Author Biographies ............................................ xxi
Table of Cases ................................................ xxv
Table of Legislation .......................................... xli
List of Abbreviations ....................................... lxvii
I. CORPORATE DEBT RESTRUCTURING
Alan Kornberg and Sarah Paterson
1. Insolvency in the UK and the US
I The Case for a Comparative Approach ........................ 3
II Directors' Duties to Promote a Restructuring in the US ..... 5
III Directors' Duties to Promote a Restructuring in England
A The Common Law .......................................... 7
B Wrongful Trading ....................................... 12
C Alleging Breach of Duty ................................ 13
D Other Miscellaneous Provisions ......................... 16
E Groups ................................................. 16
F Particular Issues for Directors of Listed Companies .... 18
G Implications of Changing Capital Structures and
Relevance of the Tests for Inability to Pay Debts ...... 19
H The Relevance of the Accounts .......................... 30
IV Avoidance Actions in the US ............................... 31
A Fraudulent Conveyances ................................. 31
B Preferences ............................................ 37
C 'Safe Harbors' for Certain Financial Transactions ...... 40
V Vulnerable Transactions in England ........................ 41
A Transactions at an Undervalue (Section 238 of the
Insolvency Act 1986) ................................... 42
B Transactions Defrauding Creditors (Section 423 of
the Insolvency Act 1986) ............................... 44
С Preferences (Section 239 of the Insolvency Act 1986) ... 45
D Jurisdiction of the Court .............................. 48
E Avoidance of Floating Charges (Section 245 of the
Insolvency Act 1986) ................................... 48
2. The EC Regulation on Insolvency Proceedings
I Preliminary ............................................... 51
II Legal Framework ........................................... 52
A Purpose ................................................ 52
B Interpretation ......................................... 53
C Relationship with the Brussels Regulation .............. 53
D Scope and Application .................................. 56
E International Jurisdiction ............................. 59
F Choice of Law Rules .................................... 72
G Recognition of Proceedings ............................. 80
H Cooperation ............................................ 82
I Rights of Creditors .................................... 84
III Managing the Insolvency of Group Companies ................ 85
A. Group Companies and Sharing of COMIs ................... 85
IV Application of the EC Regulation to Rescue Plans .......... 96
A Impact on Discharge and Variation of Debt .............. 96
B Use of Company Voluntary Arrangements in Main
Proceedings ............................................ 97
C Use of Company Voluntary Arrangements and
Administrations in Secondary Proceedings ............... 98
D Schemes of Arrangement ................................. 99
V Forum Shopping as a Restructuring Tool ................... 106
A Introduction .......................................... 106
B Timing Post-Migration: When to Open Insolvency
Proceedings ........................................... 112
C Freedom of Establishment .............................. 120
D The Recast Regulation and COMI Shifting ............... 123
E The Impact of the European Merger Directive ........... 124
3. Out-of-Court vs Court-Supervised Restructurings
I Workouts and Other Restructurings in the US .............. 126
A Advantages and Disadvantages of Workouts .............. 126
B Considerations in Out-of-Court Workouts ............... 128
C Typical Out-of-Court Approaches ....................... 130
D Potential for Failure and a Subsequent Chapter 11
Filing ................................................ 131
II Out-of-Court Restructurings in England ................... 132
A Advantages and Disadvantages of an Out-of-Court
Restructuring in the UK ............................... 132
B Considerations in Out-of-Court Restructurings in
the UK ................................................ 133
C Typical Approaches in the UK .......................... 137
D Subsequent Failure and Insolvency Filing .............. 138
III US Exchange Offers ....................................... 138
A Introduction .......................................... 138
B Reasons for Doing a Debt Exchange Offer ............... 141
C US Securities Law Considerations ...................... 142
D Common Tactics in Debt Exchange Offers ................ 157
E Certain US Federal Income Tax Considerations
and Accounting Considerations ......................... 161
IV Exchange Offers in the UK ................................ 162
V Chapter 11 Plan Reorganizations .......................... 164
A Introduction .......................................... 164
B Limitations on Bankruptcy Court Jurisdiction - Stern
v Marshall ............................................ 164
C Chapter 11 Plan Standards ............................. 168
D Plan Mediation ........................................ 180
VI Pre-Packaged and Pre-Arranged Chapter 11 Plans ........... 182
A Pre-Petition Activities ............................... 182
B First-Day Filings ..................................... 187
С Confirmation Hearing (Day 30-60) ...................... 189
D Post-Confirmation Activities .......................... 190
E Advantages and Disadvantages of a Pre-Packaged
or Pre-Arranged Chapter 11 Plan ....................... 191
VII The Section 363 Sale Alternative ......................... 193
A Relevant Standard: Sound Business Reason .............. 193
B Section 363 Sales Versus Plan Sales ................... 195
С Improper Section 363 Sub Rosa Plans .................... 196
D. Secured Creditors' Right to Credit Bid ................ 198
VIII US Chapter 11 and Administration in the UK Compared ...... 201
A Administration ........................................ 201
