 Dwi'n ddigon i'n ddweud o'r meddwl youting le yn gwneud. Yn amddangos chi y gallwn i— … ac sy'n nodi'n eu wneud o modd lawer o'n newydd o gael y seminam awr. Yn gyflwyno'n mynd, mae'r Celfysgol yn cyflwyno sy'n maen nhw. Felly, mae'r gwylltir sy'n awr i'r blin ydechrau. I wedi bod yn bwysig i'r smelly │ gotig i'n gwneud yw'r ffordd. Dyma, rywbeth yng nghymru yn rhaid i ddallu, ddynaeth o bu centuryais yma. A gynnwch ei cas o bobl o'r cymryd. Ac rwy'n meddwl, ond rwy'n meddwl, a'u meddwl dros yr awtodau sydd yn ysgrifhau i siaradau. Cymru oedd yn gwneud rwy'n meddwl hefyd, fel y llei gwbl o'r Sehamdd-Neu. Llywodraeth ddechrau i d remotely o gweithio y Llywodraeth sefydliadau y Llywodraeth i'w cael eu cyfrififyr yma, eu cair y mawr fel sicrhau o gwerthu sydd wedi'i gweithio i ddegu'r newydd, oeddwn ni i gweithio i dedd ein cyfrifyr eich g Carnot, a'r llyfr thoesol yn gwneud sefydliadau yr etymwybol, oherwydd at grannoddau y Llywodraeth i ddraedd yr etymwybol, a yw yn ei bod angen cyfgrififyr yma felly dda'r ddechrau i hyn am fydden o'r hyn. Yn fy nid ei fod yn dweud o'r golygl, nid i'n debydd i'r prif, o ffalaeg a'r ffrifodol yn gair unrhyw gweithesiaf, sydd y fflugiau wedi symud y gweld cyfostiwyr. Bydd yn cael ei fod yn eistedd o ballad i gwrthu'r drws wrth i'n gweld, ac yn ystod eu llwynt yn eistedd o gweld yr union. Ond yna'n gweithio iddo yn tu'r Fynol. Roedd gwybod hynny, ac roedd yna'n gweithio beth sy'n gweithio beth sy'n golygl i'r rheinydd. Wrth gael y gallwn cyfwlad y llennidiaeth newydd bod hi'n unrhyw unrhyw unrhyw sy'n anhywch hwnnw ddiwedd yn y UK. Ond ydych yn ni'n gallu spoons o amser i'r bobl oedd o'r barchfordd OVC o'i ymddangos. Dyna'n gwybod dweud y cynnym honnod hyn i'n lleidio hyd o'r hwyddoedd cyfanau a gyffredinol byd yn ei bod nhw'n anhywg voedd o'r cyfriforau hwnnw, a hynny wedi cyflwyn ac yr hylluno i'n rhan o dechrau ei hynny'n neud o bob ar.] Mae'r ddaf yn ddwylliant a'r ddwylliant yn meddwl ffynasol. Mae'r ddaf yn meddwl i ddwch yn dechrau'r ddwylliant wedi'r ddwylliant yn ymdolol, ac mae'n addysg i'r ddwylliant yn ddwylliant. Felly mae'n anodd i'u ddwylliant i'r prosesol, sydd wedi'u gweld i'r dweud yng ngyfyrdd. Mae'r ddwylliant i'r ddwylliant yn ddwylliant fel y cyhoeddwyd mewn ycofaint, ac mae'n gyrsaf oedd y ddweud y Llywodraeth Cymru neu'r Rhys-Dŵr. Rydym yn cyfrifio'r arweinyddau. Mae'n cyfrifio'r arweinyddau, ac mae'n cyfrifio'r arweinyddau yn wiping arweinyddau yng nghymru, ac yn cyfrifio'r arweinyddio cyfrifio'r arweinyddau. ystyried diddorol, iechyd perpetuol o nhw wedi gwasanaetherau cysteiniw yn cael cy�로edd, a'r cyhoeddbeth hynny'n gwstoddol fel y byddech chi, mae'n gwiswch yn gwiswch yn cymdeithasol. Yn cymryd foldydd arweinydd, mae'n gofynnid i hynny'n gwiswch yn gwiswch. Mae'r ddyn ni'n gwiswch yn cymryd yn gwiswch yn gwiswch yn gwiswch i'r ddych yn myllfaith, that is likely to be the interest of the business in the stakeholders, but that's not always possible. Another general proposition is that we would try and limit the restructuring process to holding companies rather than operating companies, in that a process at the operating company level is likely to be valued destructive, and in particular even English Law upholds gyda'r newid o'r pawb i ffadogol, bydd y cael cyfnodau canfodol a'r cyfnodol ar y llyfrnodau. Felly mae'n fyddo i'r ffodol i'r awtio ac mae'n meddwl. Felly, mae'n gweithio, mae'n gweithio'n gweithio'r cyfnodd, ond mae'n cael y gallu meddwl i'r adeiladau. Felly, mae'n gweithio'n gweithio'r rhan o'i cyfnoddau arwad o'r llyfrnodau, y llyfridd gan hyn yn gweitio'r gorfodau sydd wedi ei gyrddwch ar gweithio'r gwrthwyleth. Rwy'r modd, mae'r llyfridd yn gyntaf o'r corll gwaith yn iawn unrhyw fathogaf yn kefyd. Ychydigol ac y ddiweddol i'r grwyhaeth cyflym yn bwysig yn llyfriddol. Roedd yn ei bod yn ei wneud o gwisigau'r llyfriddol llawer coursell ddiddoriol i gwaith. Not just using the UK but all over the world. This is a rather forbidding diagram. What we're doing at the end is looking at how you might restructure that. We're just to elaborate on understanding creditor claims. On the diagram you'll see that target subs 2, 3 and 4 are operating companies. They've got lease and operating creditors. They hold operating assets. But notice also that they've given upstream guarantees and security to the senior and junior lenders. Parent, bidco, target and sub 1 are holdco's. So they too have given guarantees and security to the senior and the junior. Bidco's also got liabilities under swaps to hedge counter parties. The parent and its subsidiaries, you'll see that they've also made unsecured intergroup loans. So therefore they're ranked behind the senior and the mayor's money in solvency. Holdco and Topco at the top, they've got no liabilities in this structure which is fairly conventional. No liabilities to the senior or the mayors. But you'll see that they are being holdco's. They're what we call structurally subordinated to the claims of the creditors against the operating companies. Because only if those lower down claims are satisfied in full would there be any surplus which could ever get up to the topco's. Under the intercreditor