Weil Gotshal & Manges LLP

This Practice Note outlines the key tax issues relevant to acquisitions of distressed debt portfolios, referred to as non-performing loans (NPLs). It considers appropriate acquisition vehicles and compares the tax consequences of using UK corporate vehicles, offshore vehicles or tax transparent vehicles. It also analyses the financing options available to fund the acquisition and the various other associated costs involved. This Practice Note is produced in partnership with Jenny Doak of Weil Gotshal & Manges.

This Practice Note outlines the key tax issues that should be considered when a company struggling to repay external debt seeks to restructure its external debt obligations. It focuses on formal debt waivers (debt releases), looking at the application of the loan relationships rules to such eventualities and the possible availability of relief where there is insolvency or where debt is swapped for equity. It also looks at the tax issues arising where connected parties are involved, where the ‘deemed release’ provisions are potentially triggered. This Practice Note concludes by considering what to keep in mind when debt is being renegotiated and in situations that might involve a change in ownership of the borrower group.

This Practice Note outlines the key tax issues that are relevant where a creditor seeks to enforce its security over the assets of a corporate borrower in distress. It considers the different types of enforcement mechanisms available to a creditor including exercising a power of sale, appointing a receiver, administration and foreclosure. It also considers the situation where a borrower agrees to transfer property to a creditor in satisfaction of a debt owed.

This Practice Note, produced in partnership with Lois Deasey and Georgia Papathanasiou of Weil, Gotshal & Manges LLP, considers the elements of a transfer scheme under section 900 of the Companies Act 2006 (or schemes of reconstruction and amalgamation), the similarities and differences between them and section 895 schemes of arrangement (or Part 26 schemes), the meaning of reconstruction and amalgamation and some deal analysis.

This Practice Note, produced in partnership with Hillarie James and Kelly DiBlasi of Weil Gotshal & Manges LLP, discusses the potential impact of the US Supreme Court’s ruling in Harrington v Purdue Pharma LP on striking down non-consensual third-party releases on recognition and enforcement of such releases in Chapter 15 proceedings. The US court ruled that these types of third-party releases (which effectively seek to discharge claims against a non-debtor without the consent of affected claimants) are not available in Chapter 11 plans under the US Bankruptcy Code. This decision is narrow in scope as it did not express a view on plans that provide for consensual releases of claims against non-debtors and how such consent will be defined in future cases.

This checklist lists out the key tax issues to consider when dealing with distressed corporate debt. It is intended to provide a quick and high-level reference guide to the key tax considerations that ought to be considered when acting for clients involved in the acquisition, restructuring, release or enforcement of distressed debt. This checklist is produced in partnership with Jenny Doak of Weil Gotshal & Manges.