B Differences in Theory ................................. 203
C Differences in Practice ............................... 203
D Perceptions of Administration and Chapter 11 .......... 211
IX The Role of Receivership in English Debt Restructurings .. 213
X The Role of the Company Voluntary Arrangement
in English Debt Restructurings ........................... 214
A Introduction .......................................... 214
B Process ............................................... 215
C Challenge ............................................. 218
D Decision to Implement a CVA ........................... 225
E Moratorium ............................................ 226
F The CVA and the Great Recession ....................... 228
XI English Pre-Packaged Administrations and Corporate Debt
Restructurings ........................................... 231
A Introduction .......................................... 231
B Criticisms of Pre-Packs ............................... 232
C Pre-Pack Guidelines ................................... 234
D Courts' Approach to Pre-Packs ......................... 242
XII English Schemes of Arrangement and Corporate Debt
Restructurings ........................................... 248
A Introduction .......................................... 248
B Meaning of 'Creditor' ................................. 249
C Stages of a Scheme and Related Issues ................. 253
XIII Comparison Between 'Cramdown' in England Achieved
Through a Scheme and a Pre-Packaged Administration and
(A) a Chapter 11 Plan of Reorganization and (B)
a Section 363 Credit Bid with Stalking Horse ............. 261
A Introduction .......................................... 261
B The Courts' Approach .................................. 263
C Valuation ............................................. 266
D Pre-Packaged Administration and Section 363 Sales ..... 272
4. The UNCITRAL Model Law on Cross-Border Insolvency
I The Impact of the UNCITRAL Model Law on Cross-Border
Insolvency ............................................... 276
A Introduction .......................................... 276
B Objectives ............................................ 276
C Scope of Application .................................. 277
D Interpretation ........................................ 278
II The US Version - Chapter 15 .............................. 279
A Overview .............................................. 279
B History of Chapter 15 ................................. 279
C Mechanics of Chapter 15 ............................... 283
III Chapter 15 Recognition of English Schemes of
Arrangement .............................................. 295
IV Does Availability of Chapter 15 Relief Affect
Willingness to Accept Jurisdiction in Chapter 11 Case
Where Debtor's COMI is Outside the US? ................... 298
A Eligibility Requirements for Relief ................... 298
B Eligibility for Chapter 11 Relief when the Debtor's
COMI is Outside the US ................................ 299
V Choosing Between Chapter 15 and Chapter 11 for Foreign
Debtors .................................................. 302
A The Automatic Stay .................................... 302
B Debtor in Possession Financing ........................ 303
C Automatic Relief ...................................... 304
D Additional Protections Under Chapter 11 ............... 305
VI Notable Litigation Arising Under Chapter 15 .............. 308
A Litigation Regarding COMI ............................. 308
B Litigation Regarding Available Relief ................. 319
С Litigation Regarding Section 363 ....................... 326
VII Areas for Potential Improvement .......................... 330
VIII The English Experience of the Model Law—
The Cross-Border Insolvency Regulations 2006 ............. 332
A Implementation ........................................ 332
B Framework of the Regulations and Limitations on
Application ........................................... 333
C Relationship Between the Regulations and Other Bases
of Recognition and Assistance Under English Law ....... 334
D Key Definitions ....................................... 336
E Recognition of a Foreign Proceeding and Relief ........ 338
F Effects of Recognition ................................ 342
G Foreign Creditors' Rights of Access to Proceedings
Under British Insolvency Law .......................... 352
H Cross-Border Cooperation .............................. 353
I Commencement of Concurrent Proceedings and
Coordination of Relief ................................ 356
J UNCITRAL Guidance ..................................... 357
II BANK RESOLUTION
Dalvinder Singh, John Douglas, and Randall Guynn
5. Legal Aspects of Banking Regulation in the UK and US
I Introduction ............................................. 361
II The UK Model of Regulation and Supervision ............... 362
A The Scope of the Responsibilities of the FCA and PRA .. 368
B Bank Supervision ...................................... 373
С Ring-fencing ........................................... 378
III The US Approach to Bank Supervision ...................... 379
A The Dual Banking System ............................... 380
B The Individual Regulators ............................. 382
C Financial Stability Oversight Council ................. 387
IV The US Regulation of the Business of Banks and Safe
and Sound Requirements ................................... 389
A Volcker Rule .......................................... 390
B Safety and Soundness .................................. 391
C Capital and Liquidity Requirements .................... 394
D Stress Testing ........................................ 396
E The Directors' Duties ................................. 397
F The Common Law Standard ............................... 398
G The Statutory Position ................................ 399
H Other Enforcement Actions ............................. 401
6. Banks in Distress
A bermons and Burials ................................... 405
B Northern Rock: the Catalyst for the Banking
Legislation ........................................... 406
C The Institutions to Which the Banking Act Applies ..... 408
