Restructuring Insights - UK - An Acuris Company - Europe 27 May 2020
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Restructuring Insights - UK
An Acuris Company
Restructuring Data - Europe
27 May 2020
Restructuring
Insights - UKRestructuring Insights - UK
An Acuris Company
Debtwire Europe
CONTENTS AUTHORS
Introduction 3 Joshua Friedman
Restructuring Data Analysis 5 Global Head of Restructuring Data
+1 (212) 574 7867
Creditor/Investor Analysis 19
Joshua.Friedman@iongroup.com
UK Restructurings: Marketplace & Current Issues 25
Timelines and Tables 28 Shab Mahmood
Contacts 35 Restructuring Analyst
Disclaimer 36 +44 203 741 1323
Shab.Mahmood@iongoup.com
Juan Mariño, CFA
Restructuring Analyst
+44 203 741 1364
Juan.Marino@iongroup.com
Donald Ndubuokwu
Restructuring Analyst
Donald.Ndubuokwu@iongroup.com
2Restructuring Insights - UK
An Acuris Company
Introduction: Restructuring Data - Europe
As part of the roll-out of Debtwire’s Restructuring Data - Europe, this inaugural Restructuring Insights Report serves as a preview of the power,
breadth and depth of the data that will be available to subscribers.
Debtwire’s global team of legal, financial, credit and data professionals has been producing analysis and data reports on a variety of
restructuring topics and in jurisdictions across the globe. In a natural evolution of that data-driven direction, we have compiled and enhanced
the data underlying those reports and combined it with Debtwire’s exclusive editorial coverage and financial research to create a searchable
Restructuring Database, which will allow subscribers to craft bespoke data-driven answers to a wide variety of research questions and to
enhance business development.
With the expansion to cover Europe, the Restructuring Data platform now includes bankruptcy and restructuring situations in North America
(US Chapter 11s, Chapter 7s and Chapter 15s), Asia-Pacific (NCLT processes in India) and Europe.
In total, the Restructuring Data platform encompasses approximately 1,000 US bankruptcy cases, close to 400 NLCT cases, and almost 200
restructuring situations across Europe. At launch, the Restructuring Data platform covers a significant part of the European marketplace:
specifically, the UK, France, Germany, Italy, the Nordics and Greece. Restructuring and Insolvency processes covered range from Schemes of
Arrangement and out-of-court situations, Administrations and CVAs in the UK, Concordato Preventivo in Italy, Safeguards in France, and many
more.
The database captures a wealth of data related to EU restructuring and insolvency matters broadly starting 1 January 2016 and in the main,
funded debt obligations exceeding GBR/EUR 150m.* As reflected in this report, each restructuring situation will include:
• Pre- and Post- Restructuring Capital Structures;
• Involved Creditors and Disclosed Holdings (e.g. debt holders, admin agents and indenture trustees, bidders, group members, etc.);
• Restructuring documentation (e.g., Lock-Up Agreements, Organisational Charts, Skeleton Arguments and Financials); and
• Retained Advisors and Relationships.
In this report, we apply the same lenses to the UK restructuring landscape from January 2016 through April 2020, analysing the newly initiated
restructuring and bankruptcy situations as well as those completed—whether successfully or unsuccessfully—during that time period.*
Click here to explore the entire Restructuring Data platform (access required).
NOTE: We have also tracked a number of situations below the debt threshold or prior to 2016 to provide a more robust picture of the distressed European market. Similarly, the data analysed in this report
includes certain key restructurings below the debt threshold and six restructurings before 2016: Adelie Foods, Codere Finance, DTEK Finance, MF Global UK, Phones4u, and Yuksel Insaat. In addition, we have 3
analysed the data on a “case” basis, not company basis. So, for example, if a company uses a CVA and a Scheme of Arrangement to restructure, there would be separate cases for each included in the analysis.Restructuring Insights - UK
An Acuris Company
General Introduction
Analysing restructuring-level data is an ideal starting point to understand the financial landscape — providing a 10,000-foot view of the
distressed marketplace for strategic planning and asset allocation (financial or otherwise).
The restructuring level data illustrates:
• The size of the companies involved and the duration of their restructurings;
• The trending distressed sectors (or what sectors are cooling off);
• Relationships between advisors, creditors and market participants to assist with opportunity identification and opportunity
development; and
• Which restructuring and exit strategies are more popular and utilised in which sector, by which advisors and by which creditor.
Debtwire’s EU Restructuring Insights report provides a high-level overview of restructuring and insolvency situations across the EU,
digging deep into the data to highlight key trends and takeaways. This inaugural edition examines the UK Restructuring market with a
focus on five restructuring and bankruptcy processes from 1 January 2016 onwards: Administration, Company Voluntary Arrangements
(CVA), Out-of-Court Restructurings, In-Court Liquidations, and Schemes of Arrangement.
Following a slow start to the year, the restructuring and insolvency market is expected to be particularly active with an increase in the
number of defaults and debt restructurings, as COVID-19, gyrations in the global oil market, depression levels of unemployment and
severely reduced business and human activity have greatly affected the capital markets, many businesses and society.
Looking at the data over the last four-plus years, the Retail sector dominated with 35% of restructuring situations, followed by Food &
Beverage (11%) and Oil & Gas (9%). These are the same three sectors that have dominated the 2020 US bankruptcy market, with O&G and
Retail also serving as the primary drivers since 2016. In comparison, the EU (excluding the UK), has seen a preponderance of
Transportation industry restructurings (24%), alongside Retail and Oil & Gas situations, with 14% and 10%, respectively.
In terms of case strategies, having a pre-arranged plan was the dominant restructuring strategy used by distressed companies, particularly
with Schemes of Arrangement, reflecting the time and planning the process allows prior to and at court. Sale processes were the next most
frequent strategy, partially reflecting the rise and establishment of Accelerated M&A (i.e. AMA) as a strategy deployed to preserve going
concern values, repayment and recoveries.
