Initial analysis

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Initial steps

Whichever party you are acting for, the first step of a restructuring is to obtain all relevant documentation and conduct due diligence.

Usually the company will appoint new advisors to conduct an independent review—see Practice Note: A guide to independent business reviews. Restructuring specialists will be skilled at negotiating with creditors and allow the management to concentrate on running the business—see Practice Note: Restructuring—initial steps.

A number of parties involved in a restructuring or insolvency require legal advice and, in certain circumstances, parties with common interests may choose to use the same firm of solicitors. It is important to identify common conflict situations that arise and how information barriers may be put in place to allow a law firm to continue to act—see Practice Note: Conflicts in restructuring and insolvency.

If the company operates in a sensitive sector, the provisions of the National Security and Investment Act 2021 may apply (see Practice Notes: FAQs for insolvency professionals on the National Security and Investment Act 2021 and National Security and Investment Act—final orders tracker).

Benefits of restructuring over formal

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Latest Restructuring & Insolvency News

Insolvency Service forces fraudulent online pet supply company to cease all operations

The Insolvency Services has reported the shut down of Funnyfuzzy UK Co.Ltd for providing its customers with inferior and defective pet supplies. Following the Insolvency Service's investigation, it was revealed that the company had been misleading its customers by providing them with second-rate merchandise; failing to deliver ordered items; and refusing to issue refunds while lodging fabricated dormant accounts and evading VAT registration.

Directors’ liability for company’s debts under section 217 of the Insolvency Act 1986 and rule 22.17 of the Insolvency Rules 2016 (Maxima v Fealy and Barrett)

Restructuring & Insolvency analysis: The High Court has dismissed a claim brought by an assignee of creditors' debts against individuals who were directors of a company in liquidation and a second company which was operating under a prohibited name pursuant to section 216 of the Insolvency Act 1986 (IA 1986). The defendants successfully argued that the second company fell within ‘The Third Excepted Case’ under the Insolvency Rules 2016 (IR 2016), SI 2016/1024, r 22.7, and that the second company had been known by its name for the entire 12 months prior to the first company's liquidation and had not at any time in those 12 months been dormant. The case is thought to be the only reported case on the true meaning and effect of the second of the two elements of The Third Excepted Case and demonstrates that the principles of corporate accounting law on non-dormancy cannot be translated from an accounting to an insolvency scenario. The concept of phoenix syndrome and the principle against doubtful penalisation were also considered. Written by Laura Newbery, legal director at Addleshaw Goddard LLP.

Top UK court rejects Bedzhamov Russian bankruptcy order

Law360, London: The UK Supreme Court refused on 20 November 2024 to recognise a Russian bankruptcy order against two properties owned by banker Georgy Ivanovich Bedzhamov in Britain, confirming a legal principle that foreign courts do not have jurisdiction over English land.

Restructuring & Insolvency weekly highlights—21 November 2024

This week's edition of Restructuring & Insolvency weekly highlights includes: confirmation by the Supreme Court of the immovables rule to English property (Kireeva v Bedzhamov), the publication by the Insolvency Service of its monthly insolvency statistics for October 2024, an analysis on the interface between property law and financial remedy in the context of bankruptcy (DDR v BDR), plus a round-up of other news and cases for restructuring and insolvency professionals.

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