Restructuring Data - Europe 27 May 2020 Restructuring ... EU - UK Report - 27 May...

An Acuris CompanyRestructuring Insights - UK

RestructuringInsights - UK

Restructuring Data - Europe

27 May 2020


2

Debtwire Europe

AUTHORS

Joshua Friedman

Global Head of Restructuring Data

+1 (212) 574 7867

[email protected]

Shab Mahmood

Restructuring Analyst

+44 203 741 1323

[email protected]

Juan Mariño, CFA


+44 203 741 1364

[email protected]

Donald Ndubuokwu


[email protected]

CONTENTS

Introduction 3

Restructuring Data Analysis 5

Creditor/Investor Analysis 19

UK Restructurings: Marketplace & Current Issues 25

Timelines and Tables 28

Contacts 35

Disclaimer 36


Introduction: Restructuring Data - Europe

As part of the roll-out of Debtwire’s Restructuring Data - Europe, this inaugural Restructuring Insights Report serves as a preview of the power,

breadth and depth of the data that will be available to subscribers.

Debtwire’s global team of legal, financial, credit and data professionals has been producing analysis and data reports on a variety of

restructuring topics and in jurisdictions across the globe. In a natural evolution of that data-driven direction, we have compiled and enhanced

the data underlying those reports and combined it with Debtwire’s exclusive editorial coverage and financial research to create a searchable

Restructuring Database, which will allow subscribers to craft bespoke data-driven answers to a wide variety of research questions and to

enhance business development.

With the expansion to cover Europe, the Restructuring Data platform now includes bankruptcy and restructuring situations in North America

(US Chapter 11s, Chapter 7s and Chapter 15s), Asia-Pacific (NCLT processes in India) and Europe.

In total, the Restructuring Data platform encompasses approximately 1,000 US bankruptcy cases, close to 400 NLCT cases, and almost 200

restructuring situations across Europe. At launch, the Restructuring Data platform covers a significant part of the European marketplace:

specifically, the UK, France, Germany, Italy, the Nordics and Greece. Restructuring and Insolvency processes covered range from Schemes of

Arrangement and out-of-court situations, Administrations and CVAs in the UK, Concordato Preventivo in Italy, Safeguards in France, and many

more.

The database captures a wealth of data related to EU restructuring and insolvency matters broadly starting 1 January 2016 and in the main,

funded debt obligations exceeding GBR/EUR 150m.* As reflected in this report, each restructuring situation will include:

• Pre- and Post- Restructuring Capital Structures;

• Involved Creditors and Disclosed Holdings (e.g. debt holders, admin agents and indenture trustees, bidders, group members, etc.);

• Restructuring documentation (e.g., Lock-Up Agreements, Organisational Charts, Skeleton Arguments and Financials); and

• Retained Advisors and Relationships.

In this report, we apply the same lenses to the UK restructuring landscape from January 2016 through April 2020, analysing the newly initiated

restructuring and bankruptcy situations as well as those completed—whether successfully or unsuccessfully—during that time period.*

Click here to explore the entire Restructuring Data platform (access required).

3NOTE: We have also tracked a number of situations below the debt threshold or prior to 2016 to provide a more robust picture of the distressed European market. Similarly, the data analysed in this report includes certain key restructurings below the debt threshold and six restructurings before 2016: Adelie Foods, Codere Finance, DTEK Finance, MF Global UK, Phones4u, and Yuksel Insaat. In addition, we have analysed the data on a “case” basis, not company basis. So, for example, if a company uses a CVA and a Scheme of Arrangement to restructure, there would be separate cases for each included in the analysis.

https://www.debtwire.com/restructuringdb


General Introduction

Analysing restructuring-level data is an ideal starting point to understand the financial landscape — providing a 10,000-foot view of the distressed marketplace for strategic planning and asset allocation (financial or otherwise).

The restructuring level data illustrates:

• The size of the companies involved and the duration of their restructurings;

• The trending distressed sectors (or what sectors are cooling off);

• Relationships between advisors, creditors and market participants to assist with opportunity identification and opportunitydevelopment; and

• Which restructuring and exit strategies are more popular and utilised in which sector, by which advisors and by which creditor.

Debtwire’s EU Restructuring Insights report provides a high-level overview of restructuring and insolvency situations across the EU,digging deep into the data to highlight key trends and takeaways. This inaugural edition examines the UK Restructuring market with afocus on five restructuring and bankruptcy processes from 1 January 2016 onwards: Administration, Company Voluntary Arrangements(CVA), Out-of-Court Restructurings, In-Court Liquidations, and Schemes of Arrangement.

Following a slow start to the year, the restructuring and insolvency market is expected to be particularly active with an increase in thenumber of defaults and debt restructurings, as COVID-19, gyrations in the global oil market, depression levels of unemployment andseverely reduced business and human activity have greatly affected the capital markets, many businesses and society.

Looking at the data over the last four-plus years, the Retail sector dominated with 35% of restructuring situations, followed by Food &Beverage (11%) and Oil & Gas (9%). These are the same three sectors that have dominated the 2020 US bankruptcy market, with O&G andRetail also serving as the primary drivers since 2016. In comparison, the EU (excluding the UK), has seen a preponderance ofTransportation industry restructurings (24%), alongside Retail and Oil & Gas situations, with 14% and 10%, respectively.