On the advisory front, Houlihan Lokey and Rothschild led the rankings with the most mandates, followed closely by KPMG—ranging
between 29 and 26. Allen & Overy had the most mandates on the legal side, the only law firm topping 20, followed by Clifford Chance and
Linklaters, Kirkland & Ellis and Latham & Watkins.
In terms of creditors, HSBC was involved in the most UK restructurings (including Steinhoff, Abengoa Concessions, and Carillion),
followed by UK-based banks Barclays, and RBS.
4Restructuring Insights - UK
An Acuris Company
Restructuring Data AnalysisRestructuring Insights - UK
An Acuris Company
TIMELINE – RESTRUCTURING PROCESSES (FROM 2016)
14
12 2
10 2
1 1
8
1 1
5
6
3 3 1
2
5 3
4
3 1 1 3
2
3 1
2 2 2 2 4 2 2 4
3 3 1 3
2 2 2 2 2
1 1 1 1 1 1 1 1
0
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
KEY TAKEAWAYS UK RESTRUCTURINGS – PROCEEDING TYPE (FROM 2016)
• In the timeline under review, 2Q 2018 represented the
peak with a total of 13 situations, four more than the Scheme of Administration
next most active quarters: Q1 2019 and Q1 2018. Arrangement 26%
39%
• Schemes of Arrangement led in both number of
situations and debt restructured, as it accounts for
~40% of the UK restructuring market, while
Administrations and CVAs followed with 26% and 22%,
respectively.
• In 2020, we have seen eight UK restructurings of note CVA
commenced, including Premier Oil’s Scottish Scheme of Out-of-Court
22%
Liquidation
Arrangement and NMC Health’s Administration. 11% 2%
Source: Debtwire’s Restructuring Database
6Restructuring Insights - UK
An Acuris Company
UK RESTRUCTURINGS – SECTOR SPLIT
35
30 7
1
25
20
14
15
10
2
12 5 5
5
7 4 3 2 2 1 1
3 2 1 1 1 1 2 1 1 1
1 1 1 1 1 1 2 1 1 1 1 1 1 1 1
0
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
Source: Debtwire’s Restructuring Database
7Restructuring Insights - UK
An Acuris Company
SCHEMES OF ARRANGEMENT: COMI CHANGES, FORUM SHOPPING AND FOREIGN FILINGS IN GENERAL
Schemes have undergone a meteoric rise to become one of the most common debt restructuring tools. They allow a statutory majority of creditors
to vary the rights of an entire class and ‘cram down’ dissenting creditors, subject to Court oversight. Schemes expanded from being a core UK
mechanism to increasingly being used by foreign borrowers, engendering what’s known as a shift in the centre of main interests (‘COMI’). The COMI
shift results from companies ‘forum shopping’ in advance of their restructuring by identifying an optimal jurisdiction and, sometimes, transferring
assets to that jurisdiction. The EU restructuring directive may limit such forum shopping in the future.
Courts will only accept jurisdiction to sanction a Scheme in respect of a foreign-incorporated company if it is satisfied that there is a ‘sufficient
connection’ with the relevant country. It is now well established that a company will have such a ‘sufficient connection’ if: (a) it has substantial
assets in the UK; (b) its COMI is in the UK; or (c) its liabilities subject to the scheme are governed by relevant law and jurisdiction.
As the table below shows, Schemes are popular among companies domiciled outside the UK due to the speed, flexibility and commercial attitude of
the court. Eastern Europe—particularly Ukraine—has been a frequent user of Schemes, with Metinvest and DTEK each using three Schemes,
including certain moratorium Schemes. Spanish companies have also used Schemes a couple of times for significant debt restructurings (Codere
and Lecta).
Since 1 January 2016, foreign companies filing Schemes accounted for more than half of the total. Since the process and utilisation of Schemes is
well established, avoids the stigma of formal insolvency procedures, can be effective in dealing with troubled debt and is an attractive tool
accessible to companies seeking to bring their debts to a sustainable level, we expect the UK courts to continue to be a restructuring haven.
UK vs FOREIGN CASES DISTRIBUTION SCHEME FILLING TIMELINE
5
40
35
4
30
1
20 1
25 3 2
3
20 1 3
UK
15 2
24 1 1 3 1 Foreign
10 18
17
1 2 2 2 2 2 2 2 2
5 2
1 1 1 1 1 1 1 1
0
0
SOA Administration CVA Liquidation
UK FOR
Source: Debtwire’s Restructuring Database
8Restructuring Insights - UK
An Acuris Company
ADVISORY MANDATE TIMELINE (2016 ONWARDS)
400
350
300
250
200
150
100
50
0
2016 2017 2018 2019 2020
Madate Timeline for All of the Restructurings Madate Timeline for the UK Restructurings
TOTAL ADVISOR COUNT BY JURISDICTION UK TOTAL ADVISOR COUNT BY PROCEEDING TYPE
700 644
600
500
400
300
208
200
138
112
100 66 53 43 34
0
UK Italy Germany France Greece Scotland Norway Ireland
Source: Debtwire’s Restructuring Database 9Restructuring Insights - UK
An Acuris Company
ADVISORY MANDATE RANKING (BASED ON ALL ADVISOR TYPES)
Houlihan Lokey 4 4 2 5 14 29
Rothschild 4 1 1 3 19 28
KPMG 6 9 1 10 26
Allen & Overy 6 2 1 1 11 21
PwC 7 4 1 8 20
FTI Consulting 3 3 2 1 10 19
PJT Partners 2 2 3 12 19
Deloitte 4 3 1 2 8 18
Linklaters 1 3 1 2 9 16
Clifford Chance 1 1 1 1 12 16
0 5 10 15 20 25 30
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
Source: Debtwire’s Restructuring Database
10
Footnote: Advisory mandates used for the above graph do not include advisors which acted as auditors or claims agentsRestructuring Insights - UK
An Acuris Company
UK ADVISORY BREAKDOWN
• Houlihan Lokey and Rothschild led the rankings with the most mandates, followed by KPMG, PJT Partners, and FTI Consulting. Similarly,
Houlihan & Rothschild are the Financial Advisor/Investment Banking leaders.
