McDermott Comment | Virgin Active Shareholder Brait Updates Status Of Restructuring, Notes Super Scheme Launch Of 3 UK Companies


Mark Fine, partner at law firm McDermott Will & Emery, said:

“Given the various creditor groups involved it is not surprising that Virgin Active has launched a restructuring plan. The new cross class cram down afforded under the plan means landlords may be included as a class in the plan (and following on from Malaysian Aviation, they may all be the same class) and any potential rejection by them can be overcome subject to certain requirements. Whilst not as tested as a CVA being run in conjunction with a scheme of arrangement, we have seen some recent examples where plans have been launched contemplating a similar cram down like Virgin Atlantic. That said, in that case, prior acceptance of the plan by the relevant classes meant the appropriate tests where cross-class cram-down arises still remain to be established as does the test for the limits of what is ‘just and equitable’.”

Mark Fennessy, partner at law firm McDermott Will & Emery, added:

“The first successful use of cross class cram downs in relation to the new Part 26A Restructuring Plan was in the Deep Ocean restructuring and there are likely to be more of these going forward as debtors seek to deleverage their balance sheets in the coming months.”