Restructuring Plan
This new powerful and flexible rescue process that came into being on 25 June 2020 under new government legislation. It contains a cross-class cram down (“CCCD”) which can bind, by court sanction, a dissenting class of creditors into a scheme to prevent them from blocking it when it is in the company’s and creditors interest. We can assist you with putting a Restructuring Plan or “RP” in place. We are able to move quickly and cost effectively as soon as instructed.
What is a company Restructuring Plan?
A RP is a flexible agreement between a financially distressed company and its creditors to restructure its debt to secure a long term survival. It contains a court mechanism to compromise objecting creditors where overall it is in the company’s and creditors’ best interest.
The Restructuring Planning Process
Eligibility
Process
Conclusion
Contact Us
We are happy to offer you an initial free Restructuring Plan consultation that can be done remotely on a video or telephone call.
We will also discuss the options such as administration, creditors voluntary liquidation (cvl), company voluntary arrangement (cva) and validation orders.
Give us a call on 0113 242 0808 or e-mail advice@chamberlain-co.co.uk.
The Advantages and Disadvantages of a Restructuring Plans
Advantages of a Restructuring Plan
- The company can compromise both the claims of secured and unsecured creditors.
- It can bind dissenting creditors when in other rescue procedures they could block the rescue.
- It can compromise members rights
- An all encompassing procedure whereas previous restructuring may have involved a separate scheme and a CVA.
Disadvantages of a Restructuring Plan
- As it is a process which involves the courts, the involvement of a solicitor and a barrister will result in increased costs.
- The involvements of the courts may make it a slower process to implement.
- No formal protection from creditor action prior to the approval of the Restructuring Plan (without a moratorium)
Restructuring Plan FAQs
Does the company have to be insolvent to be eligible for the Restructuring Plan?
No. The company may be solvent or insolvent but in order to be eligible for the new procedure, it must be or have prospects of facing financial difficulties that impact its ability of continuing to trade as a going concern.
What will the Restructure Plan look like?
The only condition for the Restructure Plan is that it must combat the company’s financial difficulties and have prospects of turning the company around. Apart from this, the plan can be tailored and adapted to the individual company’s needs through the assistance of an Insolvency Practitioner.
Does an Insolvency Practitioner need to be appointed?
Even though the process does not require an Insolvency Practitioner to administer, a restructuring specialist, such as an Insolvency Practitioner, will be needed to prepare and implement the plan. By doing so, creditors are much more likely to agree to the terms and allow the restructure to take place.
Will I retain all my powers as a director?
Yes, as this is not a formal insolvency procedure, directors powers will not be affected. Directors must ensure their duties and responsibilities are discharged throughout the process.
Is there any protection from Creditors?
Once the Restructuring Plan is implemented the company obtains protection from creditor action. However, prior to the Restructuring Plan being approved there is no formal protection from such action. We can advise upon the best procedure under which protection can be obtained whilst seeking the approval of a Restructuring Plan. For example, the new moratorium procedure.