In terms of case strategies, having a pre-arranged plan was the dominant restructuring strategy used by distressed companies, particularlywith Schemes of Arrangement, reflecting the time and planning the process allows prior to and at court. Sale processes were the next mostfrequent strategy, partially reflecting the rise and establishment of Accelerated M&A (i.e. AMA) as a strategy deployed to preserve goingconcern values, repayment and recoveries.

On the advisory front, Houlihan Lokey and Rothschild led the rankings with the most mandates, followed closely by KPMG—rangingbetween 29 and 26. Allen & Overy had the most mandates on the legal side, the only law firm topping 20, followed by Clifford Chance andLinklaters, Kirkland & Ellis and Latham & Watkins.

In terms of creditors, HSBC was involved in the most UK restructurings (including Steinhoff, Abengoa Concessions, and Carillion),followed by UK-based banks Barclays, and RBS.

4

https://www.debtwire.com/intelligence/view/prime-2980192


Restructuring Data Analysis


TIMELINE – RESTRUCTURING PROCESSES (FROM 2016)

Source: Debtwire’s Restructuring Database6

UK RESTRUCTURINGS – PROCEEDING TYPE (FROM 2016)KEY TAKEAWAYS

• In the timeline under review, 2Q 2018 represented thepeak with a total of 13 situations, four more than thenext most active quarters: Q1 2019 and Q1 2018.

• Schemes of Arrangement led in both number ofsituations and debt restructured, as it accounts for~40% of the UK restructuring market, whileAdministrations and CVAs followed with 26% and 22%,respectively.

• In 2020, we have seen eight UK restructurings of notecommenced, including Premier Oil’s Scottish Scheme ofArrangement and NMC Health’s Administration.

Administration26%

CVA22%

Liquidation2%

Out-of-Court11%

Scheme of Arrangement

39%

21

2

4

1

4

21

32

1 1

2

5

5

2

3

2

1

21

1

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32

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0

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4

6

8

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12

14

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Administration CVA Liquidation Out-of-Court Scheme of Arrangement


UK RESTRUCTURINGS – SECTOR SPLIT

7Source: Debtwire’s Restructuring Database

12

31 1 1 1 1 1 2 1 1

14

5

11

11

1

2

2 1 11

11 1

7

5

7 4 3 2 22 1

1 11 10

5

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20

25

30

35



SCHEMES OF ARRANGEMENT: COMI CHANGES, FORUM SHOPPING AND FOREIGN FILINGS IN GENERAL


UK vs FOREIGN CASES DISTRIBUTION SCHEME FILLING TIMELINE

Schemes have undergone a meteoric rise to become one of the most common debt restructuring tools. They allow a statutory majority of creditorsto vary the rights of an entire class and ‘cram down’ dissenting creditors, subject to Court oversight. Schemes expanded from being a core UKmechanism to increasingly being used by foreign borrowers, engendering what’s known as a shift in the centre of main interests (‘COMI’). The COMIshift results from companies ‘forum shopping’ in advance of their restructuring by identifying an optimal jurisdiction and, sometimes, transferringassets to that jurisdiction. The EU restructuring directive may limit such forum shopping in the future.

Courts will only accept jurisdiction to sanction a Scheme in respect of a foreign-incorporated company if it is satisfied that there is a ‘sufficientconnection’ with the relevant country. It is now well established that a company will have such a ‘sufficient connection’ if: (a) it has substantialassets in the UK; (b) its COMI is in the UK; or (c) its liabilities subject to the scheme are governed by relevant law and jurisdiction.

As the table below shows, Schemes are popular among companies domiciled outside the UK due to the speed, flexibility and commercial attitude ofthe court. Eastern Europe—particularly Ukraine—has been a frequent user of Schemes, with Metinvest and DTEK each using three Schemes,including certain moratorium Schemes. Spanish companies have also used Schemes a couple of times for significant debt restructurings (Codereand Lecta).

Since 1 January 2016, foreign companies filing Schemes accounted for more than half of the total. Since the process and utilisation of Schemes iswell established, avoids the stigma of formal insolvency procedures, can be effective in dealing with troubled debt and is an attractive toolaccessible to companies seeking to bring their debts to a sustainable level, we expect the UK courts to continue to be a restructuring haven.

1

2 2 2 2

1 1 1

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1

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1

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5

UK

Foreign17

2418

2

20 1

3

0

5

10

15

20

25

30

35

40

SOA Administration CVA Liquidation

UK FOR


ADVISORY MANDATE TIMELINE (2016 ONWARDS)

Source: Debtwire’s Restructuring Database 9

TOTAL ADVISOR COUNT BY JURISDICTION UK TOTAL ADVISOR COUNT BY PROCEEDING TYPE

644

208

138112

66 53 43 34

0

100

200

300

400

500

600

700

UK Italy Germany France Greece Scotland Norway Ireland

0

50

100

150

200

250

300

350

400

2016 2017 2018 2019 2020

Madate Timeline for All of the Restructurings Madate Timeline for the UK Restructurings


ADVISORY MANDATE RANKING (BASED ON ALL ADVISOR TYPES)

