Regime guide
Seven restructuring regimes, and how each one binds dissenting creditors
Most of Europe rewrote its restructuring law after the 2019 EU Restructuring Directive. This is a working reference to the tools that show up in our cases: who votes, what majority carries a class, and when a court can impose a plan anyway.
United Kingdom
UK plans can bind whole dissenting classes
Two tools sit in the Companies Act 2006. A scheme of arrangement under Part 26 needs 75% by value and a majority in number of each class that votes.
A restructuring plan under Part 26A, added by the Corporate Insolvency and Governance Act 2020, drops the headcount test. Under section 901G the court can impose the plan on a class that voted against it, as long as that class is no worse off than in the relevant alternative and at least one in-the-money class voted in favour.
Court of Appeal rulings in Adler, Thames Water and Petrofac now set the limits on how far that power goes, which is why all three are on our case list.
Germany
StaRUG lets a German company restructure without opening insolvency
StaRUG, Germany’s corporate stabilisation and restructuring act, came into force on 1 January 2021. A company facing imminent illiquidity can put a restructuring plan to its creditors, grouped by rights, without filing for insolvency.
Each group approves with 75% of the voting rights in that group. The restructuring court can confirm the plan over a dissenting group under section 26 StaRUG, and can grant stabilisation orders that pause enforcement while the plan is negotiated.
France
French safeguard now votes by class, shareholders included
Ordonnance no. 2021-1193 rewrote Book VI of the Commercial Code with effect from 1 October 2021. In safeguard, accelerated safeguard and larger judicial reorganisations, affected parties now vote in classes, and shareholders form classes of their own.
A class approves with two thirds of the votes cast. The court can impose the plan on dissenting classes, applying an absolute priority rule with set exceptions. Accelerated safeguard has to follow a conciliation, and that combination is what Casino, Orpea and Atos used to hand control to creditors.
Spain
Spanish plans can take a company away from its shareholders
Ley 16/2022 of 5 September 2022 reformed Spain’s consolidated Insolvency Act to implement the EU Restructuring Directive, and brought in court-approved restructuring plans.
A class approves with more than two thirds of its claims, or three quarters for a secured class. The commercial court can confirm a plan over dissenting classes, and the shareholders of an insolvent company can be crammed down too. Celsa was the first big test of that, with creditors taking control over the owners’ objections.
Netherlands
The Dutch WHOA comes in a public and a confidential version
The WHOA (Wet homologatie onderhands akkoord) added a court-confirmed composition outside bankruptcy to the Dutch Bankruptcy Act from 1 January 2021.
A class approves with two thirds of the amount of the claims that vote, and the court can confirm a plan over dissenting classes. The public version is recognised across the EU under the Insolvency Regulation. The confidential version is not, and has to rely on other routes to recognition abroad.
Italy
Italy pairs out-of-court talks with court-confirmed plans
The Code of Business Crisis and Insolvency (Legislative Decree no. 14 of 12 January 2019) took full effect on 15 July 2022.
It includes the composizione negoziata, where an independent expert helps the company and its creditors reach a deal out of court. The court routes include debt restructuring agreements, which need creditors holding 60% of claims, and the concordato preventivo, which votes by class.
United States
Chapter 11 keeps pulling in European companies
European companies still file Chapter 11, usually in New York, Delaware or Texas, for the automatic stay, DIP financing and a judge used to big cases. airBaltic and SAS both went this way.
A class accepts a plan with two thirds in amount and more than half in number of the claims that vote, under section 1126(c). Section 1129(b) lets the court confirm over a rejecting class if the plan is fair and equitable and does not discriminate unfairly. Chapter 15 works the other way round, recognising a foreign proceeding such as an English plan so that it binds creditors in the US.