you'll see that in terms of where the claims lie, the senior and the mayors are in the same companies. Therefore there's no structural subordination. So what you do is under the intercreditor is contractually ranked in the two claims. And generally speaking the mayor's principle cannot be repaid ahead of the senior. And generally speaking the senior will control enforcement. So bear that in mind for when we come to the quiz at the end. And it's absolutely vital when you're doing a restructuring to know exactly where you're starting. So there are some background concepts, before we look at the actual processes, some background concepts to have in mind when you're doing a restructuring. The key one is where does the value break. So if you take our group and if the group were to be sold or liquidated, how much of the proceeds will be available to satisfy creditor claims. So to take an example, say the value of the assets is 100 million sterling, but the extent of the senior debt is 200 million, we would say that the value breaks in the senior. If there were an extra 100 million at mayor's debt and the value of the assets were 250 million, the value would break in the mayor's. And that clearly can be disputes about evaluation process. But it's important to understand where the value breaks. Secondly, does the company need protection from its creditors? Of the procedures I'm going to talk about, only administration gives a moratorium against creditor action, other than company voluntary reasons for very small companies. But any process, as I say, if it's done prematurely or in a free-form manner, it's likely to be valued destructive. So it may just have to be accepted that trade creditors continue to be paid during the restructuring process in order to avoid a precipitate insolvency. Next, director's duties. There will be pressure points from the directors under UK law. Firstly, if a company is insolvent or a doubtful insolvency, the duties that become owed to the creditors primarily are done by the shareholders. And they're also potentially at risk for personal liability and or disqualification. If they are liable for what's called wrongful trading, which essentially is where if the company no longer has a reasonable prospect of going into insolvent liquidation or administration, interestingly, the law was changed in October to make it applicable on the administration not just liquidation. Then, after that point of no return, they have a duty to take every step to minimise the potential loss to the creditors if they don't, they're personally at risk. Generally speaking, those situations are manageable with professional advice, but it can lead to pressure points during the restructuring. It also means if a creditor is too aggressive, you can actually put life too difficult for the directors and prejudice for restructuring. Equally, sometimes the directors are just in denial and a shot across the bounds can be quite valuable. You also need to be very careful during your restructuring to make sure that your transactions are unlikely to be set aside as being an undervalue or a preference. Again, only administration provides automatic insulation against that risk. On any modern restructuring, a common feature will be trading of debt on all levels across the capital structure. That can be a good thing in the sense that it can provide an exit for an unwilling lender. It can be quite dangerous if you've got some people described as a hold-out creditor who is there just to take a blocking position in voting on a restructuring in return for a financial advantage. There are extra pressures if the company's securities are listed. Two main points. Firstly, there's a duty to make regular announcements of material information which isn't available to the public. That can make it very difficult on a restructuring in that if you basically have to give a run in commentary and put all the dirty laundry into the public arena, it means that, for example, your best employees walk. They get scared and walk. Or your suppliers think they're not going to get paid, so they're going to run cash on delivery. But you have to comply with the rules of the exchange. The other impact of securities being listed is that inside the dealing legislation applies, which can be a great concern to investors like hedge funds if they're vying into the debt. They actually don't want to have too much non-public information. Or if they do, if they go restricted for a short period, they will insist that the company regularly cleanses that by announcing it to the market. It's a fact of life, but it's a complication. Last point, a slightly techy point, but potentially important, that's Comey or Centrumane Interests, that if the company's centrumane interest is outside the UK, you may need or wish to bring it to the UK to do the restructuring process. And it's a reasonably well-won path to start holding your board meetings in the UK and your key creditor meetings. Much easier to do at the whole co-level, relatively hard to do it at the operating level. Now, turning to the first mechanic, and that's lender-consent thresholds. The third thing you have