Source: Debtwire’s Restructuring Database

Footnote: Advisory mandates used for the above graph do not include advisors which acted as auditors or claims agents10

1

1

4

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3

7

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6

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26

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29

0 5 10 15 20 25 30

Clifford Chance

Linklaters

Deloitte

PJT Partners

FTI Consulting

PwC

Allen & Overy

KPMG

Rothschild

Houlihan Lokey



UK ADVISORY BREAKDOWN


UK LEAD LAW FIRMS UK FINANCIAL ADVISOR / INVESTMENT BANKS

• Houlihan Lokey and Rothschild led the rankings with the most mandates, followed by KPMG, PJT Partners, and FTI Consulting. Similarly,

Houlihan & Rothschild are the Financial Advisor/Investment Banking leaders.

• Allen & Overy was the clear leader on the law firm side, followed by fellow Magic Circle law firms Linklaters and Clifford Chance. Two US firms,

Kirkland & Ellis and Latham & Watkins, rounded out the top-5; Kirkland routinely leads the US league tables for bankruptcy and restructurings

mandates.

• Scheme of Arrangement feature heavily in terms of mandates, representing 55% of the overall mandates, followed by Administrations (19%), CVAs

(16%) and Out-of-Court situations (6%).

• The advisory leader board—including Houlihan Lokey, PJT Partners, FTI, Moelis, Kirkland, Akin Gump, etc— showcases the in-roads continuing to

be made by US firms in penetrating the upper echelons of the UK restructuring advisory market.

2

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21

0 5 10 15 20 25

Milbank

Akin Gump Strauss Hauer & Feld

Freshfields Bruckhaus Deringer

Latham & Watkins

Kirkland & Ellis

Clifford Chance

Linklaters

Allen & Overy


2

4

7

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3

6

4

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8

19

14

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18

18

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22

28

29

0 5 10 15 20 25 30

Moelis

Deloitte

PwC

PJT Partners

FTI Consulting

KPMG

Rothschild

Houlihan Lokey



TOP UK LEGAL ADVISORS

LEAD COUNSEL


STATS

Firm # List of Most Recent Restructurings / Party Represented Type of Representation

Allen & Overy 21

NMC Health Plc / NMC Health PlcEuropean Fintyre Distribution Limited /

Ad Hoc Group of First Lien LendersPremier Oil Plc (II) / Ad Hoc Group of Bank Lenders

Survitec Group Limited / Survitec Group LimitedThomas Cook Group Plc (Liquidation) / Revolving Credit Lender

Group

Ad Hoc Group: 13Company: 8

Linklaters 16

Lecta Paper UK Ltd / Lecta S.A.New Look Secured Issuer Plc / New Look Group Limited

Stripes US Holding, Inc / Stripes US Holding, IncThe Innovation Group Plc / The Innovation Group Plc

Steinhoff Europe AG / Steinhoff Europe AG

Company: 10Ad Hoc Group: 6

Clifford Chance

16

NMC Health Plc /

Ad Hoc Group of Convertible Noteholders and Sukuk Holders

The Innovation Group /

Ad Hoc Group of Senior Secured Lenders

House of Fraser / Lender Syndicate

Lehman Brothers International / Deutsche Bank

NN2 Newco Limited and Politus BV / Politus BV

Ad Hoc Group: 10Company: 5Creditor: 1

Kirkland & Ellis 15

Addison Lee / The Carlyle GroupBibby Offshore Services plc / Bibby Offshore Limited

Britax Childcare Limited / Britax Childcare LimitedDoncasters Group Limited / First Lien Term Loan Lenders

DTEK Finance PLC (II) / DTEK Finance Plc


Latham & Watkins

15

Doncasters Group Limited / First Lien Term Loan LendersSurvitec Group Limited / Survitec Group Limited

Addison Lee / The Carlyle GroupThomas Cook Group Plc / Thomas Cook Group PlcBritax Childcare Limited /Britax Childcare Limited


UK LEAD LAW FIRMS

21

16 16

15 15

0

5

10

15

20

25

Allen & Overy Linklaters Clifford Chance Kirkland & Ellis Latham &Watkins


TOP UK FINANCIAL ADVISORS / INVESTMENT BANKERS

LEAD COUNSEL


UK FINANCIAL ADVISORS / INVESTMENT BANKS STATS

Firm # List of Most Recent Restructurings / Party Represented Type of Representation

Houlihan Lokey

29

NMC Health Plc / BRS Ventures, FinablrSurvitec Group Limited / Survitec Group Limited

Lecta Paper UK Ltd / Ad Hoc Committee of BondholdersThomas Cook Group Plc / Ad Hoc Bondholder Group

Britax Childcare Limited / Britax Childcare Limited


Rothschild 28

Premier Oil Plc (II) / Premier Oil Plc

Mothercare Plc / Mothercare Plc

Lecta Paper UK Ltd / Lecta S.A.

