Counsel to Virgin Atlantic in the first-ever UK restructuring plan under Part 26A of the Corporate Insolvency and Governance Act
|Global head of restructuring and insolvency:||Ian Field|
|Partners in restructuring team:||71|
|Restructuring lawyers in Who’s Who Legal:||9|
History of the practice
Allen & Overy’s (A&O) restructuring and insolvency (R&I) team was established in the late 1980s by Philip Wood CBE QC, a senior figure in the finance department who was conscious that the firm did not have an R&I practice to speak of at the time.
Wood, now an A&O veteran of over 50 years, saw that the firm’s finance and corporate departments were advising on deals increasingly financed by aggressive borrowing, and sensed turbulent economic times ahead. In April 1989, A&O hired a team of three – Peter Totty, Gordon Stewart and Nick Segal – from competitor Cameron Markby (now CMS) to start the practice in London. Segal is now a member of Erskine Chambers and a judge in the Grand Court of the Cayman Islands.
Since those beginnings – and fuelled by the Asian financial crisis of the 1990s, the collapse of the dot-com bubble in the early 2000s and the global financial crisis of 2008 – A&O’s R&I practice has expanded into continental Europe, the US and Asia.
Today, A&O boasts a global restructuring team of more than 215 lawyers across 44 offices worldwide. The group is anchored by a core set of 12 partners in London, led by the head of the global restructuring group and former president of the Insolvency Lawyers Association, Ian Field; and the managing partner of the London restructuring group, Earl Griffith. Other names to know on the team include long-serving partners Jennifer Marshall and Katrina Buckley.
Elsewhere, the firm has a significant presence in Frankfurt, where the restructuring group is led by Franz Bernhard Herding; with other notable teams in Paris, Milan, Madrid, Amsterdam, Luxemburg, Warsaw, Bratislava, Istanbul and Moscow. In August 2020, the firm also established a new restructuring presence in the Czech Republic.
From Hong Kong, partner Richard Woodworth leads the Asia-Pacific restructuring group, which has people stationed in Sydney, Singapore, Jakarta, Tokyo, Myanmar, Bangkok, Vietnam, Abu Dhabi, Doha, Dubai and Saudi Arabia.
A&O also has an associated office in the China (Shanghai) Pilot Free Trade Zone, which it runs with local law firm Lang Yue. In January 2021, the association set up a new office in Beijing with a team from Fangda Partners led by Melody Wang.
Ken Coleman – known as “Mr section 304/Chapter 15” within A&O for his cross-border recognition work – leads the US team in New York, which he helped set up in the early 2000s with former partner turned-CRO and director of struggling companies David Frauman.
Who uses it?
The team has a diverse client base, but primarily serves creditors and lenders across a wide range of sectors. The firm acted for the coordinating committees of lenders in the restructuring of British steel trader Stemcor, and in the US$3.5 billion financial restructuring of UK-based hydrocarbons producer Premier Oil. It has also worked for a group of loan facility and bonding facility providers on the financial restructuring of UK public services contractor Interserve, and for a committee of creditors of South African conglomerate Steinhoff International Holdings and its European arm, Steinhoff Europe.
Indeed, it has become a go-to firm for funds, banks and facility or security agents on the creditors’ side of UK high street retail restructurings and insolvencies in particular, including in those of the baby products seller Mothercare, department store Debenhams and fashion chain New Look.
A host of international banks have turned to A&O for advice on resolutions and recapitalisations, including the Co-operative Bank in the UK (which A&O later also helped to separate from the wider Co-operative Group); Greek banks Piraeus Bank and the National Bank of Greece; Russian Standard Bank; and Portugal’s Banco Internacional do Funchal (Banif) and Novo Banco.
In the fast-growing Middle East market, A&O was instructed by the coordinating committee of lenders appointed in the huge restructuring of Abu Dhabi construction, engineering and shipping conglomerate Al-Jaber Group; and by the creditors’ committee on the restructuring of the Dubai World investment company.
Abraaj Holdings, the Cayman parent of a UAE asset manager accused of misuse of funds, and its provisional liquidators from PwC in Cayman, London and Dubai, also instructed A&O as international counsel alongside a team from Milbank to oversee the group’s global restructuring efforts.