to do is look at your existing finance agreements and look at what are the majorities in order to effect a change. If what you're doing is relatively minor, like changing the financial covenants under a traditional LMA bank loan facility, that's a 2,000 majority. If you want to do something more like extending maturity or reducing interest, that will generally be an all-lender decision. If you're in the bond market, then generally speaking, the threshold to initiate an acceleration is 25%, enforcement and minor contractual changes is 50.1%, and all remaining decisions are 90%. So if you're extending maturity, then it's a very high threshold. Sometimes you see an additional clause called what's called a structural adjustment clause, where provided you get the 2,000 majority overall and the consent of the lender's particular class that are affected, then that can go through without it being an all-lender decision. Then we turn to the creditor release mechanisms. It's a contractual construct, very, very powerful, arguably as powerful as the scheme of arrangement which we'll come to, and has not yet been seriously challenged in the courts. What it basically does is where there's a stress disposal, essentially an enforcement scenario, and there's senior creditors, is they can enforce their security by serving the shares, say, in Bidco, or an administrator doing that. So we have a stress disposal. Then the security agent which holds the security for the syndicate has power to basically eliminate or transfer and eliminate the claims of the junior creditors. So we'll take our scenario where the value is breaking in the senior. And the mes will not simply agree to release their claims. Then the senior can move the assets into a new control by the senior lenders. Now, if the mes, as we saw earlier, the operating companies have generally given guarantees and security for the junior debt, if that debt and security stays in place, they effectively have a veto. So what the integrator allows the security agent to do in a stress disposal situation is to remove those guarantees and security. I'm generalising slightly in that it's very, very important to check the precise wording of the integrator. I've largely been referring to the LMA standard, but that's open to all sorts of negotiation and drafting slips. So if you're dealing with this in practice, not very carefully drafting to make sure the release and the canyms do what you think they're going to do. But under the standard, the security agent has the duty to get the fair price, and there are ways of proving that, which would include a sale through an administrator. So just bear in mind that the release mechanisms of the integrator are very powerful. Now, administration, it's now the preeminent insolventy process in the UK, both as a means of protection at the instance of the directors or a means of enforcement for the secured creditors. And the administrator has primary duty, if he can, is to rescue the company failing which to achieve a better result for the creditors as a whole failing which a realisation for the secured creditors. As I mentioned earlier, it may well be that as part of a restructuring, if it's necessary to, if the value is breaking in the senior, if it's necessary to move the assets out of the existing capital structure into a senior control of the new capital structure, administration is a very powerful and effective way of achieving that. It's very, the advantage of administration compared, for example, with a security agent as more routine selling the shares is that a sale by an administrator will not be capable of challenges as an undervalue. Clearly the administrator needs to satisfy himself that proper value is obtained. And these are often called pre-packaged administrations in that all the work to agree that the terms of the sale and obtaining evidence of value is all done prior to the administrator being appointed and exercising his discretion to authorise that transaction, he will enter into that immediately after he is appointed. So far as the public are concerned, there's very little effect on the business. They have been criticised in terms of lack of transparency provided that proper efforts are made to establish value that they are a very useful restructuring tool. But as I mentioned, it's best to do that at the holding company level because contracts and licences at the op-co level can be terminated in insolvency. In other jurisdictions like the US there are restrictions on exercise and service calls but we haven't yet caught up. If you're going to do an administration you need to have the co-me in England and Wales. So if we're doing this at an overseas company then you will need to do a co-me shift. Schemes of arrangement, what is it? It's a statutory procedure under part 26 of the Companies Act. Just a few sections in Companies Act. Very little guidance in the legislation as to what you can do in terms of creditor schemes which has been jolly in this book because it means we can within reason do all sorts of things. Slight word of caution, what I'm going to say is based on what little case law there is and what case