July 12, 2020

Volume X, Number 194

July 10, 2020

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July 09, 2020

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Corporate Insolvency and Governance Act 2020: A New Era for Restructuring

On 25 June 2020, the Corporate Insolvency and Governance Act 2020 (the Act) received Royal Assent, and the majority of its provisions are now in force. The Act has introduced a number of permanent reforms and temporary measures, which together represent the most significant change to English insolvency law in nearly 20 years.

Permanent Reforms

The permanent reforms include:

  • A new restructuring plan, based largely on the existing procedure for Schemes of Arrangement but with the additional discretion for the Court to allow dissenting classes of creditors to be bound, provided one class of creditors approves the plan.

  • Ipso Facto clauses (clauses which allow for the termination of an agreement on the basis that a party has entered into an insolvency process) are now unenforceable in a wide range of supplier contracts.

  • A pre-insolvency, standalone moratorium for companies in financial distress, with certain carve-outs.

Temporary Measures

The temporary measures are intended to provide support and flexibility to businesses facing financial difficulty due to the economic impact of COVID-19. These measures will apply until 30 September 2020 with retrospective effect to 1 March 2020 (26 March 2020 in respect of corporate governance) and include the following:

  • Suspension of wrongful trading rules.

  • Suspension of the use of statutory demands as a basis for a winding up petition and issuance of winding up petitions where a company can demonstrate the cause was the financial effects of COVID-19.

  • Relaxation of corporate governance requirements with respect to certain meeting and filing obligations.

Over the coming weeks, Faegre Drinker Biddle & Reath LLP will be publishing a series of client briefings and key takeaways on some of the most significant provisions of the Act. 

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 181


About this Author

Patrick Corr Financial Attorney Faegre Drinker UK

Patrick Corr delivers creative solutions and sound, business-minded legal guidance to corporations facing challenging financial circumstances. Widely recognized as a leader in the areas of insolvency and restructuring, Patrick has extensive experience in contentious and non-contentious corporate recovery and turnaround matters and regularly advises clients on their cross-border challenges and opportunities.

Clients describe Patrick as a top choice for cross-border matters, and he is an asset to clients navigating the restructuring, insolvency and liquidation laws of various European...

+44 (0) 20 3405 3453
Wayne Beck Financial Attorney Faegre Drinker Law Firm London

Wayne Beck brings a wide range of high-level experience to client engagements, including acting for creditors, creditor committees, debtors, insolvency practitioners, banks and other financial institutions, and purchasers of distressed assets in cross-border, multijurisdictional and domestic insolvency, corporate reorganization, recovery, turnaround and litigation matters.

Wayne has also assisted with the restructuring of a number of distressed securitizations and other structured finance products, including distressed collateralized debt obligations (CDOs), structured investment vehicles (SIVs) and commercial mortgage-backed securities (CMBS). He has also regularly advised clients on security and insolvency law aspects of commercial, structured and leveraged finance, particularly with respect to catastrophe bond transactions.

Representative Experience

  • A global card acquirer in connection with the proposed restructuring of a major global airline due to the impact of COVID-19.

  • A bank in its capacity as lender under a revolving credit facility and as swaps counterparty with Intu Properties plc.

  • Deutsche Bank AG, London Branch, as respondent in the latest phase of the landmark Lehman “Waterfall” litigation relating to priority between tranches of subordinated debt, release under a New York law settlement agreement and provability of subordinated future debts.

  • The largest creditor in the Irish law scheme of arrangement of Ballantyne Re plc, an Irish capital markets securitization of a closed block of U.S. life insurance policies – the first use of an Irish scheme to compromise New York law debt.

  • A global card acquirer in connection with the distressed acquisition of Flybe Limited by way of a members’ scheme of arrangement.

  • AlixPartners LLP in their capacity as interim manager of the Abraaj Growth Markets Health Fund following the filing for provisional liquidation of the Abraaj Fund.

  • A creditor in its challenge of the English law scheme of arrangement of Lehman Brothers International (Europe) (in administration).

  • Simon Appell of AlixPartners LLP and Eleanor Fisher of Kalo in their capacity as joint provisional liquidators of Ocean Rig UDW in its successful restructuring of approximately $3.8 billion of financial indebtedness, one of the world’s largest-ever restructurings. The restructuring was implemented through four separate and interconnected Cayman Islands law schemes of arrangement with Chapter 15 recognition.

  • Northwood Investors on the restructuring of a portfolio of properties formerly owned by a fund managed by Highcross Strategic Advisers Limited.

+44 (0) 20 3405 3450
Raphaela Constance Cotoulas Insolvency Attorney Faegre Drinker London

Raphaela Cotoulas has a wide range of experience in cross-border and domestic restructuring, insolvency, corporate rescue and distressed real estate matters. She has undertaken secondments at a private equity real estate investment fund and a global serviced office and co-working space provider.

Representative Experience

Raphaela has represented:

  • A global serviced office and co-working space provider in coordinating its continued internal restructuring in various European, Asia Pacific and African jurisdictions.

  • Exide in its internal group...

+44 (0) 20 3405 3443