Addison Lee / Addison Lee Limited

New Look Limited / Ad Hoc Group of 2022 Secured

Noteholders


KPMG 22

Mothercare Plc /Mothercare PlcBritish Steel Limited / The UK Government

Debenhams – CVA / DebenhamsDebenhams - 2019 Admin / Debenhams

New Look Limited / New Look Group Limited


Other: 1

FTI Consulting 19

Mothercare Plc / First Lien LendersThomas Cook Group Plc (Liquidation) / Revolving Creditor Group

Thomas Cook Group Plc / Bank LendersDebenhams – CVA / Lenders Group

New Look Limited / Ad Hoc Group of 2022 Secured Noteholders


PJT Partners 19

NMC Health Plc / Ad Hoc Group of Convertible Noteholders and Sukuk Holders

Doncasters Group Limited / First Lien Term Loan LendersThomas Cook Group Plc / Thomas Cook Group PlcBritax Childcare Limited / Secured Lender Group

Syncreon Group BV & Syncreon Automotive (UK) Ltd / Syncreon Holdings Inc.


29

28

22

19 19

0

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10

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20

25

30

35

Houlihan Lokey Rothschild KPMG FTI Cosulting PJT Partners


RESTRUCTURING ENTRY STRATEGY BY UK PROCEEDING TYPE


• Restructuring via a pre-arranged plan was the dominant beginning ‘strategy’ for distressed companies, particularly with Schemes of Arrangement.Sale processes were the next most common restructuring strategy used at the beginning of the restructuring, where it is sometimes deployed insituations where the back up plan is some sort of insolvency process. This contrasts heavily with the US, where the most common filing strategy in USbankruptcy cases is via a “free-fall,” where a debtor enters bankruptcy protection with no plan or sale in place.

• Schemes dominate restructuring processes where a foreign recognition is required or pursued with a Chapter 15 and also in parallel cross-borderproceedings (11), highlighting the fact that Schemes are being increasingly deployed alongside processes in other jurisdictions. CVAs (three) are alsofeaturing, for example, deployed on Steinhoff and Abengoa Concessions.

• Companies who has previously undertaken restructurings within the last 10 years are fairly prevalent. Schemes have been utilised the most in thosescenarios, but Administrations (7) and CVAs (3) too, reflecting that in some instances, there has been CVAs that have not delivered what was setout/compromised and have garnered a unfair reputation as to being ‘hit and miss’.

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Pre-Arranged Plan Sale Process PriorRestructuring

Within 10 Years

Foreign PlanRecognised

Parallel Cross-Border

Proceedings

Dual-TrackProcess

Liquidation Counter toPending Litigation

/ Liability

Involuntary



FINANCING ISSUES BY UK PROCEEDING TYPE


• Right sizing debt through haircuts via exchanges and write-offs is the clear dominant financing issue and outcome across all four processes with a broadly even spread amongst Schemes (18), Administration (16), and CVAs (15), with seven done Out-of-Court.

• Changes to debt service features predominately and as expected in Schemes (19), with more limited use in Out of Court situations (6) and CVAs (2). Similarly, changes to amortisation featured exclusively in Schemes and not in Out of Court situations tracked as broader corporate restructurings, reflecting that Amend & Extends are a majority feature of Schemes, where changes to debt instruments and debt servicing is a predominate feature of actions and outcomes.

• In terms of lesser financing issues, Debt Novation features on a limited basis across the restructuring and bankruptcy situations and similarly so with Bridge Financing, which has arisen in Schemes and Out of Court situations but not to the extent one might expect.

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Debt Haircut Amend-and-Extend Interest Rate Change / PIKAdded

Amortisation Change Bridge / DIP Financing Debt Novation



KEY RESTRUCTURING & LEGAL ISSUES


% OF CVAS WITH LANDLORD ISSUES

• Debt equitisation is often a method used by distressed companies to decrease debt burden, often replacing PE sponsors andfamily ownership, in whole or in part, by providing debt holders with a recovery consisting of an equity stake in the post-restructuring company, sometimes alongside debt instruments. This situation occurred in Bibby Offshore, where its seniorsecured notes were exchanged for 100% of the post-restructuring equity, Avanti Communications, Gulf Keystone and manyothers.

• Debt equitisation was most prevalent in Out-of-Court restructurings with 38% of the total, followed by Schemes of Arrangementand CVAs, with 28% and 22%, respectively. Equitisations were exceedingly rare in Administrations (1%).

• From our dataset it can be seen that landlord issues are quite prevalent in CVAs. Restructurings such as Arcadia and House ofFraser are key examples of this. The vast number of CVAs also occurred within the Retail sector, which helps explain the highnumber of retail restructurings and the preponderance of landlord issues in CVAs.

• Forum Shopping/COMI Shifts and Employee/Union/Pension Issues are other key legal issues arising in UK restructurings.• The charts below and on the next page highlight other significant restructuring issues, including Landlord Issues, which frequent

CVAs. COMI Shifts, which feature heavily in Schemes, and Employee/Pension Issues, are also pervasive across the variousrestructuring and bankruptcy processes (e.g. BHS, Carillion)

RESTRUCTURINGS INVOLVING DEBT EQUITISATION

76%

24%

CVAs with Landlord Issues CVAs without Landlord Issues

14

26 7

37

2521

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55

Scheme ofArrangement

Administration CVA Out-of-Court Liquidation

Count of Debt Equitization Count of Company


OTHER SIGNIFICANT RESTRUCTURING ISSUES


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RESTRUCTURING TRIGGERS


• We have reviewed the primary restructuring triggers for the various distressed companies. In terms of UK specific ones, Liquidity Issues (48)were the clear front runner, across all processes analysed but more so in Schemes (22) (e.g. House of Fraser, EnQuest), Administrations (16)(e.g. BHS, Debenhams) and Out of Court (5) (e.g. Survitec Group, Addision Lee), followed by CVAs (2) (e.g. Carpetright) and Liquidation (2)(e.g. Carillion, Thomas Cook).