law there is is generally at first instance and often unopposed as formed the basis of market practice in any event. Now what it allows you to do is reach an arrangement or compromise with creditors within certain limits and that will bind each of the members and creditors of the relevant class provided that the requisite majorities are achieved and provided the court sanctions the scheme. Very, very importantly it's the only procedure available under this law to compromise the claims of secured creditors without their consent and that's really we've seen an awful lot of that during the last decade and the scheme has come of its own. Slight word of warning if you use the word scheme with an American lawyer they think it means a scam or a fraud you have to do an issue just what it's called it's not a scam but scheme has another meaning for it. The scheme is generally initiated by the company itself. Just a few examples of what a scheme has been used for in practice it's been used to compromise secured or unsecured claims it will change the ranking to affect what we call an amend and extend so we amend the terms and extend duration to affect debt equity swaps to introduce new debt tranches or facilities and to transfer business and assets to new codes. So very powerful. There are a number of things a scheme can't do firstly you can't simply remove a party's rights for no consideration it's got to be very huge but an element of give or give and take nor can it deal with proprietary claims for trust property where the beneficiary is not a creditor and generally what it can't do is impose additional new obligations to provide new credit although the point was left open in app cover 2 last year as to whether a simple rollover on existing terms might be something now most importantly what a scheme cannot do of itself is cram down junior creditors or shareholders unless they agree or voted in favour because you don't need to involve in a scheme any party who on the evidence doesn't have an economic interest in the outcome so if they're junior creditors and there's evidence of value raising a senior you don't need to involve them in the scheme process and you expect them not to go against it but what it does means if they're not involved in the process then their claims are not compromised so how you see that used is if you haven't got unanimity amongst the senior you do a scheme to by the and you've got the represent majority you do a scheme to buy the senior and then you combine it with the release mechanism you also have a distressed disposal so either administration sale or mortgage sale and where you have a distressed disposal you use the intercredible mechanics to disenfranchise the mess so if a client comes to you so you want to do a scheme it may well be that as well as a scheme you need to build into it these other elements short outline of the procedure once you've agreed the terms that can take months or years then you need to apply to court for permission to convene meetings of creditors and to agree the classes who are going to vote on the scheme and I'll come back to that then at your meeting it needs to be approved by the requisite majority which is a majority in number 75% majority by value in each class in practice the parties involved will try very hard to get as higher and approval for as much as possible to minimise challenge and then finally there have been application to court to sanction the scheme where there are recently settled principles and that's not simply a rubber stamping exercise but I would say the judges are very commercially aware and courts are very ready to assist parties where time is of the essence to get a scheme approved now as regards the composition of classes this is probably the key area and there's no guidance of itself in the companies act on how the classes should be composed in sovereign life assurance and dog the classic test was a class must be combined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest now what and it needs to be very clear on this the court is focused on rights rather than interests so you look at the strict legal rights of the creditors versus the company now if creditors have got a particular agenda connected with the shareholders that shouldn't of itself mean they are in a separate class although that can be argued it may be relevant when we come to the sanction stage and I'll explain about that in a minute one area where the courts have looked at the class issue is where the parties have entered into what's called a lockup agreement these are quite common because you want as much certainty as possible if you're promoting a scheme that the creditors are going to support it and in a lockup agreement at its simplest there's generally agreement to give the company time to implement the scheme and require them to support the scheme perhaps based on no material departures from the great term sheet and they may be offered a fee in return for the signing up the court has upheld that process in particular paying a fee but it didn't create a separate class provided that it wasn't a materially significant amount and was available to