Authors

Emilie Delacave

Associate

Read More
Louise Jennings

Louise Jennings

Professional Support Lawyer

Read More
Authors

Emilie Delacave

Associate

Read More
Louise Jennings

Louise Jennings

Professional Support Lawyer

Read More

16 December 2021

R&I update - December 2021 – 1 of 5 Insights

English High Court sanctions Amicus restructuring plan

  • Quick read

On 15 November 2021, the English Court released its reasoned judgment for the sanction of Amicus Finance Plc's (Amicus) restructuring plan.

Background

Amicus, a short term property lender, entered administration in 2018. The administrators proposed a restructuring plan to compromise creditors' claims, exit the administration and ultimately restore the company as a going concern. The company faced imminent liquidation if the plan was not approved.  Secured creditor, Crowdstacker, an online peer-to-peer lending platform, opposed the plan.

Amicus asked the court to exercise its power of cross-class cram down to sanction the plan against Crowdstacker. The court needed to be satisfied that Crowdstacker would not be any worse off under the plan than the 'relevant alternative' in this case, liquidation (Condition A), and the consenting class of creditors had a genuine economic interest in the event of the relevant alternative (Condition B).

Decision

It was accepted by all parties that Condition B had been met as the consenting expense creditor class would receive a payment in a liquidation. The dispute centred on Condition A. Crowdstacker argued that the administrators had undervalued recoveries in a liquidation because a liquidator could pursue litigation in respect of antecedent transactions, which would increase recoveries.

The judge found that Condition A had been met because:

  • while 'clawback claims' can be factored into a 'no worse off' test,'a mini trial of ‘clawback’ claims without disclosure or evidence' cannot take place in a sanction hearing
  • he was satisfied on a balance of probabilities that Crowdstacker was not worse off under the plan than it would be if Amicus entered liquidation.

Restructuring plan 'firsts'

This case, while specific to its facts, involved a series of 'firsts' for UK restructuring plans: the first sanction of a plan proposed by administrators; the first for a mid-market company; and the first to involve the use of the cross-class cram down for a secured creditor.

Find out more

To discuss the issues raised in more detail, please reach out to a member of our Restructuring & Insolvency team.

 
Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.

Subscribe
Subscribe

Related Insights

Bridge frame
Restructuring & insolvency

UK court sanctions first restructuring plan to exclude 'out of the money creditors' from voting and compromise overseas shareholders

4 May 2022
Quick read

by Louise Jennings

Click here to find out more
Old and new office building facades
Restructuring & insolvency

UK court confirms where burden of proof lies in directors' duties cases

7 April 2022
Quick read

by Emilie Delacave

Click here to find out more
Low Angle View Of Engineer Walking On Steps
Restructuring & insolvency

Return to pre-pandemic insolvency measures in UK as last temporary rules are lifted

7 April 2022
Quick read

by Louise Jennings

Click here to find out more