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Posted: 24 Sep, 2021

On 20th September, the first session of TMA NOW’s Spotlight Series took place. The Spotlight Series has been created to shine a light on leading women in the restructuring, distressed and insolvency space, and there was no better way to kick off the series than with Felicity Toube QC, South Square. A specialist in particular in domestic and cross-border insolvency and restructuring, Felicity has acted in relation to most of the recent major corporate restructurings or insolvencies and related litigation including NMC, GateGroup, Codere, Saad, Madoff, Lehman, Stanford, Rastogi, Nortel, SPhinX, Sigma, Landsbanki, MF Global, and Rafidain Bank.

If you missed the session or would like to watch it again, you can find the recording here.

Opening the webinar, Tayyibah Arif, Chair of TMA NOW and Counsel at Dechert LLP, welcomed Felicity and asked her to share her journey to becoming a barrister and whether, as a woman, she has faced any barriers navigating a profession that has traditionally been dominated by men.

As a child, Felicity said she dreamt of becoming a biochemist but as she was not a lover of Maths, she soon set her sights on becoming a lawyer. After a summer spent working in a solicitors’ firm, doing grunt work and paginating by hand, she went to a barrister’s chambers where she was given more interesting work that led her towards the Bar. Early in her career, Felicity said she knew nothing about insolvency law but when she moved to South Square for her second six pupillage she learned how varied and exciting it could be. She was taken under the wing of Gabriel Moss QC, whose expertise in insolvency and restructuring law was unparalleled and who enabled her to get involved in multiple interesting cases.

Felicity said she thinks luck has a lot to do with where she is now in her career, but she also said that she comes from a long line of stubborn women and that if someone tells her she can’t do something it makes her want to do it even more. When she first joined Chambers she was often the only woman in the room, and even now she is often the only senior woman in the room. Felicity recalled a case when she took Silk ten years ago where she arrived at a meeting and when trying to begin the discussion was asked “Don’t you think we should wait until the QC arrives?”. While the male/female divide is less overt these days, she said it still manifests in subtle ways.

When asked by Tayyibah whether she has seen diversity increase in the industry, Felicity said she is often invited to speak at diversity and inclusion events but is wary of those firms that just spend a lot of time talking about diversity but not much time making sure that their practices are really diverse. Felicity said “diversity works by giving people opportunities, not by ticking boxes. If you really want diversity you need to give underrepresented people more work rather than asking them to come and speak for free at diversity events”. Felicity said she tries to ensure diversity this by doing everything she can to give a helping hand to those coming up behind her (both men and women) on merit.

Moving on to the subject of good faith in Voluntary Arrangements, Felicity said she thinks this is a troublesome area. To illustrate her point, she gave details of a recent case she worked on, Gertner, where she acted on behalf of the majority creditor Laser Trust. The case, which had been in litigation for several years, derived from Mr Gertner borrowing money from CFL Finance Ltd that he failed to pay back. When CFL sought to make Mr Gertner bankrupt Mr Gertner decided to go into a voluntary arrangement, persuading his majority creditor, Kaupthing hf, to vote in his favour by helping them get money from elsewhere. CFL said this was a breach of the good faith principle and the Court of Appeal agreed and ruled that Kaupthing hf would have their votes discounted, causing the first voluntary arrangement to fail.

Following this decision, Kaupthing hf assigned its interest to Laser Trust. Laser Trust was a trust settled by the wife of a friend of Mr Gertner. It paid $6m for the Kaupthing hf debt, becoming the majority creditor. Mr Gertner then proposed a second voluntary arrangement which Laser Trust said it would vote in favour of. Again, CFL said this was a breach of the good faith principle but Felicity argued on behalf of Laser Trust that the case was different because Laser Trust was not being paid to vote in favour of the Voluntary Arrangement, they were doing so for commercial reasons. Even if Laser Trust had purely been motivated by friendship, that would not have been a breach of the good faith principle. At first instance, the Court found there was a breach of the good faith principle. However, upon appeal, Mr Justice Marcus Smith said there was no breach of the good faith principle.

In addition to having their vote crammed down, Felicity said the reason why some creditors object to Voluntary Arrangements (for example if you’re a minority creditor like CFL), is that there is no investigation into the debtor’s assets. In Gertner, that is what CFL wanted, to find out if there were any undisclosed assets and whether Mr Gertner had lied about his liabilities (although there was no evidence that this was the case). CFL said it was unfair that a Voluntary Arrangement was used and they thought they should be entitled to a bankruptcy order. Laser Trust’s argument was that they were not, because statute had provided a different route – that of a Voluntary Arrangement.

When considering whether it is right to go into a Voluntary Arrangement or not, Felicity said you need to look at the law and the rules on good faith. The Gertner case highlights some of these rules. One, that associates in Voluntary Arrangements have their votes discounted. Two, that you can’t get around that rule by assigning your vote to a non-associate solely to subvert. Three, that you can’t use a secret inducement to a creditor to vote. Four, that there cannot be a collateral advantage that induces the vote (even if it is not secret at all).

Felicity went on to discuss the rulings in the Gertner case and why she questions some of the principles behind the decision in Gertner 1. There is still, she said, a question mark about what is and is not a collateral advantage that induces you to vote.

Closing the webinar, Emily Scaife, TMA NOW committee member and Partner at Burges Salmon, put some audience questions to Felicity, including what advice she would give to women in the early stages of their career who want to champion other women. Felicity said that even in the early stages of your career you can give other people a hand. If you’re asked to go somewhere or do something that you can’t do, put someone else forward. If you attend a function, bring someone along with you and introduce them to people you know. Felicity said it’s important to seize opportunities, even if they scare you, and try to get out of the habit many women fall in to of saying ‘I don’t think I can do that’.


Thank you to Felicity for taking the time to speak and to everyone who joined the first event in our Series. The next Spotlight webinar will take place on 18th October with Clare Kennedy, Managing Director of AlixPartners interviewing Pippa Wicks, executive director at John Lewis on the challenges being faced by the UK’s retail market. Register here.


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