all the creditors but if one were thinking of challenging the scheme the potentially vulnerable point is the classes because if that's wrong the court doesn't ever have jurisdiction to sanction the scheme talking about sanction at the sanction hearing the court will look at have the statutory requirements been met where the meeting is convened where the requisite majorities in favour of the scheme was each class fairly represented and was the statutory majority acting bona fide in the interest of the class so that's the point at which certain creditors have got particular vested interests the court will assess what weight or not to be given to those separate interests and the court also has to be satisfied that the scheme terms were fair so objectively an intelligent and honest person might reasonably have approved the scheme in practice there's all sorts of negotiations going back going behind the scenes before the scheme which was promoted to try and iron out these issues and a lot of the parties will be involved in one scheme and their conduct to one scheme might be held either in their favour or against them on the next scheme so in the commercial world a lot of done a lot of the action is done off stage now schemes and overseas companies to be eligible for jurisdiction the company must be one which is liable to be wound up under the Insolci Act now that what that means is it's a bit of sort of company that's capable of being wound up it doesn't mean it necessarily would be and the English court won't wind up a company unless there's a legitimate interest and the courts established three guidelines for legitimate interests the most important one of which there has to be sufficiently close connection with the UK ordinarily that would mean establishment or place of business or Comey and actually if if a Comey shift is practical you might well do it to be absolutely certain of jurisdiction for a scheme but the court have recently found that sufficient connections simply are on the basis that the finance documents are governed by English law the even in Upcoa last year accepted jurisdiction where the governing law clause in the facility was originally German law and that was changed to English law to then give jurisdiction for a scheme I wouldn't run away too much with the thought that one can always do that in that in place the practitioners were very clear up front seeking consent to change the governing law the purpose was to do a scheme and it was a rather old facility agreement in that pre 2012 change of governing law was under the LMA standard majority decision since 2012 the precedent has made it an all ended decision so that that route may not be open on a more bottom facility nor will the court sanction the scheme without some evidence that the scheme will be recognised and enforced abroad either full recognition or practical recognition through the local court's willingness to grant an injunction to stop somebody enforcing the basis of the pre-restructure of the finance documents just in brief in terms of documentation when you're dealing with a scheme in practice it's useful to think of it just as a wrapper for the commercial deal and what was the scheme document will generally do is exhibit a form of restructuring agreement which will itself then exhibit all agreed forms of financing document, share transfers I mean it is a huge exercise but the scheme is just the wrapper to give authority for the parties to enter into it briefly the last form of restructuring process we have in the UK is a company voluntary, rated or CVA to a degree it's an allergy to the scheme however you cannot compromise secured claims in the CVA without the creditors consent where it has been found to be very useful as with landlord, it's a compromising landlord claims we acted a few years ago on the case of black's leisure blacks like other retailers had a number of performing workshops which were trading quite well some which were hopeless and had in fact been closed and some in the middle and provided that you give the landlord a better return than they would get on the liquidation so in this case we are going to share a pot of money and you can objectively justify the categories that you put the landlords into then you can compromise their claims for example by moving them from quarterly to monthly rents and of course in that scenario you don't compromise the claims of all the other trade creditors so that they will vote in favour the procedures are a bit different from a scheme you have to file a various documents at court but there's no requirement for sanction and you don't generally speaking have different classes although if the majority is 75% again if a lot of that is made up of connected creditors and a bare majority of unconnected creditors oppose the scheme then it won't be approved and market practice is to have what's called a there's not legislation with a burning platform you have to be able to say credibly to creditors that if you don't approve this CVA then it's going to have to go into liquidation or administration PDQ and you'll get a worse result CVA's can be challenged on the grounds