• Allen & Overy was the clear leader on the law firm side, followed by fellow Magic Circle law firms Linklaters and Clifford Chance. Two US firms,
Kirkland & Ellis and Latham & Watkins, rounded out the top-5; Kirkland routinely leads the US league tables for bankruptcy and restructurings
mandates.
• Scheme of Arrangement feature heavily in terms of mandates, representing 55% of the overall mandates, followed by Administrations (19%), CVAs
(16%) and Out-of-Court situations (6%).
• The advisory leader board—including Houlihan Lokey, PJT Partners, FTI, Moelis, Kirkland, Akin Gump, etc— showcases the in-roads continuing to
be made by US firms in penetrating the upper echelons of the UK restructuring advisory market.
UK LEAD LAW FIRMS UK FINANCIAL ADVISOR / INVESTMENT BANKS
Allen & Overy 6 2 11 11 21 Houlihan Lokey 4 4 2 5 14 29
Linklaters 1 3 1 2 9 16 Rothschild 4 1 1 3 19 28
Clifford Chance 1111 12 16 KPMG 6 8 8 22
Kirkland & Ellis 1 4 4 6 15 FTI Consulting 3 3 2 1 10 19
Latham & Watkins 2 4 9 15 PJT Partners 2 2 3 12 19
Freshfields Bruckhaus Deringer 4 2 2 6 14 PwC 7 4 1 6 18
Akin Gump Strauss Hauer & Feld 2 1 7 10 Deloitte 4 3 1 2 8 18
Milbank 1 4 5 10 Moelis 2 2 1 8 13
0 5 10 15 20 25 0 5 10 15 20 25 30
Administration CVA Liquidation Out-of-Court Scheme of Arrangement Administration CVA Liquidation Out-of-Court Scheme of Arrangement
Source: Debtwire’s Restructuring Database
11Restructuring Insights - UK
An Acuris Company
TOP UK LEGAL ADVISORS
UK LEAD LAW FIRMS STATS
Firm # List of Most Recent Restructurings / Party Represented Type of
25 Representation
NMC Health Plc / NMC Health Plc
European Fintyre Distribution Limited /
Ad Hoc Group of First Lien Lenders
Ad Hoc Group: 13
21 Allen & Overy 21 Premier Oil Plc (II) / Ad Hoc Group of Bank Lenders Company: 8
Survitec Group Limited / Survitec Group Limited
Thomas Cook Group Plc (Liquidation) / Revolving Credit Lender
20 Group
Lecta Paper UK Ltd / Lecta S.A.
New Look Secured Issuer Plc / New Look Group Limited
Company: 10
16 16 Linklaters 16 Stripes US Holding, Inc / Stripes US Holding, Inc Ad Hoc Group: 6
The Innovation Group Plc / The Innovation Group Plc
15 15 Steinhoff Europe AG / Steinhoff Europe AG
15
NMC Health Plc /
LEAD COUNSEL Ad Hoc Group of Convertible Noteholders and Sukuk Holders
The Innovation Group / Ad Hoc Group: 10
Clifford
16 Ad Hoc Group of Senior Secured Lenders Company: 5
Chance
House of Fraser / Lender Syndicate Creditor: 1
10 Lehman Brothers International / Deutsche Bank
NN2 Newco Limited and Politus BV / Politus BV
Addison Lee / The Carlyle Group
Bibby Offshore Services plc / Bibby Offshore Limited Ad Hoc Group: 10
Kirkland & Ellis 15 Britax Childcare Limited / Britax Childcare Limited Company: 4
Doncasters Group Limited / First Lien Term Loan Lenders Creditor: 1
5 DTEK Finance PLC (II) / DTEK Finance Plc
Doncasters Group Limited / First Lien Term Loan Lenders
Survitec Group Limited / Survitec Group Limited Ad Hoc Group: 8
Latham &
Watkins
15 Addison Lee / The Carlyle Group Company: 6
Thomas Cook Group Plc / Thomas Cook Group Plc Creditor: 1
0 Britax Childcare Limited /Britax Childcare Limited
Allen & Overy Linklaters Clifford Chance Kirkland & Ellis Latham &
Watkins
Source: Debtwire’s Restructuring Database
12Restructuring Insights - UK
An Acuris Company
TOP UK FINANCIAL ADVISORS / INVESTMENT BANKERS
UK FINANCIAL ADVISORS / INVESTMENT BANKS STATS
35 Firm # List of Most Recent Restructurings / Party Represented Type of
Representation
NMC Health Plc / BRS Ventures, Finablr
Survitec Group Limited / Survitec Group Limited
Houlihan Company: 15
30 29 Lecta Paper UK Ltd / Ad Hoc Committee of Bondholders
29 Lokey Ad Hoc Group: 14
Thomas Cook Group Plc / Ad Hoc Bondholder Group
28 Britax Childcare Limited / Britax Childcare Limited
25 Premier Oil Plc (II) / Premier Oil Plc
Mothercare Plc / Mothercare Plc
Lecta Paper UK Ltd / Lecta S.A. Company: 21
22 Rothschild 28
Addison Lee / Addison Lee Limited Ad Hoc Group: 7
New Look Limited / Ad Hoc Group of 2022 Secured
Noteholders
20 19 19
LEAD COUNSEL Mothercare Plc /Mothercare Plc
British Steel Limited / The UK Government
Company: 16
Debenhams – CVA / Debenhams
KPMG 22 Ad Hoc Group: 5
15 Debenhams - 2019 Admin / Debenhams Other: 1
New Look Limited / New Look Group Limited
Mothercare Plc / First Lien Lenders
10 Thomas Cook Group Plc (Liquidation) / Revolving Creditor Group
Thomas Cook Group Plc / Bank Lenders Ad Hoc Group: 16
FTI Consulting 19
Debenhams – CVA / Lenders Group Company: 3
New Look Limited / Ad Hoc Group of 2022 Secured Noteholders
5
NMC Health Plc /
Ad Hoc Group of Convertible Noteholders and Sukuk Holders
Doncasters Group Limited / First Lien Term Loan Lenders
Ad Hoc Group: 14
PJT Partners 19 Thomas Cook Group Plc / Thomas Cook Group Plc Company: 5
Britax Childcare Limited / Secured Lender Group
0 Syncreon Group BV & Syncreon Automotive (UK) Ltd /
Syncreon Holdings Inc.
