EMEA Litigation Wrap 2023

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Restructuring Plans Challenged; FCA Creates Hurdles for Schemes and Gibbs Here to Stay

Reorg has analyzed the key restructuring and insolvency litigation from 2023 and distilled the key takeaways.

Key New Guidance From 2023

Court of Appeal Examines Part 26A After Creditor Challenge: Undue Pressure, Valuation, Restructuring Surplus Considered

• This is the first Part 26A to go to the Court of Appeal. Under the original plan pari passu ranking creditors were given different treatment.
• A successful appeal will provide a precedent for equal treatment of creditors with equal rights under a plan, regardless of cross-class cramdown.
• Following the sanctioning of Adler’s Plan in the English High court, challenging creditors have sought to challenge the plan and have it set aside by the Court of Appeal with the hearing raising several issues:
  • (i) The pressure expedited sanction hearings placed on the court, especially in the context of valuation disputes;
  • (ii) The question of who gets to dictate how the restructuring surplus is shared; and
  • (iii) Whether there should be a framework to structure the court’s discretionary power to sanction a plan.
• The European restructuring industry keenly awaits judgment from the English Court of Appeal on this. Lord Justice Snowden is expected to deliver the main judgment in the coming weeks.

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