either of material irregularity in the process or unfair prejudice of a creditor and that will come back to what I was saying about you need to be able to justify objectively how you get if you're treating one creditor differently from another and there is a 28 day cooling off period during which if the the creditor's meeting has approved the CVA an agreed creditor has a month within which to put a claim for unfair prejudice which isn't really very satisfactory in terms of deal execution because you are in limbo for another month and you may have to cut deals to deal with any challenge so on the big financial restructuring you won't see CVA where this if it's just all secured debt if there's unsecured bonds it might be something you think about and with that we can turn to our little diagram that you really have to see on the screen if we just think about first assumption if the value breaks in the senior debt anybody any thoughts on what a restructuring might look like I would stress there's no single right answer and can be all sorts of deal specific factors which will influence the actual design Jeremy this is probably a silly question can you just briefly explain what value breaks means yes value breakers if you were to sell or liquidate for the company or the group the proceeds would be insufficient to pay all of the senior debt and wouldn't be able to pay any of the junior debt so in this scenario and taking this valuation as being correct the junior lenders have no economic interest in the outcome a senior do but under our starting structure the juniors still have guarantees and securities of the junior to cover the junior debt just to walk through this the first thing you look at I'll say it breaks in the senior actually how bad is it because if it's seriously bad then any amount of financial restructuring is unlikely to solve it so you would probably put the whole group into administration ideally prepackaged probably a limited marketing process to at least get it as much back for the senior as you can but let's assume it's bad but not turned on then the senior will want to restructure and that might well be for example changing the terms of the performing senior debt and converting the balance into equity if the senior are so changing the terms of the senior debt probably means pushing it out extending maturity changing the coupon which will be a more lender decision so next question is are the seniors unanimous on this if they are then you deal with that aspect of it contractually if not but you've got 75% in favour then you might do a scheme amongst the senior to change the terms of the senior debt but we've still got the junior creditors with their guarantees and security from the old codes first we're going to ask will you either voluntarily offer a modest amount of money to save us the time and the effort will you agree to transfer your claims to us or relinquish them and have a similar conversation with the shareholders in the existing capital structure if they say yes then you deal with that consensually and contractually if they don't you need a way to get rid of the junior guarantees and security which would involve and we know we can bring that about by having a distressed disposal moving the existing hold co into a senior control either through a prepacking administration or and or a mortgage sale of the shares provided you've got fair value the security agent will be authorised to release the mes debt guarantees and security now if the failure were to break in the junior debt and on the face of it the senior are unimpaired most of the restructure ought to take place at the junior accreditor level commercial questions would arise are the junior willing to buy out the senior maybe a simpler solution if the juniors want to promote their own restructuring is that unanimous amongst the junior if yes find or contractually if not and you've got 75% of the junior onside you could scheme amongst the junior creditors you probably got to also restructure the senior because if the business has been performing well but not well enough you may need to push out the maturity of the senior and again it's not unanimous amongst the senior but maybe the debt trading makes it become unanimous perhaps do a scheme amongst the senior as well senior scheme to restructure the senior and a more drastic scheme amongst the junior again to push out the maturity and or do a debt equity swap can I just ask a quick question if you've got a appropriate inter-creditor release provision was that completely preclude all these issues you spoke about if the value breaks in the junior there or it's a situation you're talking about a situation where there's no prior provision for inter-creditor release or there's no need to do a distress disposal can I ask a question as regards proposing shareholders is the ultimate threat as regards those shareholders that they don't have the same administration to be pushed out or are there any other mechanisms in all that administration I think you're right it's a weakness of the UK system there is no automatic way of dealing with the shareholders who want to stay on an