• Being over-leveraged and having approaching maturities featured the next most (28), followed by debt default, defined as reaching maturityand/or payment default and/or covenant breach at 19.

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48

0 5 10 15 20 25 30 35 40 45 50

Litigation / Judgment

Legacy Liabilities

Accounting / Fraud

Financial Results

Debt Default (Matured Debt/Missed Interest Payment/Covenant Breach)

Upcoming Debt Maturities/Over-levered

Liquidity Issues



Creditor/Investor Analysis


Creditor Involvement & Investor Activity

Active creditors and investors in the restructuring space—the parties that are strategically driving much of what occurs in the distressed

arena—are given prime placement in the Restructuring Data platform.

As such, the Restructuring Database tracks a wide variety of investor and creditor activity, including:

• Ad hoc and official group members acting in concert together (whether debt or equity holders);

• Lender and bondholder securities holdings;

• Secondary market debt trades;

• Administrative agents and indenture trustees for pre-restructuring and post-restructuring instruments; and

• Bidder and plan sponsor activity.

Using this information, the report looks at the most active creditors in the space—i.e. which creditors showed up in the most

restructurings in the UK, regardless of role. Second, the report tracks bidders/plan sponsors in UK restructurings.

MOST ACTIVE CREDITORS

• HSBC is an incredibly significant creditor in UK restructurings, involved in the capital structure in the most situations by a fairly wide

margin (25 in total). Barclays and RBS were the next most active creditors, involved in 20 and 14 restructurings, respectively.

• BNP Paribas, UniCredit, Deutsche Bank, ING Bank, Citibank and MUFG were also among the leading banks in terms pre- and post-

restructuring debt with close to 10 restructurings each.

• On the fund side, York Capital and VR Capital appeared in the most situations (e.g. Doncasters and Bibby Offshore; Metinvest and

DTEK). PE stalwarts Apollo, KKR and The Carlyle Group were also heavily involved in the UK restructuring market.

BIDDERS/PLAN SPONSORS

• Retail focused funds and companies led the bidding activity, as Sports Direct, Hilco Global, Endless, and Alteri Investors were some of

the most active parties. Large PE shops were also frequently looking around opportunistically.

20

NOTE: This report tracks bidding activity on a bidder basis (not company basis) and includes all key creditor roles for involvement, including committee members, bidders, and securities holders (both equity and debt).


UK CREDITOR RANKING


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HSBC Barclays RBS UniCredit BNP Paribas Deutsche Bank ING Bank MUFG CitiBank York CapitalManagement



FREQUENT BIDDER/PLAN SPONSOR


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Sports DirectInternational

KKR & Co. Apollo GlobalManagement

Hilco Global The CarlyleGroup

EdinburghWoollen Mill

GordonBrothers

AlteriInvestors

Endless



AD HOC GROUPS – FREQUENT ADVISORS AND TYPE


MOST FREQUENT ADVISORS FOR AD HOC GROUPS IN THE UK UK AD HOC GROUP TYPE

• On the financial advisory side, FTI Consulting was the FA/I-Banker leader with 16, followed by PJT Partners (14), Houlihan Lokey

(14), Moelis & Co (7) and Rothschild (7).

• On the Advisory side, from a legal perspective, Allen & Overy led the way with 13, followed by Clifford Chance (10), Kirkland & Ellis

(10), Akin Gump (8) and Latham & Watkins (7).

• In terms of security type, the majority of Ad Hoc Groups were acting in capacity as secured creditor, whether by first or second lien,

representing 54% of Ad Hoc Groups reviewed.

• The unsecured creditor group category followed with 33%, while equity-specific groups had 3%. Secured/Unsecured crossholder

groups were quite limited (1%).

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13

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0 5 10 15 20

Milbank

Deloitte

Rothschild

Moelis & Co.

Latham & Watkins

Akin Gump Strauss Hauer & Feld

Kirkland & Ellis

Clifford Chance

Allen & Overy

Houlihan Lokey

PJT Partners

FTI Consulting


FREQUENT CREDITOR PARTICIPANTS IN AD HOC GROUPS (UK)


• From a group membership perspective, there is no standout creditor as compared to the US, where Simon Property Group and Brookfield

dominate official committees. HSBC and RBS lead the way with nine and seven, respectively. One other key difference is the preponderance of

banks in ad hoc committees in Europe; in the US, hedge funds tend to dominate ad hoc groups.

• In term of HSBC, 67% of its group appearances were in secured debt groups, while the remaining occurrences were with unsecured and cross

holder groups.

• VR Capital, Ashmore Investment Management, and UniCredit followed with membership in six groups each. Avenue Capital and Silver Point

Capital featured with five, while York Capital Management, GSO, GoldenTree Asset Management, CitiBank, and ING Bank all had four.