Houlihan Lokey Rothschild KPMG FTI Cosulting PJT Partners
Source: Debtwire’s Restructuring Database
13Restructuring Insights - UK
An Acuris Company
RESTRUCTURING ENTRY STRATEGY BY UK PROCEEDING TYPE
40
37
35
30
26
25
25
6 22
29
20 19
13
8 15
15
11
19 6
1
10 1
8
3 1
3 2 3 5
4 12
5 1 3
7 6 2 3
3 5 1
3 2 2 1
0 1 1
Pre-Arranged Plan Sale Process Prior Foreign Plan Parallel Cross- Dual-Track Liquidation Counter to Involuntary
Restructuring Recognised Border Process Pending Litigation
Within 10 Years Proceedings / Liability
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
• Restructuring via a pre-arranged plan was the dominant beginning ‘strategy’ for distressed companies, particularly with Schemes of Arrangement.
Sale processes were the next most common restructuring strategy used at the beginning of the restructuring, where it is sometimes deployed in
situations where the back up plan is some sort of insolvency process. This contrasts heavily with the US, where the most common filing strategy in US
bankruptcy cases is via a “free-fall,” where a debtor enters bankruptcy protection with no plan or sale in place.
• Schemes dominate restructuring processes where a foreign recognition is required or pursued with a Chapter 15 and also in parallel cross-border
proceedings (11), highlighting the fact that Schemes are being increasingly deployed alongside processes in other jurisdictions. CVAs (three) are also
featuring, for example, deployed on Steinhoff and Abengoa Concessions.
• Companies who has previously undertaken restructurings within the last 10 years are fairly prevalent. Schemes have been utilised the most in those
scenarios, but Administrations (7) and CVAs (3) too, reflecting that in some instances, there has been CVAs that have not delivered what was set
out/compromised and have garnered a unfair reputation as to being ‘hit and miss’.
14
Source: Debtwire’s Restructuring DatabaseRestructuring Insights - UK
An Acuris Company
FINANCING ISSUES BY UK PROCEEDING TYPE
60
56
50
18
40
7
30
27 27
15
20
20
19
21
10 20 8
7
16
3
6 3
3
3 2
1
1 2 1 2
0 1 1
Debt Haircut Amend-and-Extend Interest Rate Change / PIK Amortisation Change Bridge / DIP Financing Debt Novation
Added
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
• Right sizing debt through haircuts via exchanges and write-offs is the clear dominant financing issue and outcome across all four processes with
a broadly even spread amongst Schemes (18), Administration (16), and CVAs (15), with seven done Out-of-Court.
• Changes to debt service features predominately and as expected in Schemes (19), with more limited use in Out of Court situations (6) and CVAs
(2). Similarly, changes to amortisation featured exclusively in Schemes and not in Out of Court situations tracked as broader corporate
restructurings, reflecting that Amend & Extends are a majority feature of Schemes, where changes to debt instruments and debt servicing is a
predominate feature of actions and outcomes.
• In terms of lesser financing issues, Debt Novation features on a limited basis across the restructuring and bankruptcy situations and similarly so
with Bridge Financing, which has arisen in Schemes and Out of Court situations but not to the extent one might expect.
Source: Debtwire’s Restructuring Database
15Restructuring Insights - UK
An Acuris Company
KEY RESTRUCTURING & LEGAL ISSUES
• Debt equitisation is often a method used by distressed companies to decrease debt burden, often replacing PE sponsors and
family ownership, in whole or in part, by providing debt holders with a recovery consisting of an equity stake in the post-
restructuring company, sometimes alongside debt instruments. This situation occurred in Bibby Offshore, where its senior
secured notes were exchanged for 100% of the post-restructuring equity, Avanti Communications, Gulf Keystone and many
others.
• Debt equitisation was most prevalent in Out-of-Court restructurings with 38% of the total, followed by Schemes of Arrangement
and CVAs, with 28% and 22%, respectively. Equitisations were exceedingly rare in Administrations (1%).
• From our dataset it can be seen that landlord issues are quite prevalent in CVAs. Restructurings such as Arcadia and House of
Fraser are key examples of this. The vast number of CVAs also occurred within the Retail sector, which helps explain the high
number of retail restructurings and the preponderance of landlord issues in CVAs.
• Forum Shopping/COMI Shifts and Employee/Union/Pension Issues are other key legal issues arising in UK restructurings.
