Professional Services
Professional Services Firm
Full Credential Description
In a landmark case, the Joint Administrators were appointed to manage a short-term property finance company that had been placed into Administration but continued trading. The company faced significant challenges due to the combined effects of Covid-19 and Brexit, which severely impacted its financial viability and the realization of its assets. Recognizing that continuing the Administration was no longer a feasible option, the Administrators proposed a restructuring plan during a sanction hearing to prevent the company from entering liquidation.
To facilitate this, the Joint Administrators utilized Part 26A of the Companies Act 2006, a new restructuring tool introduced in June 2020. This plan aimed to provide an exit route from Administration, allowing the company to operate as a going concern while improving the position of creditors compared to a liquidation scenario. The restructuring plan involved negotiating the claims of five distinct classes of creditors: expense, senior secured, junior secured, preferential, and unsecured. A key feature of this plan was the "cross-class cramdown," which allowed dissenting classes of stakeholders to be bound by the plan, ensuring that secured creditors would not be worse off than they would have been in liquidation.
Despite opposition from a dissenting creditor, the High Court upheld the restructuring plan, marking a significant victory for the Administrators. This approval not only allowed the company to avoid liquidation but also set a precedent in UK restructuring practices, highlighting the effectiveness of the new legislative framework in addressing complex financial challenges faced by mid-market companies.