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5

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6

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9

0 1 2 3 4 5 6 7 8 9 10

ING Bank

CitiBank

GoldenTree Asset Management

GSO Capital Partners

York Capital Management

Silver Point Capital

Avenue Capital Group

UniCredit

Ashmore Investment Management

VR Capital Group

RBS

HSBC


UK Restructurings: Restructuring Types & Current Issues


Restructuring Types - Terminology and procedures

In the UK, there are several different restructuring and bankruptcy options at the disposal of distressed companies. They range from Administrations

and Company Voluntary Arrangements, (CVAs) to Schemes of Arrangements and Out-of-Court Restructurings. Below is a brief guide to terminology

and procedures.

Administration is an important insolvency procedure. Its objective is the rescue of the company as a going concern, or if this is not possible then to

obtain a better result for creditors than would be likely if the company were wound up. A licensed insolvency practitioner, 'the administrator', is

appointed to manage a company's affairs, business and property for the benefit of creditors. On entering administration, a moratorium period enables

the appointed insolvency practitioner to plot a route out of administration free from the threat of legal action. Administration will end automatically

after one year, save when extended by court order or with creditor consent. Recent judicial and market developments have seen ‘Light Touch

Administration’ (LTA) developed and implemented on the Debenhams Administration, which could see them being used significantly more than

historically. LTAs are considered in further detail in the next slide.

CVAs are a voluntary means of repaying creditors some or all of what they are owed. Once approved by 75% or more of creditors, the arrangement is

binding on all creditors. CVAs are supervised by licensed insolvency practitioners and allow a company to repay creditors over an extended period of

time by making one monthly payment to the creditors included in the CVA rather than multiple payments to individual creditors, and all interest and

charges are frozen. A CVA may be used alongside, or to obviate the need for, other insolvency procedures. CVAs have been utilised on 22% of

restructurings since 2016, cementing its role as a useful tool to address unsecured creditors.

Out of Court situations are debt restructurings undertaken and concluded outside of court and bankruptcy processes. They are often efficient and

cheap in comparison to court-based alternatives—and the desired outcome often yields a reduced balance sheet and financially healthier company.

A Scheme of Arrangement is a statutory procedure for debt restructuring undertaken under Part 26 of the Companies Act 2006, pursuant to which a

company may enter into a compromise or arrangement with its members or creditors (or any class of them). The scheme may, however, be used in

conjunction with a formal insolvency procedure. Creditor approval and court sanction are necessary. Schemes led in both number of situations and

debt restructured, accounting for 40% of UK restructurings and often utilised in larger cross-border situations.

Liquidation is a legal process in which a liquidator is appointed to 'wind up' the affairs of a limited company. The purpose of liquidation is to sell the

company’s assets and distribute the proceeds to its creditors. At the end of the process, the company is dissolved – it ceases to exist. Whilst this

process is utilised less frequently, Carillion and Thomas Cook are two examples where this process was utilised given the exhaustion of options and

their respective liquidity positions at the time of failure.

26


Recent Market Developments – Light Touch Administration

COVID-19 has seen many different jurisdictions and governments implement extraordinary measures to support the economy, businesses and jobs. In

the UK, businesses have benefitted from over £32 billion in government loans and guarantees to support their cashflow during the crisis, as well as

other cashflow measures such as Time to Pay Arrangements and VAT deferrals with HM Revenue & Customs and Business Rates suspension.

There have also been changes to bankruptcy legislation, rules and regulations following the publication of the long-awaited Corporate Insolvency and

Governance Bill, published on Wednesday 21 May 2020. This will provide, amongst others, a moratorium to rescue businesses as a going concern, the

introduction of a new restructuring plan as an additional rescue process, a temporary prohibitions of winding-up petitions, relaxation to wrongful

trading provisions, prohibition on enforcement of supplier insolvency termination clauses and a temporary extension of time periods and providing

information to Companies House.

Another change, however, has come via the restructuring and insolvency profession through Light Touch Administration (LTA) in a process helped by

The Insolvency Lawyers Association and City of London Law Society, which published a template consent protocol to facilitate LTAs of companies

during the COVID-19 lockdown.

LTAs are not a new procedure since no new rules have been introduced. In fact, they have been around but have been utilised infrequently, typically in

specific circumstances or with some real estate related bankruptcies where the appointment of a Receiver was insufficient to maximise control or

recoveries. However, the implementation of LTA on Debenhams could open the way for wider use.

In a LTA, the company would still go into Administration in the usual way and management wouldn't be displaced. Instead, the Administrators

effectively give consent to the board to exercise certain powers within agreed parameters, enabling them to continue to run the day to day

management of the business with oversight from the Administrators.

It ultimately provides a low-cost strategy whilst maintaining control so as to maximise recoveries at minimum cost within an acceptable timeframe.

Whilst at all times the Administrator will oversee the insolvency to ensure the interests’ of creditors as a whole are treated appropriately, the primary

driver of the LTAs is for the Administrator to use their powers and status - as an agent of the company and officer of the court - to keep or appoint a

new/appropriate team of professionals to deliver the best outcome at least cost. LTAs also provide a degree of continuity and certainty to employees

at a stressful time and allows the administrator to concentrate on their main task – devising a strategy to enable the company to survive in the longer

term. remain ultimately legally responsible for any decisions taken while the company is under their purview.