• The charts below and on the next page highlight other significant restructuring issues, including Landlord Issues, which frequent
CVAs. COMI Shifts, which feature heavily in Schemes, and Employee/Pension Issues, are also pervasive across the various
restructuring and bankruptcy processes (e.g. BHS, Carillion)
% OF CVAS WITH LANDLORD ISSUES RESTRUCTURINGS INVOLVING DEBT EQUITISATION
55
50
45
24%
40
35
37
30
25
20
15 21
25
11
76% 10
14
5
6 7
0 2 2
Scheme of Administration CVA Out-of-Court Liquidation
Arrangement
CVAs with Landlord Issues CVAs without Landlord Issues Count of Debt Equitization Count of Company
Source: Debtwire’s Restructuring Database
16Restructuring Insights - UK
An Acuris Company
OTHER SIGNIFICANT RESTRUCTURING ISSUES
35
30 29
4 26
25 24
1 4
1
20
7
16
15
22
10
8
14 6
5
5 2 4
8 8 2 3 3 3
2 1
4 3 2 3 1
2 2 1 1
0
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
Source: Debtwire’s Restructuring Database
17Restructuring Insights - UK
An Acuris Company
RESTRUCTURING TRIGGERS
Liquidity Issues 16 3 2 5 22 48
Upcoming Debt Maturities/Over-levered 4 11 1 3 9 28
Debt Default (Matured Debt/
Missed Interest Payment/Covenant Breach)
4 3 15 22
Financial Results 11 9 1 21
Accounting / Fraud 2 2 1 5
Legacy Liabilities 1 1
Litigation / Judgment 1 1
0 5 10 15 20 25 30 35 40 45 50
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
• We have reviewed the primary restructuring triggers for the various distressed companies. In terms of UK specific ones, Liquidity Issues (48)
were the clear front runner, across all processes analysed but more so in Schemes (22) (e.g. House of Fraser, EnQuest), Administrations (16)
(e.g. BHS, Debenhams) and Out of Court (5) (e.g. Survitec Group, Addision Lee), followed by CVAs (2) (e.g. Carpetright) and Liquidation (2)
(e.g. Carillion, Thomas Cook).
• Being over-leveraged and having approaching maturities featured the next most (28), followed by debt default, defined as reaching maturity
and/or payment default and/or covenant breach at 19.
Source: Debtwire’s Restructuring Database
18Restructuring Insights - UK
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Creditor/Investor AnalysisRestructuring Insights - UK
An Acuris Company
Creditor Involvement & Investor Activity
Active creditors and investors in the restructuring space—the parties that are strategically driving much of what occurs in the distressed
arena—are given prime placement in the Restructuring Data platform.
As such, the Restructuring Database tracks a wide variety of investor and creditor activity, including:
• Ad hoc and official group members acting in concert together (whether debt or equity holders);
• Lender and bondholder securities holdings;
• Secondary market debt trades;
• Administrative agents and indenture trustees for pre-restructuring and post-restructuring instruments; and
• Bidder and plan sponsor activity.
Using this information, the report looks at the most active creditors in the space—i.e. which creditors showed up in the most
restructurings in the UK, regardless of role. Second, the report tracks bidders/plan sponsors in UK restructurings.
MOST ACTIVE CREDITORS
• HSBC is an incredibly significant creditor in UK restructurings, involved in the capital structure in the most situations by a fairly wide
margin (25 in total). Barclays and RBS were the next most active creditors, involved in 20 and 14 restructurings, respectively.
• BNP Paribas, UniCredit, Deutsche Bank, ING Bank, Citibank and MUFG were also among the leading banks in terms pre- and post-
restructuring debt with close to 10 restructurings each.
• On the fund side, York Capital and VR Capital appeared in the most situations (e.g. Doncasters and Bibby Offshore; Metinvest and
DTEK). PE stalwarts Apollo, KKR and The Carlyle Group were also heavily involved in the UK restructuring market.
BIDDERS/PLAN SPONSORS
• Retail focused funds and companies led the bidding activity, as Sports Direct, Hilco Global, Endless, and Alteri Investors were some of
the most active parties. Large PE shops were also frequently looking around opportunistically.
NOTE: This report tracks bidding activity on a bidder basis (not company basis) and includes all key creditor roles for involvement, including committee members, bidders, and
securities holders (both equity and debt). 20Restructuring Insights - UK
An Acuris Company
UK CREDITOR RANKING
30
25
25
8 20
20
7
3
15 14
1
12 12
3
4
7
10 9
5
2 8 8 8
7
7
3 1
1 7 5 5
5 4 6
9
6
4
5 5 1 1
2
1 1 1
2
1 1 1 1 1 1
0
HSBC Barclays RBS UniCredit BNP Paribas Deutsche Bank ING Bank MUFG CitiBank York Capital
Management
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
Source: Debtwire’s Restructuring Database
21Restructuring Insights - UK
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FREQUENT BIDDER/PLAN SPONSOR
7
6
3
5
4
3
3 4 2
1 1 1 1
2 4
1 1 3
1 2 2 2 2
1 1 1
0
Sports Direct KKR & Co. Apollo Global Hilco Global The Carlyle Edinburgh Gordon Alteri Endless
International Management Group Woollen Mill Brothers Investors
Administration CVA Liquidation Out-of-Court Scheme of Arrangement
Source: Debtwire’s Restructuring Database
22Restructuring Insights - UK
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AD HOC GROUPS – FREQUENT ADVISORS AND TYPE
• On the financial advisory side, FTI Consulting was the FA/I-Banker leader with 16, followed by PJT Partners (14), Houlihan Lokey
(14), Moelis & Co (7) and Rothschild (7).
• On the Advisory side, from a legal perspective, Allen & Overy led the way with 13, followed by Clifford Chance (10), Kirkland & Ellis
(10), Akin Gump (8) and Latham & Watkins (7).
• In terms of security type, the majority of Ad Hoc Groups were acting in capacity as secured creditor, whether by first or second lien,
representing 54% of Ad Hoc Groups reviewed.
• The unsecured creditor group category followed with 33%, while equity-specific groups had 3%. Secured/Unsecured crossholder
groups were quite limited (1%).