Clients on the debtor’s side include Ukraine’s largest steel and iron group, Metinvest, and international shipping groups Hanjin and Vroon.
EY (as monitor in various Canadian proceedings) and PwC (as administrators to UK mobile retailer Phones 4u) are among A&O’s professional services clients.
Historic track record
The R&I practice picked up some major cases right from the off, working on the £1 billion (US$1.2 billion) collapse of the Maxwell business empire in the early 1990s, as well as the restructuring of London’s Canary Wharf property development and the £1 billion rescue of indebted British development company Heron.
Notably, in early 2015 it pioneered the first use of an English scheme of arrangement for a Polish corporate, acting for Polish and international lenders in the US$590 million restructuring of Celsa Huta, a borrower within a large European steel manufacturing group.
Other “firsts” the team oversaw include the UK’s first consensual bail-in of subordinated debt in the resolution of the Co-operative Bank, and the first use of “lite” schemes of arrangement to preserve the status quo while an entity negotiates with creditors. The latter allowed A&O and co-counsel Baker McKenzie to help Ukrainian steel giant Metinvest complete a US$2.2 billion restructuring in 2017 – a deal that won the award for innovation in cross-border restructuring and insolvency at the inaugural GRR Awards the same year.
More recently, Frankfurt-listed fashion retailer Gerry Weber’s holding company tapped a cross-border team led by A&O partners in Germany for its self-administration proceedings that began in January 2019 and led to a rescue sale by distressed investors six months later. Describing the case as “one of the most complex restructuring projects in the German market”, the firm said it involved 130 individual Schuldschein creditors and more than 20 bilateral working capital providers; included novel tailor-made solutions for different classes of creditors that led to a 99% approval rate; and preserved exit options for investors and creditors through maintaining the company’s stock exchange listing, which was a legal first for Germany.
Where sheer scale is concerned, A&O acted for secured creditors in the insolvency of the OW Bunker group – formerly the world’s largest bunker supplier – in a case that witnessed more than 1,000 claims in 21 jurisdictions, and called on the advice of A&O teams in 11 different offices. Lawyers in Europe, Singapore and New York arrested more than 200 ships around the world to obtain payment of outstanding receivables or security, and reached bilateral compromises with insolvency practitioners in various jurisdictions to realise assets.
The firm also acted in the US$2.2 billion restructuring of Drydocks World, one of the largest shipyards in the Middle East, which was achieved by a consensual deal while the parties were trying to implement five inter-conditional company voluntary arrangements and five English schemes. The firm acted for a group of lenders and Standard Chartered Bank as global facility and security agent. The deal was the fifth restructuring of an entity belonging to the government-owned Dubai World group since the global financial crisis, and the fifth time that A&O has acted for creditors in one of those transactions.
Finally, the firm acted as international co-counsel to Turkish firm Gedik & Eraksoy in what it says was the largest restructuring in Turkish history. Together, they advised the coordinating committee of Ojer Telekomünikasyon, whose US$5.1 billion reorganisation was completed by allowing creditors to take control of its 55% stake in Turkish telecoms company and part state-owned asset Türk Telekomünikasyon. To effect the change in ownership, a different A&O team also acted for Citicorp Trustee Company as security agent in the largest-ever security enforcement in Turkey, and another set of partners worked for GLAS as new facility agent in the deal.
A&O lost the head of its global corporate lending group, partner Trevor Borthwick, to Mayer Brown in London in April 2020. In the summer of 2020, two London partners with decades of experience, Tim Crocker and David Lines, also both retired from the firm’s partnership.
At around the same time, however, it hired partner David Walter in Sydney from Baker McKenzie, noting it was part of a planned expansion in the Asia-Pacific region. The firm also opened an office in the Czech Republic, with the hire of counsel Petr Sprinz from Havel & Partners in Prague.