D The Role of the Appropriate Regulator, the Bank
of England, and the Treasury .......................... 409
E Recovery and Resolution Plans ......................... 414
R Early Intervention and the PRA Proactive
Intervention Framework ................................ 416
G The Special Resolution Regime: Part 1 of the Banking
Act ................................................... 420
H The Impact of Share Write-down and Conversion,
and Share Transfers and Property Transfers ............ 427
I Compensation and Valuation ............................ 430
J. The Resolution of Dunfermline Building Society ........ 438
K. Third Country Resolution Actions ...................... 440
L. Recognized Central Counterparties ..................... 442
7. Banking Act Restructuring and Insolvency Procedures
A Introduction .......................................... 445
B The Administration and Liquidation Regime for
Banking Institutions .................................. 448
C The Bank Administration Procedure ..................... 449
D Bank Insolvency Procedures ............................ 460
E Building Societies .................................... 465
F The Treatment of Creditors in Bank Insolvencies ....... 466
G Deposit Protection .................................... 467
H Cross-Border Bank Insolvency .......................... 471
I The Investment Bank Special Administration Regime ..... 472
8. Resolution of US Banks and Other Financial Institutions
I Introduction ............................................. 485
II Fundamentals of Resolution Authority ..................... 490
III Resolution of US IDIs .................................... 494
A Background ............................................ 496
B Supervisory and Other Tools to Prevent Failure ........ 503
С Resolution Process ..................................... 515
D FDIC-Assisted Purchase-and-Assumption Sale
Transactions .......................................... 524
E Claims Process ........................................ 536
F FDIC Super Powers ..................................... 537
IV Resolution Authority over Fannie Mae, Freddie Mac, and
the Federal Home Loan Banks .............................. 549
A Background ............................................ 549
B Resolution Authority .................................. 551
C Exercise of New Resolution Authority .................. 553
D Recent Developments ................................... 554
V Resolution Authority over Systemically Important
Financial Institutions ................................... 557
A Orderly Liquidation Authority Framework ............... 558
B Key Policy Issues ..................................... 565
C Single-Point-of-Entry Strategy ........................ 576
D Resolution Under the US Bankruptcy Code ............... 578
E Resolution Planning ................................... 585
VI International Coordination of Cross-Border Resolutions ... 588
VII Conclusion ............................................... 596
9. European Bank Resolution Regime
I Introduction ............................................. 597
II The Pillars of the Banking Union ......................... 598
A The Rationale for the BRRD ............................ 600
B Recovery and Resolution Plans ......................... 603
C Resolvability ......................................... 608
III Early Intervention ....................................... 609
IV Resolution Objectives, Conditions, and Principles ........ 611
V Resolution Tools ......................................... 615
A The Sale of Business Tool ............................. 615
B The Bridge Institution Tool ........................... 616
C Asset Separation Tool ................................. 617
D The Bail-in Tool ...................................... 618
E Government Financial Stabilization Fund ............... 621
F Resolution Powers of the Resolution Authority:
Administrative and Procedural ......................... 622
VI Cross-Border Group Resolution ............................ 627
A The Resolution Colleges ............................... 628
VII Relations with Third Countries ........................... 630
VIII The Financing Arrangements ............................... 633
III SOVEREIGN DEBT RESTRUCTURING
Rodrigo Olivares-Caminal .................................
10. An Introduction to Sovereign Debt Restructuring
I Introduction ............................................. 639
11. Litigation Aspects of Sovereign Debt
I Sovereign Debt Litigation ................................ 647
II Legal Precedents ......................................... 653
A Cases Being Analysed .................................. 653
B Some Preliminary Distinctions: Using a Fiscal Agent
and a Trust Structure ................................. 654
C The Pari Passu Cases .................................. 656
D The Pari Passu Clause and Multilateral Debt Payments .. 671
E The Attachment of the Tendered Bonds (Future Rights) .. 672
III Conclusion ............................................... 682
12. Transactional Aspects of Sovereign Debt Restructuring
I Transactional Aspects of Sovereign Debt Restructuring .... 683
A An Introduction to the Transactional Aspects of
Sovereign Debt Restructuring .......................... 683
B Current Debate on Sovereign Debt Restructuring:
Procedures and Methods ................................ 686
С The SDRM Proposed by the IMF .......................... 689
D The ESM: An Institution Designed to Avert Financial
Crises ................................................ 708
E The Use of CACs, Exit Consent, and Term Enhancements .. 720
F Case Study: Uruguay's Debt Reprofiling—How to
Perform a Successful Exchange Offer ................... 741
II Conclusion ............................................... 747
Annex: Certain Key Differences Between the US Bankruptcy
Code and the US Bank Resolution Statute (Sections 11
and 13 of the Federal Deposit Insurance Act) .................. 751
Index ......................................................... 757
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