Schemes of Arrangements, Restructuring Plans & Chapter 11

Redcliffe’s schemes of arrangement training courses are delivered by a consultant, public speaker and author with expertise in private equity, debt advisory, restructuring and infrastructure. He is a Senior Advisor to KPMG Finland, a Senior Advisor to Reorg EMEA Covenants, the leading provider of information to the European High Yield community, and a Senior Consultant to Grant Thornton UK.

Training programmes are provided to a wide range of blue-chip clients in Europe, Africa, the Middle and Far East, North America and Australasia. In-house clients include banks (BNP Paribas, Société Générale, ING, Barclays Capital, Bank of China, RBS, SEB); lawyers (Baker & McKenzie, Skadden Arps, Sullivan & Cromwell, Cadwalader, Latham & Watkins, Weil, White & Case); advisory firms (Lazard, PWC, M&A International, KPMG, EY, Deloitte); PE firms (Cinven, Advent, Barings Asia, Waterland); corporates (Siemens, Airbus, Turkcell, Candy Crush, Gunvor, Statkraft) and governmental bodies (the UKLA, the EBRD, the ECGD, Omani Oil Corp.)

He qualified in South Africa both as a Chartered Accountant, with Deloitte and as a lawyer with Hofmeyr where he was involved in structuring many high-profile project financings including BMW 3 Series, Ford Sierra, GM, Sappi and Mondi. When he moved to London and joined Lazard Brothers as a corporate finance executive he was involved in a wide range of public and private transactions.

Subsequently, he joined Hoare Govett as an assistant director where he acted as an advisor to smaller listed companies and was involved in several syndicated Euro-Equity Initial Public Offerings.

In 1991 he joined ABN Amro’s cross-border M&A team before being transferred to MeesPierson Corporate Finance as a Director in Cross-Border M&A; where he was also involved in several deals in Central Europe. During this time, he was a member of the EU-PHARE programme and advised the Estonian government on its privatisation programme.

He is the Programme Director at the City Business School, London, for Infrastructure Finance for the M. Sc. programme in Business Administration and Finance.

He is a member of the Institute of Chartered Accountants in England & Wales and the South African Institute of Chartered Accountants. He completed a BA and an LLB at the University of Natal and a B. Compt. (Hons) at UNISA.

• Schemes (your flexible friend) – whilst Schemes are a creature of statute, over many years English courts have expanded their application in ways perhaps not originally envisaged by Parliament by adopting a commercial approach, thus expanding the application and usefulness of Schemes (e.g., Metinvest’s ‘Standstill’ and the ‘stay’ in Vinashin Shipping).
• The broad jurisdictional reach of Creditor Schemes – the flexibility of Schemes coupled with English courts’ willingness to entertain schemes on ‘foreign’ firms has seen Schemes being widely used for companies around the world. A variety of German, Spanish and Italian companies have used Schemes but firms from further afield have also made use of the flexible benefits inherent in Schemes (Vinashin and Synchreon).
• Member Schemes have wide applications - they have been used for Takeovers, Reduction & Return of Share Capital as well as demergers and removal of minority shareholders.
• The composition of ‘Classes’ – this represents one of the most contentious aspects of Schemes and features numerous cases on a wide range of issues affecting “Class”.
• Cross-class cram-down may not matter – whilst the absence of a CCCD is a potential impediment, landmark decisions have mitigated this impediment to some extent by excluding creditors who either have no economic interest or whose rights are not affected by the Scheme.
• Valuation matters – the proliferation of laminated debt structures together with the exclusion of out-of-the-money creditors from a class vote has pushed this aspect up the agenda. Schemes of Arrangement training reviews the two key judgements on this matter and considers the pros and cons of how to approach this issue.
• Schemes of arrangement in corporate restructuring plans (Part 26A of the Companies Act) – the programme will provide insight into the recently unveiled Restructuring Plan and the lessons from the Virgin Atlantic restructuring.
• Relevant & Recent Cases – the programme highlights the key issues in Schemes of Arrangement (“Schemes”) concerning relevant and recent cases (Matalan, Swissport Super Senior RCF Scheme).

This programme is designed for professionals who advise on, negotiate, or execute distressed and contested restructurings, including:

• Restructuring, insolvency, banking and finance lawyers
• Investment bankers and restructuring advisers
• Private credit, direct lending and distressed debt investors
• Hedge fund, credit fund and special situations professionals
• Private equity deal and portfolio teams
• Corporate treasurers, CFOs and in-house counsel
• Workout and special asset managers at banks

This schemes of arrangement course covers the key legal and commercial issues of Schemes of Arrangement and Restructuring Plans (recently used by Virgin Atlantic). English Schemes of Arrangement has long been a widely used pathway for restructurings in a wide variety of jurisdictions abroad. Schemes offer several benefits that promote the preservation of value.

First, despite being a creature of Statute the Act does not proscribe the terms so Schemes have been used in restructuring, demergers and take-overs to mention a few examples. Secondly, this flexibility has been enhanced significantly through the commercial approach that English courts have adopted to facilitate Schemes (e.g. by disregarding creditors whose rights are not affected).

Thirdly, the scheme of arrangement process is not a formal restructuring which makes them attractive to firms whose business could be terminated via a formal process (e.g. Codere). Finally, Schemes have been available to foreign companies provided there is “sufficient connection” with England and Schemes have also been enforceable in these local jurisdictions.

The absence of a cross-class cram down is one notable disadvantage of Schemes and this has been addressed in part by the recent introduction of Restructuring Plans which, whilst broadly following Schemes, do include some additional tools (imported from Ch 11) not available in Schemes (e.g. the cross-class cram down) which will be useful in the waves of restructuring which, doubtless, lie ahead.

Schemes of arrangement in corporate restructuring Plans have gained significant traction since their introduction and the recent restructuring of Amicus Asset Finance was the first mid-market company to make use of a Restructuring Plan. Amicus is notable for many interesting features, including a cross-class cram down of a senior creditor class; the first time an insolvency official (i.e. the Administrator) proposed a Restructuring Plan which facilitated a solvent exit from administration (the court appears to have taken a more liberal approach than was evident in prior cases e.g. Virgin Active). One notable difference in Restructuring Plans (vis-à-vis Schemes) is the court’s willingness to split the classes and this was another feature of Amicus Finance (see also Hurricane and Gategroup).