During the research period and beyond there were some significant personnel changes in Allen & Overy’s Johannesburg office, which launched back in 2014 when London-based partners Michael Duncan and Kathleen Wong relocated to the city to establish the firm’s restructuring practice in South Africa, along with new hire Lionel Shawe – then local firm Bowman Gilfillan’s banking head. Duncan resigned from being a member at Allen & Overy in April 2020, while Shawe left for White & Case in May 2021. Wong also returned to London during the research period. Before the departures, Khurshid Fazel, another partner in Johannesburg who’d joined with Shawe, left for Webber Wentzel and became its new restructuring head in May 2020.
On the promotions front, Nick Charlwood in London Viola Jing in Hong Kong and Adam Fadian in Istanbul made partner in April 2021.
Just as the GRR 100 2021 was going to press, Allen & Overy lost partner Christopher Kranz in Frankfurt and two associates to Simmons & Simmons.
Top five cases of the research period
The firm A team led by Griffith, Marshall and partner Nick Clark acted as counsel to Virgin Atlantic in the first ever UK restructuring plan under Part 26A of the new Corporate Insolvency and Governance Act that came into force in June 2020. The team successfully structured, negotiated, launched and implemented the £1.2 billion (US$1.7 billion) plan – all while working virtually in covid lockdown – to save the international airline from insolvency. They even lobbied the UK government to remove certain sections of the Act while it was still a bill, which could have scuppered the restructuring and others. Once the English High Court approved the plan in September 2020, the team successfully obtained the first recognition of the new UK instrument in New York under Chapter 15.
In another Part 26A restructuring plan on the debtor side, Buckley led a team advising Swiss airline services provider gategroup as it set up new English-incorporated company to restructure Swiss bonds, shifted the bonds’ Luxembourgish issuer’s centre of main interests to the UK, and made them both enter an English-law governed contribution payment agreement with other group entities to ensure the plan company could pay bondholders on the issuer or Swiss parent’s behalf. An English judge approved the plan in March 2021, after an additional provision was added to it stating that bondholders would appoint the company to take whatever steps necessary to implement the bond amendments in Switzerland. In the course of the court proceedings, gategroup’s counsel successfully persuaded the English court that a restructuring plan falls within the insolvency exclusion to the Lugano Convention.
Field also led a multi-jurisdictional team on the US$1.9 billion restructuring of international oil and gas services group KCA Deutag, working with local co-counsel in Oman, Norway, Saudi Arabia and Scotland. The restructuring was completed through a debt-for-equity swap and a US$500 million new notes issuance via an English scheme of arrangement, plus parallel amendment and continuation of various facilities under an old revolving credit facility. To implement the restructuring through a single court process, various entities in the group signed a deed of contribution to facilitate a “guarantor scheme”, which also became the first English scheme to compromise an overdraft facility. As with the Virgin Atlantic case, A&O obtained Chapter 15 recognition of the completed scheme in the US.
The firm acted on transactions related to Premier Oil’s restructuring, with London partners Nick Lister and Hannah Valintine advising a coordinating group of bank creditors on an amend and extend proposal in early 2020 that was challenged in Scotland. The banks appeared in support of Premier Oil, which successfully defended the proposal, opening the way for its interconditional reverse takeover of independent North Sea oil and gas company Chrysaor in October 2020. The transaction, on which A&O provided local advice to the banking clients in respect of Dutch, German, Indonesian and Vietnamese law, created the largest independent oil and gas company listed on the London Stock Exchange and allowed Premier Oil to partially repay creditors and partially award them equity in the merged business. Dual Scottish restructuring plans under Part 26A were used to implement the financial restructuring portion of the deal – the first such plans to be sanctioned in Scotland.
With Roschier as Swedish counsel, the firm represented a syndicate of distressed debt funds and banks as RCF lenders to oil and bitumen products manufacturer Nynas Group, in a Swedish composition process and consensual restructuring with financial creditors. The €1.5 billion restructuring included a partial debt write-down, the restructuring of the RCF, and a crude supply loan divided into two senior facilities and two hybrid subordinated perpetual loan agreements that had to be structured as equity to contribute to the group’s balance sheet deleveraging. There was also a new bespoke intercreditor agreement, new guarantee and security package across six jurisdictions. A&O said the fact Nynas’ former majority owner was Venezuelan oil company PdVSA, which was subject to US sanctions, made the case’s complexity even trickier.