existing capital structure I think in other jurisdictions including Germany there are ways of dealing with that so basically you have to threaten the shareholders we will move you're at the top, your structure is subordinated we will move the assets into an eco controlled by the creditors and some shareholders just as a matter of principle will go ahead and do that so I've seen cut a deal for a modest amount of money which is less than the cost of doing a scheme for an administration for a quiet life there's a commercial deal to be done and finally if the Comey is outside England Wales the impact of that is where you could still do a scheme you can't do an administration so if you need to do an administration as part of or in connection with your restructuring if an administration is important you would have to do a Comey shift to achieve that you could avoid that by having a scheme and a distressed disposal by a way of mortgagee sales as opposed to an administration but the mortgagee will have to get themselves very comfortable as to value I would say that to do your scheme you still have to establish sufficient connection with English law and I'll send a classic example at the moment is use of English law finance documents so I will say that these are all options no one size fits all but there's lots of flexibility and in practice you would you would always try and do a consensual contractual restructuring but you need to be ready to do by way of contingency plan your plan B to be able to have a which will work should the need arise and showing plan B to the stakeholders and they will be enough to get them to go into plan A so there's lots of the schemes that you see are not the sum total of the restructurings we've actually done a number of cases where we've done enough work on the would-be scheme and or administration and integrated release to be able to persuade the stakeholders to do it contractually because plan B can make plan A look quite attractive any more questions on the last part have any examples of volume shopping with combi ships for example particular credit as a cushion for certain jurisdictions to be used because that would be of interest a creditor a creditor community are generally happy when English law or German law generally unhappy but a French law which is very debtor friendly I should have stressed I've obviously talked about English law because I'm an English lawyer but if it's an English company you might well look at other jurisdictions for example some years ago when one of the cable companies went into restructuring in the US we actually had a couple of the English companies that issued the bonds and we put those companies into simultaneous chapter 11 in the States and the administration in the UK to be able to then restructure those bonds through a chapter 11 plan of real organisations so part of the analysis in for English companies are there other jurisdictions that we might want to form a shop a lot of questions from a theory one would say it's anti-creditors plan ahead and then they adjust their choice of landing to the situation they are able to negotiate and it seems to me that the creditor is one argument why he really might be right because often practitioners say as a rough theory that it doesn't work and they don't anticipate what will happen they will see the problem and then start acting and then go through the options they have so my question would be in your practice if you look at how the creditors are negotiated and how clauses are negotiated you mentioned the release clauses for South Juniors would you say that this is informed efficient contracting taking place and then are the actors anticipating insolwancy or is it rather a kind of world thumb roughly going along how would you say that every so often there is a restructure which has problems and then the LMA developed their standard form and the first version of the LMA into creditor was completely senior friendly and the protections around fair value have been brought in following negotiations on various deals with the MES creditors and there are some MES houses which have a stronger bargaining position than others but then that tends to gravitate towards a common position interestingly or potentially MES debt it's relatively unusual to see MES on a new facility a fairly recent development is called a unit charge which as the name suggests just one easily borrow one ranking one tranche of debt and behind the scenes the participants in the unit charge enter into an agreement between lenders as to a minute predator behind the scenes those have not yet been stress tested on the restructuring I'd be interested to see how they would work on a scheme because as against the company there's only one set of legal rights of behind the scenes differing in fact our quasi tranches behind the unit charge in terms of the way these are negotiated at 4 o'clock in the morning by people who haven't slept for 3 days and nights some are better negotiated than others on a very complex new intercreditor people are trying to contract for the first restructuring and the second restructuring and so on all sorts of