MOST FREQUENT ADVISORS FOR AD HOC GROUPS IN THE UK UK AD HOC GROUP TYPE
FTI Consulting 16
PJT Partners 14
Houlihan Lokey 14
Allen & Overy 13
Clifford Chance 10
Kirkland & Ellis 10
Akin Gump Strauss Hauer & Feld 8
Latham & Watkins 8
Moelis & Co. 7
Rothschild 7
Deloitte 6
Milbank 6
0 5 10 15 20
Source: Debtwire’s Restructuring Database
23Restructuring Insights - UK
An Acuris Company
FREQUENT CREDITOR PARTICIPANTS IN AD HOC GROUPS (UK)
HSBC 9
RBS 7
VR Capital Group 6
Ashmore Investment Management 6
UniCredit 6
Avenue Capital Group 5
Silver Point Capital 5
York Capital Management 4
GSO Capital Partners 4
GoldenTree Asset Management 4
CitiBank 4
ING Bank 4
0 1 2 3 4 5 6 7 8 9 10
• From a group membership perspective, there is no standout creditor as compared to the US, where Simon Property Group and Brookfield
dominate official committees. HSBC and RBS lead the way with nine and seven, respectively. One other key difference is the preponderance of
banks in ad hoc committees in Europe; in the US, hedge funds tend to dominate ad hoc groups.
• In term of HSBC, 67% of its group appearances were in secured debt groups, while the remaining occurrences were with unsecured and cross
holder groups.
• VR Capital, Ashmore Investment Management, and UniCredit followed with membership in six groups each. Avenue Capital and Silver Point
Capital featured with five, while York Capital Management, GSO, GoldenTree Asset Management, CitiBank, and ING Bank all had four.
Source: Debtwire’s Restructuring Database
24Restructuring Insights - UK
An Acuris Company
UK Restructurings: Restructuring Types & Current
IssuesRestructuring Insights - UK
An Acuris Company
Restructuring Types - Terminology and procedures
In the UK, there are several different restructuring and bankruptcy options at the disposal of distressed companies. They range from Administrations
and Company Voluntary Arrangements, (CVAs) to Schemes of Arrangements and Out-of-Court Restructurings. Below is a brief guide to terminology
and procedures.
Administration is an important insolvency procedure. Its objective is the rescue of the company as a going concern, or if this is not possible then to
obtain a better result for creditors than would be likely if the company were wound up. A licensed insolvency practitioner, 'the administrator', is
appointed to manage a company's affairs, business and property for the benefit of creditors. On entering administration, a moratorium period enables
the appointed insolvency practitioner to plot a route out of administration free from the threat of legal action. Administration will end automatically
after one year, save when extended by court order or with creditor consent. Recent judicial and market developments have seen ‘Light Touch
Administration’ (LTA) developed and implemented on the Debenhams Administration, which could see them being used significantly more than
historically. LTAs are considered in further detail in the next slide.
CVAs are a voluntary means of repaying creditors some or all of what they are owed. Once approved by 75% or more of creditors, the arrangement is
binding on all creditors. CVAs are supervised by licensed insolvency practitioners and allow a company to repay creditors over an extended period of
time by making one monthly payment to the creditors included in the CVA rather than multiple payments to individual creditors, and all interest and
charges are frozen. A CVA may be used alongside, or to obviate the need for, other insolvency procedures. CVAs have been utilised on 22% of
restructurings since 2016, cementing its role as a useful tool to address unsecured creditors.
Out of Court situations are debt restructurings undertaken and concluded outside of court and bankruptcy processes. They are often efficient and
cheap in comparison to court-based alternatives—and the desired outcome often yields a reduced balance sheet and financially healthier company.
A Scheme of Arrangement is a statutory procedure for debt restructuring undertaken under Part 26 of the Companies Act 2006, pursuant to which a
company may enter into a compromise or arrangement with its members or creditors (or any class of them). The scheme may, however, be used in
conjunction with a formal insolvency procedure. Creditor approval and court sanction are necessary. Schemes led in both number of situations and
debt restructured, accounting for 40% of UK restructurings and often utilised in larger cross-border situations.
Liquidation is a legal process in which a liquidator is appointed to 'wind up' the affairs of a limited company. The purpose of liquidation is to sell the
company’s assets and distribute the proceeds to its creditors. At the end of the process, the company is dissolved – it ceases to exist. Whilst this
process is utilised less frequently, Carillion and Thomas Cook are two examples where this process was utilised given the exhaustion of options and
their respective liquidity positions at the time of failure.
26Restructuring Insights - UK
An Acuris Company
Recent Market Developments – Light Touch Administration
COVID-19 has seen many different jurisdictions and governments implement extraordinary measures to support the economy, businesses and jobs. In
the UK, businesses have benefitted from over £32 billion in government loans and guarantees to support their cashflow during the crisis, as well as
other cashflow measures such as Time to Pay Arrangements and VAT deferrals with HM Revenue & Customs and Business Rates suspension.
There have also been changes to bankruptcy legislation, rules and regulations following the publication of the long-awaited Corporate Insolvency and
Governance Bill, published on Wednesday 21 May 2020. This will provide, amongst others, a moratorium to rescue businesses as a going concern, the
introduction of a new restructuring plan as an additional rescue process, a temporary prohibitions of winding-up petitions, relaxation to wrongful
trading provisions, prohibition on enforcement of supplier insolvency termination clauses and a temporary extension of time periods and providing
information to Companies House.
Another change, however, has come via the restructuring and insolvency profession through Light Touch Administration (LTA) in a process helped by
The Insolvency Lawyers Association and City of London Law Society, which published a template consent protocol to facilitate LTAs of companies
during the COVID-19 lockdown.
LTAs are not a new procedure since no new rules have been introduced. In fact, they have been around but have been utilised infrequently, typically in
specific circumstances or with some real estate related bankruptcies where the appointment of a Receiver was insufficient to maximise control or
recoveries. However, the implementation of LTA on Debenhams could open the way for wider use.
In a LTA, the company would still go into Administration in the usual way and management wouldn't be displaced. Instead, the Administrators
effectively give consent to the board to exercise certain powers within agreed parameters, enabling them to continue to run the day to day
management of the business with oversight from the Administrators.
