating charge is a floating charge over all or substantially all the debtor’s property and that, by its terms, states that it intends to take effect as a qualifying floating charge for purposes of the relevant provisions of the Insolvency Act.

Pre-packs

A popular variation on the administration process is the pre-packaged administration or pre-pack. A sale of the whole or part of the company’s business is arranged before the administrator is appointed, and the sale is effected immediately upon, or shortly after, the appointment. The purchaser is often a connected party, and a common technique is for ‘in the money’ creditors or secured creditors to form a purchaser vehicle. This ‘newco’ will purchase the business, or parts of the business, in consideration for assuming some of the outstanding debt, effectively ‘right-sizing’ the capital structure.

Junior ‘out of the money’ creditors are left behind in the old structure. Key employees and contracts are typically transferred to the newco, which can be an effective means of preserving goodwill and ensuring that the business continues on a going-concern basis.

Pre-packs are a popular rescue mechanism, but they have long been subject to criticism, with concerns raised on transparency and whether a pre-pack sale is always in creditors’ best interests. On 8 October 2020, the government announced the publication of draft legislation^[4] that will require mandatory independent scrutiny of pre-pack sales, where connected parties, such as the insolvent company’s existing directors or shareholders, are involved in the transaction.

Liquidation

Liquidation, also referred to as winding-up, is a court-based procedure set out in the Insolvency Act, pursuant to which a qualified insolvency practitioner, known as the liquidator, is appointed to realise the assets of a company and distribute the proceeds to stakeholders. Upon entering into liquidation, most businesses immediately cease trading. Once the liquidation process is complete, the company is dissolved.

There are two procedures: compulsory liquidation or voluntary liquidation. A voluntary liquidation can be a members’ voluntary liquidation (MVL) or a creditors’ voluntary liquidation (CVL).

Compulsory liquidation

Compulsory liquidation is commenced by the filing of a winding-up petition with the court, most likely by a creditor, but it is also possible for the company or one of its directors to file. A hearing is scheduled, but a provisional liquidator can be appointed by the court for the interim period, with the objective of preserving the assets of the company.

At the hearing, the court will decide whether to make a winding-up order, and it must be satisfied that one of the grounds for winding up is fulfilled. The grounds are usually that the company is unable to pay its debts as and when they fall due.

Once a winding-up order is made, the company’s creditors can appoint their own liquidator; otherwise, the Official Receiver is appointed as liquidator. There are various Official Receiver offices in England and Wales, each of which is attached to certain courts.

There is no moratorium on enforcement of security under compulsory liquidation; however, unless leave of the court is granted, there is an automatic stay in respect of the commencement or continuation of proceedings against the company.

Voluntary liquidation

The key difference between an MVL and CVL is whether the directors have made a statutory declaration of solvency, whereby they state that, having made a full enquiry into the affairs of the company, they are satisfied that the company will be able to pay its debts in full, including any official interest, within a period specified in the declaration that is not to exceed 12 months from the start of the winding up. If all the creditors are not repaid within this period, directors who have made a statutory declaration may be subject to a fine or imprisonment.

If the directors are able to give the declaration, the voluntary liquidation is an MVL or a solvent liquidation; otherwise, the voluntary liquidation is a CVL. There is no automatic moratorium in respect of proceedings against the company, although the liquidator, any creditor or any shareholder can apply to the court for a stay.

MVL

Pursuant to an MVL, all creditors of the company are paid in full, with the balance of proceeds or assets returned to the members of the company. An MVL commences with members of the company passing a special resolution that the company should be wound up. At the general meeting where the special resolution is considered, members also resolve to appoint one or more liquidators. Once the liquidators are appointed, the powers of the directors cease.

CVL

A CVL commences with members of the company passing a special resolution that the company should be wound up. At the relevant general meeting, members will also nominate one or more liquidators. Under a CVL, all creditors of the company are unlikely to be paid in full, and no statutory declaration by the directors is required. As a result, when compared to an MVL, creditors have greater control over the process, including the right to nominate a liquidator and greater access to information.

Receivership

Receivership is a self-help enforcement remedy that is available to certain secured creditors to protect their interests in certain assets. The process involves the appointment of a receiver of which there are two types: a Law of Property Act (LPA) or fixed charge receiver, and an administrative receiver.

An LPA or fixed charge receiver is appointed pursuant to the relevant security document. In the case of a mortgage, the receiver’s powers are derived from the Law of Property Act 1925. In respect of other fixed charge security, the powers are expressly set out in the security document. LPA or fixed charge receivership is typically used to sell land, shares or other fixed single assets.

