R&I Soundbites

Linklaters’ global restructuring and insolvency practice handles the world’s most challenging and significant domestic and cross-border restructuring and insolvency assignments. Listen to our R&I Soundbites podcast series to hear what our experts say on a number of R&I topics.

New Act introduces the “Dutch Scheme”

On 6 October 2020, the Dutch Senate approved the legislative proposal for the Act on Confirmation of Extrajudicial Restructuring Plans (Wet homologatie onderhands akkoord (the “WHOA”)). 

The WHOA establishes a new pre-insolvency procedure to restructure debts of companies in financial distress (the “Dutch Scheme”). The WHOA borrows elements from frequently applied foreign restructuring tools, such as the US Chapter 11 proceedings and the UK Scheme of Arrangement, combining these into a single framework.

Playing politics with distressed M&A

The checks and balances of the merger control process are never more important than in times of crisis. But we are already seeing signs that crisis-driven M&A reviews will face intense political pressure.

Meanwhile, authorities have been bracing themselves for a surge in failing firm defence claims. Traditionally met with scepticism, will they gain traction through the Covid-19 lens?

Understanding how confidentiality regimes affect debt trading

When an investor is looking to engage in secondary debt trading, it must confront a perplexing array of legal, regulatory and best practice issues. Debt market participants will typically need to address several key issues in the context of debt trading which arise from the potential asymmetry and nature of information held by the parties.

Information concerns will become especially heightened when an investor is looking to trade their debt during a restructuring. Confidential information may be regulated by a combination of legal, regulatory and market practice regimes.

SEC expands accredited investor and QIB definitions

Amendments will increase pool of investors allowed to participate in Regulation D and Rule 144A offerings

In a modest shift in the way it has traditionally viewed natural person investors in private offerings, the US Securities and Exchange Commission (the “SEC”) has adopted amendments that will expand the definition of “accredited investor” under Regulation D to include additional means of measuring a natural’s person financial sophistication, rather than focusing only on the person’s income or net worth. The final amendments also add new categories of entities to the definitions of both “accredited investor” under Regulation D and “qualified institutional buyer” (“QIB”) under Rule 144A.

What we now know about Part 26A Restructuring Plans

Part 26A of the Companies Act, which was inserted under the Corporate Insolvency and Governance Act 2020, introduced a new restructuring procedure referred to as a "Restructuring Plan” or “super scheme”. The success of the new procedure will depend on stakeholders being persuaded that there are good reasons for using a Restructuring Plan rather than going down the tried and tested Scheme of Arrangement route.

This briefing looks at the potential benefits of using the new Restructuring Plan and considers, having regard to the Virgin Atlantic Restructuring Plan which was sanctioned on Wednesday 2 September 2020, the extent to which issues raised when the new legislation came into force on 26th June have now been resolved.

Covid 19 Financing Fund Portfolio Investments Through the Crisis

Financial sponsors have been focussing significant time, efforts and resources supporting their portfolio investments through the COVID-19 crisis. This briefing note considers some of the options available to sponsors to provide cash injections into portfolio companies in need of funding, both in the short term and the longer term.

Liquidity options under European cov-lite facilities

In covenant-lite transactions, the absence of ongoing financial maintenance covenants, which have traditionally operated as the trigger for a debt restructuring, means that it is the lack of sufficient liquidity which will instead be one of the more likely factors leading to the commencement of a restructuring process.

Debt buy-backs of European leveraged loans

The European leveraged loan market has, as a whole, been affected by the economic consequences of recent government decisions and central bank action. As a result, the trading price of several leveraged loan names has fallen, in some cases, significantly below par.