Page 392 - วารสารกฎหมาย ศาลอุทธรณ์คดีชํานัญพิเศษ
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วารสารกฎหมาย ศาลอุทธรณ์คดีชำานัญพิเศษ
On 31 January 2020 the UK left the European Union. With the end of the transition
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period on 31 December 2020, these instruments no longer apply in the United Kingdom,
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which puts the success of the English restructuring practice in jeopardy. Section II.
explores the European restructuring practice based on English law as it emerged in the
aftermath of the Global Financial Crisis and briefly summarizes the recent reforms
introduced by the Corporate Insolvency and Governance Act 2020. In section III.
we analyse the benefits of the EU regime on cross-border insolvencies from the UK’s
perspective prior to Brexit, and in section IV. what the current post-Brexit regime looks
like. Schemes of arrangement will be dealt with in section V. Section VI. concludes.
II. Corporate Restructuring after Lehman
In a typical private equity transaction, the target group’s publicly traded holding
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company will be acquired by an acquisition vehicle (BidCo) held through a string of
special purpose entities leading up to the private equity investors and co-investors as
ultimate shareholders. Senior debt may be issued by BidCo, fully secured on BidCo’s
shareholding in the target company. The latter may grant additional security, usually
over its shareholdings in the operating subsidiaries, which may grant further security
and/or furnish guarantees. The junior debt tranches (second lien, mezzanine and other
junior debt) will be subordinated to the senior tranche, either contractually on the basis
of an inter-creditor agreement, and/or structurally where the junior debt has been issued
by financing vehicles further up in the corporate hierarchy. This structure greatly
facilitates a sale by the senior lenders of the firm’s business as a going concern, without
interference from junior lenders and shareholders. The underlying documentation usually
contains extensive provisions on the enforcement and release of security.
Against this background, (pre-pack) administration in combination with schemes
of arrangement has emerged as a very effective restructuring option for firms in financial
5 L Gullifer and J Payne, Corporate Finance Law – Principles and Policy (Oxford: Hart, 2nd edn 2015)
773–780.
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