Overview
Mark Fennessy, partner at law firm McDermott Will & Emery, said:
“The decision in Gategroup may have signalled a high-water mark for the utility of the new UK Restructuring Plan for debtors and debt issuers especially when it began to show such promise following decisions in the Virgin Atlantic, Pizza Express and the Deep Ocean restructurings.
The decision in Gategroup to class the Restructuring Plan as an insolvency proceeding may significantly impair the means to have such a plan recognised internationally especially post-Brexit when it has lost the automatic recognition mechanisms under European regulations.
Post-Brexit the Lugano Convention and the Hague Conventions formed the foundation of a likely path to recognition and assistance for UK Restructuring Plans. There was a hope and expectation that the Restructuring Plan would not fall into the bankruptcy exception under either of the Lugano or the Hague Conventions and therefore, like its sibling the UK Scheme of Arrangement, would benefit from these recognition mechanisms. It looks like a door has been shut on this possibility at such a formative stage of the Restructuring Plan which only came into force in late June last year as a part of the Corporate Insolvency & Governance Act 2020.
Where a door shuts another would need to be opened for debtors and we at McDermott are already exploring alternative ways of bypassing this decision in relation to future UK restructuring options which are now very likely to be needed.”