Alongside the current Administration of Debenhams, there has been very recent Judicial consideration, guidance and approval of LTAs, which as

already seen under the COVID-19 driven market changes could have a large role to play in the coming months and years.

27


Tables and Timelines


LARGEST UK RESTRUCTURINGS: TOP 20 LIABILITIES (GBPm)

29

Source: Debtwire’s Restructuring Database

Foreign currency converted to GBP at 8 May 2020 based on the following rates:

GBP/UAH 33.56

GBP/HRK 8.7

GBP/USD 1.24GBP/EUR 1.15

2,058

2,300

2,301

2,332

2,438

2,508

2,597

2,757

3,114

3,166

3,309

3,769

4,160

4,271

4,589

5,251

6,371

6,600

6,900

28,297

- 5,000 10,000 15,000 20,000 25,000 30,000

Premier Oil UK Limited

MF Global UK Limited

Seadrill Partners

Steinhoff Finance Holding GmbH

Codere Finance (UK) Limited

Enquest PLC

DTEK Finance PLC (I)

Stripes US Holding, Inc

DTEK Finance PLC (II)

Algeco Scotsman PIK S.A.

DTEK Finance PLC (III)

Agrokor d.d.

Metinvest B.V.

Steinhoff Europe AG

Premier Oil Plc (II)

Premier Oil Plc

Thomas Cook Group Plc

NMC Health Plc

Carillion Plc

Co-operative Bank plc


OPEN RESTRUCTURING CASES

Restructuring Name HQ Proceeding Type Commencement Date

Phones 4U Limited UK Administration 15 September 2014

Austin Reed Group Ltd UK Administration 26 April 2016

Maplin Electronics Limited UK Administration 28 February 2018

New Look Limited UK CVA 07 March 2018

Conviviality Plc UK Administration 05 April 2018

Carpetright Plc UK CVA 12 April 2018

Homebase Limited UK CVA 01 May 2018

Four Seasons Health Care Limited UK Administration 21 May 2018

PoundWorld Retail Limited UK Administration 11 June 2018

MF Global UK Limited UK Administration 28 January 2019

Interserve Plc UK Administration 15 March 2019

Arcadia Group Limited UK CVA 18 March 2019

Select Retail Limited UK CVA 12 June 2019

Seadrill Partners UK Out-of-Court 10 July 2019

PizzaExpress (Restaurants) Limited UK Out-of-Court 26 July 2019

Mothercare Plc UK Administration 05 November 2019

European Fintyre Distribution Limited UK Administration 19 February 2020

BrightHouse Limited UK Administration 30 March 2020

Carluccio's Plc UK Administration 30 March 2020

NMC Health Plc United Arab Emirates Administration 05 April 2020

Debenhams Plc UK Administration 09 April 2020



CLOSED SCHEMES OF ARRANGEMENT

Restructuring Name HQ Commencement Date End Date Duration - Days

Doncasters Group Limited UK 17/01/2020 17/05/2020 121

Premier Oil Plc UK 29/03/2017 28/07/2017 121

Codere Finance (UK) Limited Spain 02/09/2015 23/12/2015 112

Premier Oil Plc (II) UK 15/01/2020 29/04/2020 105

Indah Kiat International Finance Company BV Indonesia 21/01/2016 15/04/2016 85

Yuksel Insaat AS (I) Turkey 27/10/2015 19/01/2016 84

Noble Group Limited Hong Kong 24/09/2018 11/12/2018 78

Premier Oil UK Limited UK 15/05/2017 28/07/2017 74

Co-operative Bank plc UK 14/07/2017 24/09/2017 72

Drydocks World LLC United Arab Emirates 15/11/2017 22/01/2018 68

Gulf Keystone Petroleum Limited UK 25/07/2016 29/09/2016 66

Stripes US Holding, Inc South Africa 10/10/2018 11/12/2018 62

House of Fraser (Funding) Plc UK 06/06/2018 27/07/2018 51

Lecta Paper UK Ltd Spain 11/12/2019 30/01/2020 50

Syncreon Group BV & Syncreon Automotive (UK) Ltd

USA 22/07/2019 10/09/2019 50

Metinvest B.V. (III) Ukraine 23/12/2016 08/02/2017 47

YH Limited and Hibu Group Limited UK 22/07/2016 06/09/2016 46

Algeco Scotsman PIK S.A. UK 09/05/2017 23/06/2017 45

Frigoglass Finance BV Greece 19/06/2017 01/08/2017 43



CLOSED SCHEME OF ARRANGEMENT (CONTINUED)


