Cross-border restructuring – the rise of multi-process restructurings - TMA UK Event – 9 October 2024

Over 70 delegates joined TMA UK on 9 October 2024 for the organisation's latest event, which proved to be a stimulating evening of lively discussion and networking in the distressed business and restructuring space.

The event began with a Freshfields panel consisting of Richard Tett, Rachel Seeley and Jamie Murray-Jones from Freshfields’ restructuring and insolvency team. The panel delivered an update on the rising use of multi-process restructurings and the resulting complexities and benefits of using multiple tools across different jurisdictions.

Richard first offered background on the evolving restructuring landscape in Europe, which now leans much more towards debtor-friendly, rescue-oriented regimes in line with the EU restructuring directive. The UK, US and nearly all EU countries each have their own restructuring plan regime, all of which are different but share common features.

Following this introduction, Rachel detailed the key, shared features of restructuring plans across jurisdictions and their generic timelines. These fundamentals notably include the availability of cross class cramdown mechanics, which allow the plan to be enforced against dissenting classes subject to various protections.

Discussion then turned to the different types of multi-process restructurings, which range from a main process in one jurisdiction with ancillary recognition processes in other jurisdictions to different, parallel processes across two or more jurisdictions. This latter category, which was the main focus of the panel, has become increasingly common in recent years. Jamie provided some reasons for that increase, in particular rising barriers to recognition of overseas restructuring processes in European jurisdictions to match the existing difficulties of recognition in England and Wales provided by the ‘rule in Gibbs’. He noted that multi-process restructurings tend to be used only when necessary to ensure recognition of the restructuring of a multi-national group in all relevant jurisdictions.

Rachel addressed the key considerations and complexities arising from multi process restructurings. One such consideration is a "race to court" by creditors seeking to bring claims against assets ahead of other creditors (potentially leading to unequal asset distributions). Rachel also commented on the potential use of process arbitrage, in which a debtor seeks to drive the restructuring through the jurisdiction with the lowest hurdle first, in an attempt to make it harder for the second jurisdiction to deliver a different (and less favourable) outcome for the debtor.

The panel then came to examine the recent multi-process restructuring of the McDermott Group in light of these considerations. The McDermott restructuring took place by way of UK restructuring plan and a parallel Dutch WHOA, with subsequent US Chapter 15 proceedings. While demonstrating a number of the complexities that can come from multi-process restructurings, Jamie noted that the McDermott process ultimately led to a successful outcome for the business.

Finally, the audience engaged in an insightful Q&A discussion with the panel. Richard addressed questions relating to the efficiency of the restructuring plan processes across jurisdictions and reflected on trends in the wider distressed landscape, including liability management exercises.

After a stretching panel discussion, the attendees enjoyed relaxed networking over drinks and canapés.

Click on the PDF link above to view the presentation slides.

This event was kindly hosted and sponsored by Freshfields.