Welcome to the latest edition of Restructuring Trends, introduced by Jeremy Webb in his foreword. As the year draws to a close, we look back at some of the key developments of the year, some of the sectors where restructuring has been (and continues to be) necessary and highlights from our high-profile landmark cases in our interactive timeline feature. In addition, we also provide our regular restructuring and Economic corner updates for Q3 2014.
Please use the arrows to navigate our timeline, and click on the month name to access the article for that month:
The UK continues to lead the way in developing complex solutions in insolvency and restructuring situations. Whilst a number of Western European countries are implementing legislative changes in an attempt to replicate the best bits of the UK/US regimes, we look at three cases to illustrate how the UK’s procedures can deliver innovative solutions where local laws may not have been able to compete.
A number of factors continue to affect airline businesses - volatile fuel prices, the continuing impact of the economic crisis, political instability and over capacity are all creating particularly turbulent conditions, in an industry already typified by cyclicality and low margins. We look at this changing industry and how some airlines have reacted to these pressures through consolidations and restructuring activity.
The administration of Albemarle & Bond Plc was the first insolvency of a major UK pawnbroker. We continued to trade the business during the administration period, an innovative thing to do in this highly regulated sector and, under intense media scrutiny, identified a suitable buyer for the business thereby saving over 600 jobs and protecting all 120,000 individual stock items.
Hedge funds are showing increasing appetite for bilateral debt purchases in the mid-market as they look to build platforms in the UK and ultimately into Europe, and bolt on to existing investments. We consider the investment strategies that these funds are now adopting in the mid-market.
Earlier this year, PwC released its fourth study of working capital in companies across Europe. Our findings showed that in the largest global companies, working capital performance has stagnated over the last five years – we think that making improvements in this area remains a huge opportunity to generate cash, to continue to grow and enable investment.
On 9 January 2011, Al Jaber, a very large multi-jurisdictional family owned business centred in Abu Dhabi, informed its lenders of a need to restructure its numerous debt facilities. The restructuring was finally completed on 25 September 2014, following the announcement to the market in June. Why did it take so long, and what can be learnt from this?
An increasing number of infrastructure projects are not performing to plan. Even though the drivers of financial stress are often common, the solutions need to be unique. We take a look at some of the common drivers of stress facing infra/PFI deals, the stakeholder dynamics involved in the restructurings, and how these unique characteristics impact deals in the sector.
In August, we completed the refinancing and restructuring of AFG Properties (AFG), the owner and operator of eight shopping centres in the British Isles. Through a consensual approach and pre-emptive and pro-active engagement with all stakeholders, we were able to optimise outcomes for both the corporate, and borrowers facing stretched and underwater financial situations.
Unique circumstances surrounded the Phones4U administration including the composition of the main creditor body; a diverse group of investors who hold an actively traded £430m listed senior secured bond. Whilst there has been no day-to-day visibility regarding the current holders, the administrators have adopted a strategy of comprehensive disclosure to secured creditors, a level of transparency which has helped facilitate market liquidity.
Many are viewing the results of the AQR as an end in themselves – however in our view, the AQR is just the beginning of a period of unprecedented change for banks, particularly those who do not have a clear vision of their future. We examine what impact the results have had on the banking industry so far and what we might expect in future.
Insolvency distributions follow a prescribed order. But after the principal has been repaid, it's not as prescribed as it might be. With a potential c.£7bn surplus at stake, the Lehman Brothers International (Europe) administrators are seeking to clarify the exact entitlements to establish who gets what, in which order.
The 2014 UK Corporate Governance Code implements changes including the introduction of a new viability statement - looking at the prospects for companies beyond the going concern horizon – and provides updates on how boards should tackle and report on risk. Many companies will therefore revisit areas such as risk appetite, encouraging the right attitude to risk throughout the organisation, and monitoring and reviewing risk management.