Lehman Brothers International (Europe) UK 09/05/2018 18/06/2018 40

Avanti Communications Group Plc UK 16/02/2018 26/03/2018 38

NN2 Newco Limited and Politus BV Belgium 19/06/2019 26/07/2019 37

CBR Fashion GMBH Germany 05/08/2016 09/09/2016 35

Far East Capital Limited S.A. Russia 29/09/2017 03/11/2017 35

Global Garden Products Italy S.P.A Italy 23/05/2016 27/06/2016 35

Metinvest B.V. (II) Ukraine 01/06/2016 30/06/2016 29

Bibby Offshore Services plc UK 20/12/2017 17/01/2018 28

Metinvest B.V. (I) Ukraine 01/01/2016 29/01/2016 28

New Look Limited UK 02/04/2019 30/04/2019 28

New Look Secured Issuer Plc UK 02/04/2019 30/04/2019 28

Enquest PLC UK 21/10/2016 16/11/2016 26

DTEK Finance PLC (I) Ukraine 02/04/2015 27/04/2015 25

DTEK Finance PLC (III) Ukraine 02/12/2016 22/12/2016 20

DTEK Finance PLC (II) Ukraine 07/04/2016 26/04/2016 19

Agrokor d.d. Croatia 14/02/2019 28/02/2019 14

House of Fraser UK 19/07/2018 27/07/2018 8



CLOSED CVAS


British Steel Limited UK 22/05/2019 09/03/2020 292

Arjowiggins UK Holdings UK 15/01/2019 23/09/2019 251

Gaucho Grill Limited UK 11/05/2018 06/09/2018 118

Monarch Group UK 02/10/2017 23/01/2018 113

Johnston Press Plc UK 11/10/2018 19/11/2018 39

BHS Limited UK 26/04/2016 03/06/2016 38

Austin Reed Group Ltd UK 26/04/2016 31/05/2016 35

Laura Ashley Holdings Plc UK 24/03/2020 22/04/2020 29

Patisserie Valerie Limited UK 22/01/2019 14/02/2019 23

Jamie's Italian UK 09/02/2018 05/03/2019 389

Prezzo Plc UK 02/03/2018 21/02/2019 356

Debenhams UK 26/04/2019 06/04/2020 346

Select Retail Limited UK 26/03/2018 25/01/2019 305

BHS Limited UK 23/03/2016 16/12/2016 268



CLOSED ADMINISTRATIONS

Restructuring Name HQ Status Commencement date End Date Duration - Days

Iona Energy (UK) Company Plc UK Closed 18/11/2015 20/04/2017 519

British Steel Limited UK Closed 22/05/2019 09/03/2020 292

Arjowiggins UK Holdings UK Closed 15/01/2019 23/09/2019 251

Gaucho Grill Limited UK Closed 11/05/2018 06/09/2018 118

Monarch Group UK Closed 02/10/2017 23/01/2018 113

Johnston Press Plc UK Closed 11/10/2018 19/11/2018 39

BHS Limited UK Closed 26/04/2016 03/06/2016 38

Laura Ashley Holdings Plc UK Closed 24/03/2020 22/04/2020 29

Patisserie Valerie Limited UK Closed 22/01/2019 14/02/2019 23


CLOSED OUT-OF-COURT SITUATIONS

Restructuring Name HQ Status Commencement date End Date Duration - Days

Survitec Group Limited UK Closed 27/03/2019 07/02/2020 317

Proserv UK Ltd UK Closed 18/08/2017 14/05/2018 269

The Innovation Group Plc UK Closed 02/08/2018 11/04/2019 252

Britax Childcare Limited UK Closed 09/08/2019 03/02/2020 178

BMI Healthcare UK Closed 29/06/2018 17/12/2018 171

Addison Lee UK Closed 27/10/2019 21/02/2020 117

Hemisphere International Properties BV UK Closed 26/06/2018 06/09/2018 72

BrightHouse Limited UK Closed 08/12/2017 02/02/2018 56

Adelie Foods Group Limited UK Closed 27/09/2016 27/09/2016 -


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Contacts

Restructuring Data - Europe

35

DEBTWIRE RESTRUCTURING INSIGHTS

Joshua Friedman, Global Head of Restructuring Data+1 212 574 7867 / [email protected]

Jack M. Tracy II, Global Head of Legal Analytics+1 646 378 3177 / [email protected]

Shab Mahmood, Restructuring Analyst+44 203 741 1323 / [email protected]

Juan Mariño, CFA, Restructuring Analyst+44 203 741 1364 / [email protected]

Donald Ndubuokwu, Restructuring [email protected]

• At Debtwire, we are passionate about the markets we cover

and the expansion of the Restructuring Data platform to

cover European Restructuring and bankruptcy situations.

• In the US, a detailed picture of bankruptcy situations can be

analysed through public Court-based filings. The EU

presents an all together different challenge. For

transparency, swap opaqueness.

• Whilst we endeavour to expand and develop the

Restructuring Data platform, we are mindful of reflecting as

accurately as possible each restructuring and bankruptcy

situation.

• As such, if you have any questions, corrections or omissions;

would like to make submissions; or have any data query or

information request, please feel free to email

[email protected] or reach out individually to anyone

on the Restructuring Data team (see list on the left).

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We have obtained the information provided in this report in good faith from sources that we consider to be reliable, but we do not independently verify the information. The information is not intended to provide tax, legal or investment advice. We shall not be liable for any mistakes, errors, inaccuracies or omissions in, or incompleteness of, any information contained in this report. All such liability is excluded to the fullest extent permitted by law. Data has been derived from company reports, press releases, presentations and Debtwire intelligence.

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