An administrative receiver is appointed pursuant to the relevant security document, where the security comprises a floating charge over the whole or substantially the whole of the company’s property. An administrative receiver has wider powers than an LPA or fixed charge receiver; it will take custody of the secured asset and the company’s business, and then will oversee the disposal of the relevant assets to satisfy the secured obligations. However, the use of administrative receivership was significantly curtailed after the Enterprise Act 2002, meaning that it is now rarely used in practice.

Other CIGA changes: restricting reliance on termination clauses

Many commercial contracts include ipso facto clauses, whereby a supplier is permitted to terminate a contract upon the insolvency of the relevant counterparty. Pre-CIGA, English insolvency legislation prohibited suppliers of essential supplies (ie, electricity, gas, water, communications and IT services) from enforcing ipso facto clauses.

The CIGA broadens the scope of this prohibition to include all contracts for the supply of goods and services, with the objective of ensuring continuity of supplies for distressed businesses and assisting continuity of operations. The prohibition extends not only to termination of the relevant contract but also termination of supply. The grounds for termination that are covered by the CIGA prohibition include the Plan and the moratorium, as well as existing English insolvency procedures; however, termination clauses triggered by schemes are not captured.

Suppliers are not permitted to make continued supply of goods and services conditional upon payment of outstanding amounts for supplies made before the insolvency trigger. Suppliers are also prohibited from increasing pricing or introducing new payment terms as a result of the insolvency trigger.

Should rights to terminate the contract have arisen before the relevant insolvency trigger event, but were not subsequently exercised, termination after the occurrence of the insolvency trigger event is prohibited. However, once the insolvency trigger event has occurred, suppliers can terminate a contract on other contractual grounds, such as non-payment or breach of contract.

Suppliers benefit from certain safeguards. A supplier can apply to the court for permission to terminate the contract on the grounds of hardship caused to its own business. A contract can also be terminated with agreement of the company (where the company has entered a moratorium, voluntary arrangement or restructuring plan) or the office holder (in any other relevant procedure).

In addition, if a business or assets are transferred into a newco structure as part of a restructuring, suppliers do not have to supply the newco. The CIGA includes carve-outs for financial services, meaning that insolvency events of default in finance documents are not impacted.

Looking ahead

The role of the English court

The CIGA only sets out a legislative framework. The English court will be instrumental in the months and years ahead in testing and developing how the new legislation is used. For example, while there is a significant body of case law in relation to schemes, much of which will be pertinent to the Plan, new issues and challenges will arise. In particular, the English court will need to consider valuation evidence in relation to the Plan. We expect that in many situations, competing valuations will be presented to the court, and, as often seen in Chapter 11 proceedings, the courts will be involved in resolving valuation disputes.

Brexit

Upon the end of the Brexit transition period on 31 December 2020, the EU Insolvency Regulation will cease to apply in England and Wales. After this date, it is not clear whether, or how, English insolvency procedures will be recognised in EU member states. The position is similar in respect of the automatic recognition of English judgments, such as those relating to schemes or a restructuring plan. This could mean that English restructuring tools become less attractive to European companies.

DIP financing

Chapter 11 permits debtor-in-possession (DIP) financing, which is used to fund the business during the course of the Chapter 11 proceedings. Lenders under DIP financing may be secured on a super-prime basis, provided that other secured creditors consent, or if the company can show that financing was unavailable on better terms, and the other secured creditors are ‘adequately protected’.

The CIGA has not introduced a DIP regime, meaning that any new funding must fit within the framework of the existing debt documentation. However, approval may be sought pursuant to the Plan for new priming debt, and the government has indicated that DIP financing legislation may be forthcoming.

Pre-pack reform

In early October 2020, the government announced the publication of draft legislation requiring mandatory independent scrutiny of pre-pack sales, where connected parties are involved in the transaction. It is expected that the new legislation will be introduced as soon as parliamentary time allows and, in any case, before the June 2021 deadline.^[5]

Conclusion

Until recently, many jurisdictions lacked tried and tested restructuring tools. This has meant that English procedures such as schemes, or Chapter 11 proceedings in the United States, have become very popular with non-English or non-US companies seeking to restructure.

A number of European jurisdictions have or are about to introduce new restructuring procedures. Eligible European companies will be more likely to restructure in a European jurisdiction. With competition from those jurisdictions, we may see fewer European companies looking to the English courts as a forum for their restructurings, especially as, post-Brexit, seeking recognition in European jurisdictions is likely to add procedural complexity.

In the context of this increased competition, the changes introduced by the CIGA are welcome. They strengthen the English restructuring regime; certain features of Chapter 11, such as cross-class cramdown, are now available for both English companies and overseas companies that can demonstrate a sufficient connection. While Chapter 11 will remain a popular tool for cross-border restructurings, and certain European companies may choose to use new restructuring tools available in their jurisdictions of incorporation, the English jurisdiction will remain a pre-eminent forum to restructure a business.

Notes