It ultimately provides a low-cost strategy whilst maintaining control so as to maximise recoveries at minimum cost within an acceptable timeframe.
Whilst at all times the Administrator will oversee the insolvency to ensure the interests’ of creditors as a whole are treated appropriately, the primary
driver of the LTAs is for the Administrator to use their powers and status - as an agent of the company and officer of the court - to keep or appoint a
new/appropriate team of professionals to deliver the best outcome at least cost. LTAs also provide a degree of continuity and certainty to employees
at a stressful time and allows the administrator to concentrate on their main task – devising a strategy to enable the company to survive in the longer
term. remain ultimately legally responsible for any decisions taken while the company is under their purview.
Alongside the current Administration of Debenhams, there has been very recent Judicial consideration, guidance and approval of LTAs, which as
already seen under the COVID-19 driven market changes could have a large role to play in the coming months and years.
27Restructuring Insights - UK
An Acuris Company
Tables and TimelinesRestructuring Insights - UK
An Acuris Company
LARGEST UK RESTRUCTURINGS: TOP 20 LIABILITIES (GBPm)
Co-operative Bank plc 28,297
Carillion Plc 6,900
NMC Health Plc 6,600
Thomas Cook Group Plc 6,371
Premier Oil Plc 5,251
Premier Oil Plc (II) 4,589
Steinhoff Europe AG 4,271
Metinvest B.V. 4,160
Agrokor d.d. 3,769
DTEK Finance PLC (III) 3,309
Algeco Scotsman PIK S.A. 3,166
DTEK Finance PLC (II) 3,114
Stripes US Holding, Inc 2,757
DTEK Finance PLC (I) 2,597
Enquest PLC 2,508
Codere Finance (UK) Limited 2,438
Steinhoff Finance Holding GmbH 2,332
Seadrill Partners 2,301
MF Global UK Limited 2,300
Premier Oil UK Limited 2,058
- 5,000 10,000 15,000 20,000 25,000 30,000
Source: Debtwire’s Restructuring Database
Foreign currency converted to GBP at 8 May 2020 based on the following rates:
GBP/UAH 33.56
GBP/HRK 8.7
GBP/USD 1.24
GBP/EUR 1.15 29Restructuring Insights - UK
An Acuris Company
OPEN RESTRUCTURING CASES
Restructuring Name HQ Proceeding Type Commencement Date
Phones 4U Limited UK Administration 15 September 2014
Austin Reed Group Ltd UK Administration 26 April 2016
Maplin Electronics Limited UK Administration 28 February 2018
New Look Limited UK CVA 07 March 2018
Conviviality Plc UK Administration 05 April 2018
Carpetright Plc UK CVA 12 April 2018
Homebase Limited UK CVA 01 May 2018
Four Seasons Health Care Limited UK Administration 21 May 2018
PoundWorld Retail Limited UK Administration 11 June 2018
MF Global UK Limited UK Administration 28 January 2019
Interserve Plc UK Administration 15 March 2019
Arcadia Group Limited UK CVA 18 March 2019
Select Retail Limited UK CVA 12 June 2019
Seadrill Partners UK Out-of-Court 10 July 2019
PizzaExpress (Restaurants) Limited UK Out-of-Court 26 July 2019
Mothercare Plc UK Administration 05 November 2019
European Fintyre Distribution Limited UK Administration 19 February 2020
BrightHouse Limited UK Administration 30 March 2020
Carluccio's Plc UK Administration 30 March 2020
NMC Health Plc United Arab Emirates Administration 05 April 2020
Debenhams Plc UK Administration 09 April 2020
Source: Debtwire’s Restructuring Database 30Restructuring Insights - UK
An Acuris Company
CLOSED SCHEMES OF ARRANGEMENT
Restructuring Name HQ Commencement Date End Date Duration - Days
Doncasters Group Limited UK 17/01/2020 17/05/2020 121
Premier Oil Plc UK 29/03/2017 28/07/2017 121
Codere Finance (UK) Limited Spain 02/09/2015 23/12/2015 112
Premier Oil Plc (II) UK 15/01/2020 29/04/2020 105
Indah Kiat International Finance Company BV Indonesia 21/01/2016 15/04/2016 85
Yuksel Insaat AS (I) Turkey 27/10/2015 19/01/2016 84
Noble Group Limited Hong Kong 24/09/2018 11/12/2018 78
Premier Oil UK Limited UK 15/05/2017 28/07/2017 74
Co-operative Bank plc UK 14/07/2017 24/09/2017 72
Drydocks World LLC United Arab Emirates 15/11/2017 22/01/2018 68
Gulf Keystone Petroleum Limited UK 25/07/2016 29/09/2016 66
Stripes US Holding, Inc South Africa 10/10/2018 11/12/2018 62
House of Fraser (Funding) Plc UK 06/06/2018 27/07/2018 51
Lecta Paper UK Ltd Spain 11/12/2019 30/01/2020 50
Syncreon Group BV & Syncreon Automotive (UK)
USA 22/07/2019 10/09/2019 50
Ltd
Metinvest B.V. (III) Ukraine 23/12/2016 08/02/2017 47
YH Limited and Hibu Group Limited UK 22/07/2016 06/09/2016 46
Algeco Scotsman PIK S.A. UK 09/05/2017 23/06/2017 45
Frigoglass Finance BV Greece 19/06/2017 01/08/2017 43
31
Source: Debtwire’s Restructuring DatabaseRestructuring Insights - UK
An Acuris Company
CLOSED SCHEME OF ARRANGEMENT (CONTINUED)
Restructuring Name HQ Commencement Date End Date Duration - Days
Lehman Brothers International (Europe) UK 09/05/2018 18/06/2018 40
