Insolvency & Restructuring News

ILA Annual Conference 2012


The ILA Annual Conference 2012 was held at the Luton Hoo hotel in Bedfordshire on Friday 23rd March and Saturday 24th March 2012. The sun shone as did the energy and enthusiasm of the delegates. Delegates where welcomed by the new ILA President Nigel Barnett of SNR Denton

This year the Honourable Mr Justice Newey was able to find time in his busy schedule to chair the conference to provide his insight into the topics, in particular schemes of arrangement, (following his early involvement in the La Seda decision) and also in the hotel itself which, coincidentally, had been mentioned in one of his cases earlier in the week. 

The conference began with Edward Eyerman, Managing Director of Fitch Ratings talking about the hot topic of "Speculative Grade Corporate Credit and the Eurozone Crisis" which helped to put the rest of the domestic, European and international sessions in general context.  Stressing the seriousness of the current economic situation, comparing it to the 1930's, delegates were advised to  "be careful what you wish for" with the 2014 maturity wall still a critical date for the future. The session was very well received, steering us through current key economic themes.  Ed cogently explained the sovereign debt issue and the legacy of Basel I and II and other outside factors on the debt and bond market. By taking us through the figures and graphs which accompanied his talk, and finishing with an explanation of the "Impossible Trinity" and the political "Trilemma" of the World economy gave plenty of food for thought. 

Ed's session was followed by Raquel Agnello QC who gave her views on the Minmar validity of appointment pitfalls, an uncertainty which still troubles the profession and got people talking both in the session and at the break out.  In asking, "will the saga never end?" it all seemed a  long way away from the streamlined system that the new out of court appointments procedure under the Enterprise Act 2002 sought to create.  With no end in sight from the appeal court or a change in the legislation likely, we appear stuck with the current appointment problems.  Raquel's sensible risk analysis that strict compliance with the notice requirements was the only risk-free solution still could not answer the battle of the prescribed forms in practice or how to deal with the reluctance of IP's to take appointments in the first place. Of particular concern was how these uncertain appointments impacted on business sales. 

Redvers Cunningham of Caprica, who kindly sponsored the drinks reception on the Friday night, continued the "pitfalls" theme by giving us his analysis on litigation funding: now accepted by the establishment as a proper means of obtaining access to justice. He divided his presentation into two areas dealing with both the application/contracting process before citing some examples where funding had gone wrong and suggesting ways the parties could have better anticipated these problems earlier. 

Stephen Taylor of Alix Partners then gave a tremendously informative and enjoyable war story presentation about the lessons learnt from the Southern Cross care homes restructuring which has already involved the largest sale transaction in a single day ever in the care homes industry.  In an industry where continuity of care for the residents is paramount, such that insolvent liquidation must be avoided at all costs, getting the inside track on how to tread the fine line between the various stakeholders and legal responsibilities to achieve a restructuring (something which Stephen compared to "trying to land a jumbo jet in a ploughed field") was very interesting.   He suggested the UK system had stood up very well to the needs of the restructuring and a truly workable solution to a stand-alone consolidated group CVA would only involve a small tweak to the rules. Finally he recommended the ILA speak to UKLA about their insolvency rules. 

One of the great strengths of the ILA is its ability to provide a forum for both practitioners and academics to share ideas and debate the key legal issues facing the insolvency and restructuring profession.  In this respect, the conference was fortunate enough to benefit from a session by Professor Andrew Keay of the University of Leeds who reported back on the Academic Colloquium held on the previous day.

The highlight of the conference for many was the afternoon's panel sessions which covered "Using schemes of arrangement across Europe" and "Using the US as a collection destination for offshore estates". 

Philip Hertz deftly chaired a distinguished panel of experts from across Europe, all with involvement in the recent spate of cases, most notably Rodenstock.  Francisco Garcimartin  Alférez- Professor of Law at the University of Madrid, Dr Leo Plank from Kirkland & Ellis Munich and Reinhard Dammann from Clifford Chance, Paris.  After Philip set the scene providing a brief introduction to schemes in the international restructuring, Barry Isaacs QC explained how the English jurisdiction applied to foreign companies before opening the discussion up to the panel.  The panel considered whether there currently existed equivalent procedures in their jurisdiction and would their local courts recognise an English scheme under Brussels 1, private international law principles or some other basis.  The debate then turned to whether the European Insolvency Regulation should be amended to cover schemes and whether the panel thought  their local law would incorporate a schemes type procedure to permit pre-insolvency restructurings before finishing with the lessons we could all draw from this last round of restructurings.

What was clear was that schemes of arrangement continue to be a popular flexible tool for restructuring foreign companies, though it looks like the rest of Europe will soon catch up with its own procedures to rival those under the Companies Act 2006.  

The second panel session gave delegates the opportunity to understand the lessons learned from the Madoff, Fairfield Sentry and Stanford international insolvencies.  Our thanks to Farrington Yates from SNR Denton and Andrew Thorp from Harneys for travelling to sunny Luton from New York and the BVI respectively and providing us with their unique insight into the use of forum shopping by liquidators and claw back targets as a means of gaining advantage and the tactics deployed to exploit cross border issues. The overriding message was that Liquidators and Trustees in similar situations have had very different results depending on the strategy deployed, in particular in relation to forum.

Richard Snowden QC in his own inimitable style, kept everyone riveted to the end with his own insight into the implications of the Perpetual, Kaupthing and Lehman Brothers (client money) Supreme Court decisions.  Demystifying for many the complexities of the legal arguments in these cases, he painted a vivid picture of a battle raging between well-established insolvency doctrines and the recent influx of principles found in contract and commercial law.     

Following the day's technical sessions, delegates enjoyed a black tie gala dinner in the grand setting of the Mansion House.  A truly memorable way to finish another thought-provoking, stimulating and well-attended annual conference.  Special thanks must go to Nigel Barnett and all the team at SNR Denton for organising such an enjoyable weekend.

Copies of the technical papers presented at the conference can be obtained in the Conference Papers section here.

Details of the Academic Colloquium held Friday, 23rd March 2012 are available here. 

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Recent Bulletins

A key service provided by the ILA is the provision of bulletins keeping its membership up-to-date with the latest developments in insolvency law.

Below are a selection of recent topics covered:

  • Perhar v Freestone – alleged defects in QFCH appointment
  • Ackerman – standing under s303 and effect of TiBs’ release
  • Becker – lifting suspension of discharge