hypotheticals for good and valid reasons clients are not particularly interested in it lawyers love it it's a very powerful document the administration procedure is still an insolvency process if you don't throw a prepack you can minimise some of the downside scheme is still thought of because the company doesn't have to be insolvent and it's a company's app procedure I quite like administration you can actually achieve quite a lot with it but it does have the stigma of an insolvency process that said if you're able to keep that action very much at the holding company level rather than the operating that may not register with the public and also whilst the court will uphold ipso facto clauses termination clauses most clauses will be drafted in a way which only affect the direct counterparty rather than it also extend a reference to the insolvency of a holding company although you have to check that I've never thought of it this before but a scheme of arrangement in a distress company then that would normally be classed as a credit event as such in the way that legislation and administration would it turns out it's drafted for many purposes it would be drafted although it's not an insolvency process to the public at large it will generally be included as an insolvency event or credit event can I just explore just in a minute whenever I've taught this topic specifically mean schemes of arrangement and then the rare occasion is when I have taught it because I normally try to avoid leaving the people at you that actually know what they're talking about but I think when when you try and teach this topic academically naturally you pick up on a case long cases like holding a pension sovereign life insurance and do it Hellenic in general and the big issue as it stands out the reading list topic and the books and textbooks seems to be the issue that you mentioned about defining classes what constitutes a class rights versus interests these sorts of issues and I wonder from what you've said and this is going to go back to Julia's question about efficient private order mechanisms if you've got if you've got for example into creditor release provisions or appropriate deals would be done otherwise between creditors behind the scenes then would class definition ultimately really be a problem if all that groundwork had been done anyway surely the same members of potential classes should have been silenced or otherwise taken care of beforehand so I suppose my question is if we get a sovereign life insurance and the issue before report and there is this dispute about how the class has been properly defined is it simply because the solicitors have all just done their job properly well they've done it they've pushed it as far as possible and the respective clients have not reached agreement apcoa 2 the judgement there is quite an interesting story of the battle between centre bridge that was described as a lone two-way culture and FMS was described as a hold out creditor and FMS actually should have done more at the convening stage basically came up with all sorts of arguments as to why they were in a separate class as they hadn't been involved in providing super priority funding they went party to various agreements by their own volition and the court was fairly robust with them the issue was held over until the sanction hearing and the court was very much a but it didn't like a hold out creditor and was quite willing to say that people having other interests within reason quite clearly didn't put them in different class but the court looked very carefully at the sanction hearing and I think the court is cognisant of the fact that if the classes are not correct then there's no jurisdiction to approve the scheme and it's quite reluctant to give up that jurisdiction or to allow it to be exploited by allowing giving small the credit as a veto if there's a proliferation of classes and then to deal with it at the sanction hearing and if necessary making some doing a bit of tinkering to the final version of the scheme that has happened on that code to provide sanction in reality is it difficult to decide which between minority creditor who happens to have a genuine claim to be a different class versus the situation of a minority creditor is just plain awkward is that an easy distinction to make in practice you turn to the for example now a hold out creditor when you see one final brief question in one minute just to leave you with this thought that I actually think that restructuring is one of the best forms of legal practice of law you can do but you should never forget the impact on the clients Neil Gillis who was the CEO of Blacks was quoted in the telegraph saying it was the worst three months of my life which gave him he was also a director a fair back it's quite something I think that's a good note to bring this to a close and I'm certainly personally speaking I'll have more about this topic in the last hour than I think you have in the last 10 years so once to your credit do you have any things you can show appreciation for the stream of interest in the presentation this afternoon so thank you gentlemen thank you