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A flying start for the restructuring plan

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Over the summer, the court sanctioned Virgin Atlantic’s restructuring plan for take-off, making this the first restructuring to be implemented through the new restructuring plan introduced by the Corporate Insolvency and Governance Act 2020 (CIGA) in June 2020.

The judgments from both the convening and sanction hearings provide practical guidance on how the court will treat this shiny new tool and, in particular, comfort that its scheme of arrangement-like provisions will be approached in a scheme-like way. However, given that the restructuring plan was approved by all classes of creditors, its key shiny new feature, cross-class cram down, was left untested. Unlike a scheme that requires the support of all creditor classes, this cross-class cram down mechanic will allow the court, subject to certain criteria being satisfied, to sanction a restructuring plan where a class or classes of its stakeholders have voted against it. This additional feature is expected to be a game changer for the UK’s restructuring toolkit.

In this article, Alex Rogan looks at the maiden flight of the restructuring plan, highlighting the practical considerations for future cases. To read the full article, please click here.

This article first appeared in the Winter 2020 edition of RECOVERY and is reproduced with the permission of R3 and GTI Media.

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