The U.K. Restructuring Plan: Striking a Balance in Cross- Border Restructurings

Four years have passed since the introduction of the U.K. restructuring plan, often heralded as one of the most significant changes to the country's restructuring landscape in a generation. Since its inception, commentators have compared the restructuring plan to U.S. chapter 11. [...]the restr...

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Bibliographic Details
Published inAmerican Bankruptcy Institute journal Vol. 43; no. 9; pp. 24 - 61
Main Author Gallagher, Adam
Format Journal Article
LanguageEnglish
Published Alexandria American Bankruptcy Institute 01.09.2024
Subjects
Debt restructuring
Flexibility
International finance
Jurisdiction
Sanctions
Stakeholders
Stockholders
United Kingdom > UK
United States > US
Luxembourg
China
Wales
England
Hong Kong China
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Summary:Four years have passed since the introduction of the U.K. restructuring plan, often heralded as one of the most significant changes to the country's restructuring landscape in a generation. Since its inception, commentators have compared the restructuring plan to U.S. chapter 11. [...]the restructuring plan contains no absolute-priority rule in a cramdown plan, and the legislation does not provide a framework for debtor-inpossession (DIP) or priority new money financing.2 This article reflects on notable features coming out of restructuring plans to date, in particular how overseas debtors have come to use the plan and its flexibility as a restructuring solution. Governing Law and Jurisdiction Precedent shows that an overseas debtor will have a sufficient connection to England and Wales on the basis that the liabilities to be compromised under the restructuring plan are governed by English law (often supported by a choice-of-jurisdiction clause in favor of the English courts). In this case, the court found that 42 percent of the debt by value being governed by English law created a sufficient connection (when other factors were taken into account).
ISSN:1931-7522