After the research period ended, the firm received a major instruction as counsel to Grant Thornton partners as UK and Australian administrators to the disgraced trade financing group Greensill. Buckley, Field and partner Joel Ferguson are leading that mandate from London, with Walter acting on it from Sydney. Partner Laura Hall in New York, meanwhile, is representing Greensill Capital UK in recognition proceedings and defending it in district court litigation before in New York, while partners Alexander Behrens and Sven Prüfer in Frankfurt are acting as German counsel to Greensill Bank in its own administration proceedings.
Its success for Virgin Atlantic also saw the firm retain an instruction for gym chain Virgin Active, helping it gain approval for a trio of heavily contested restructuring plans, which witnessed the second-ever cross-class cramdown approved by an English court and the first ever use of a restructuring plan to compromise landlords.
The firm is currently also acting as counsel to bank creditors in the Munich insolvency proceedings of scandal-hit payments processor Wirecard; and for Bank of New York Mellon as trustee of certain bonds that were subject to Hong Kong-law governed keepwell deeds, which the Beijing-based administrators of Peking University group have failed to recognise, sparking liquidations in Hong Kong and the British Virgin Islands.
Mark Munro, senior vice president at DNB Bank in Aberdeen, worked with a team led by Lister on the Premier Oil restructuring, in which the bank was a member of the creditors’ committee.
“From a DNB perspective, Premier was one of our most challenged UK clients thus receiving significant management attention both in London and Oslo. Whilst [it was] a difficult, challenging and elongated process, I cannot speak highly enough of the A&O team,” Munro says.
He describes the team as committed – “working extremely long hours and through holidays”; very knowledgeable, not only on the legal aspects, but also on the energy industry and Premier Oil itself; organised, “which was important given the quantum of creditors and multiple processes and paths which were taken”; and “on top of everything else, very approachable”.
Munro singles out Lister as being “very impressive” and notes his “canny ability to see the big picture, but was also across all the detail”. He also has a special mention for senior associate Sophie Waples, “who was fully involved in the whole process and did much of the ‘heavy lifting’ to ensure the positive outcome”.
A professional services client that has worked alongside A&O advising banks in numerous complex restructurings described the team as “highly committed” and “collaborative”, name-checking Lister, Buckley and partner Jane Glancy as members with whom he has “always enjoyed strong and productive working relationships”.
A director at HSBC who continues to work with the firm as part of a banking syndicate after the successful US$1.8 billion restructure of agricultural commodities trader ED&F Man, says the team “always provide top quality advice” and “exceptional service in high-pressured situations and tight time frames”.
They credit Buckley and banking partner David Campbell in particular. “Throughout the engagement, Katrina robustly led the various A&O teams feeding into the deal and ensured that no part of the transaction fell through the cracks … as a lender you were very comfortable that the best position was achieved in the circumstances,” they say.
Meanwhile, “David, with his always personal, collaborative and commercial approach, not only ensured that that he and his team at all times delivered quality advice over a plethora of documents in very tight time frames, but was always able to make the most difficult parts of the transaction understandable and palatable, such that lenders were able to make well informed decisions in an efficient manner and mitigate their risks as much as possible.”
The success of a global restructuring practice can be measured by the breadth of its client base, the bench strength, depth and technical expertise available and the quality and scope of the innovation that it delivers to solve the problems faced by its clients as well as other stakeholders around the table.
It also can be measured by how often it successfully and efficiently delivers and implements complex domestic and cross border restructurings, and the range and number of deals worked on in any particular period.
The Allen & Overy Restructuring team is truly exceptional in this regard where its dedicated, diverse and commercially excellent teams across Europe, the US, Asia Pacific, Africa, the Middle East and continental South America collaborate seamlessly to provide technical expertise and success on a truly global scale.
A&O boasts an integrated first class restructuring team of over 200 restructuring lawyers across over 40 offices globally. It is anchored by a core London team consisting of 13 diverse, highly experienced partners and 30 associates – the largest in the market. Our clients include credit and distressed debt funds, alternative asset managers, noteholders, hedge counterparties, banks, facility agents, security agents, note trustees, private equity sponsors, companies, directors and insolvency officeholders such as liquidators, administrators, receivers, and company voluntary arrangement nominees.