Avanti Communications Group Plc UK 16/02/2018 26/03/2018 38
NN2 Newco Limited and Politus BV Belgium 19/06/2019 26/07/2019 37
CBR Fashion GMBH Germany 05/08/2016 09/09/2016 35
Far East Capital Limited S.A. Russia 29/09/2017 03/11/2017 35
Global Garden Products Italy S.P.A Italy 23/05/2016 27/06/2016 35
Metinvest B.V. (II) Ukraine 01/06/2016 30/06/2016 29
Bibby Offshore Services plc UK 20/12/2017 17/01/2018 28
Metinvest B.V. (I) Ukraine 01/01/2016 29/01/2016 28
New Look Limited UK 02/04/2019 30/04/2019 28
New Look Secured Issuer Plc UK 02/04/2019 30/04/2019 28
Enquest PLC UK 21/10/2016 16/11/2016 26
DTEK Finance PLC (I) Ukraine 02/04/2015 27/04/2015 25
DTEK Finance PLC (III) Ukraine 02/12/2016 22/12/2016 20
DTEK Finance PLC (II) Ukraine 07/04/2016 26/04/2016 19
Agrokor d.d. Croatia 14/02/2019 28/02/2019 14
House of Fraser UK 19/07/2018 27/07/2018 8
Source: Debtwire’s Restructuring Database 32Restructuring Insights - UK
An Acuris Company
CLOSED CVAS
Restructuring Name HQ Commencement Date End Date Duration - Days
British Steel Limited UK 22/05/2019 09/03/2020 292
Arjowiggins UK Holdings UK 15/01/2019 23/09/2019 251
Gaucho Grill Limited UK 11/05/2018 06/09/2018 118
Monarch Group UK 02/10/2017 23/01/2018 113
Johnston Press Plc UK 11/10/2018 19/11/2018 39
BHS Limited UK 26/04/2016 03/06/2016 38
Austin Reed Group Ltd UK 26/04/2016 31/05/2016 35
Laura Ashley Holdings Plc UK 24/03/2020 22/04/2020 29
Patisserie Valerie Limited UK 22/01/2019 14/02/2019 23
Jamie's Italian UK 09/02/2018 05/03/2019 389
Prezzo Plc UK 02/03/2018 21/02/2019 356
Debenhams UK 26/04/2019 06/04/2020 346
Select Retail Limited UK 26/03/2018 25/01/2019 305
BHS Limited UK 23/03/2016 16/12/2016 268
Source: Debtwire’s Restructuring Database 33Restructuring Insights - UK
An Acuris Company
CLOSED ADMINISTRATIONS
Restructuring Name HQ Status Commencement date End Date Duration - Days
Iona Energy (UK) Company Plc UK Closed 18/11/2015 20/04/2017 519
British Steel Limited UK Closed 22/05/2019 09/03/2020 292
Arjowiggins UK Holdings UK Closed 15/01/2019 23/09/2019 251
Gaucho Grill Limited UK Closed 11/05/2018 06/09/2018 118
Monarch Group UK Closed 02/10/2017 23/01/2018 113
Johnston Press Plc UK Closed 11/10/2018 19/11/2018 39
BHS Limited UK Closed 26/04/2016 03/06/2016 38
Laura Ashley Holdings Plc UK Closed 24/03/2020 22/04/2020 29
Patisserie Valerie Limited UK Closed 22/01/2019 14/02/2019 23
CLOSED OUT-OF-COURT SITUATIONS
Restructuring Name HQ Status Commencement date End Date Duration - Days
Survitec Group Limited UK Closed 27/03/2019 07/02/2020 317
Proserv UK Ltd UK Closed 18/08/2017 14/05/2018 269
The Innovation Group Plc UK Closed 02/08/2018 11/04/2019 252
Britax Childcare Limited UK Closed 09/08/2019 03/02/2020 178
BMI Healthcare UK Closed 29/06/2018 17/12/2018 171
Addison Lee UK Closed 27/10/2019 21/02/2020 117
Hemisphere International Properties BV UK Closed 26/06/2018 06/09/2018 72
BrightHouse Limited UK Closed 08/12/2017 02/02/2018 56
Adelie Foods Group Limited UK Closed 27/09/2016 27/09/2016 -
Source: Debtwire’s Restructuring Database 34Restructuring Insights - UK
An Acuris Company
Contacts
Restructuring Data - Europe
DEBTWIRE RESTRUCTURING INSIGHTS • At Debtwire, we are passionate about the markets we cover
Joshua Friedman, Global Head of Restructuring Data and the expansion of the Restructuring Data platform to
+1 212 574 7867 / Joshua.Friedman@iongroup.com
cover European Restructuring and bankruptcy situations.
Jack M. Tracy II, Global Head of Legal Analytics
+1 646 378 3177 / Jack.Tracy@iongroup.com • In the US, a detailed picture of bankruptcy situations can be
analysed through public Court-based filings. The EU
Shab Mahmood, Restructuring Analyst
+44 203 741 1323 / Shab.Mahmood@iongroup.com
presents an all together different challenge. For
transparency, swap opaqueness.
Juan Mariño, CFA, Restructuring Analyst
+44 203 741 1364 / Juan.Marino@iongroup.com • Whilst we endeavour to expand and develop the
Restructuring Data platform, we are mindful of reflecting as
Donald Ndubuokwu, Restructuring Analyst
Donald.Ndubuokwu@iongroup.com
accurately as possible each restructuring and bankruptcy
situation.
DEBTWIRE SALES • As such, if you have any questions, corrections or omissions;
Natasha Brooks, Head of Fixed Income Sales, Americas would like to make submissions; or have any data query or
+1 212 686 5340 / Natasha.Brooks@iongroup.com information request, please feel free to email
RDBEU@iongroup.com or reach out individually to anyone
Angus Codd, Head of Fixed Income Sales, EMEA
+44 (0)20 3741 1002/ Angus.Codd@iongroup.com on the Restructuring Data team (see list on the left).
35Restructuring Insights - UK
An Acuris Company
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