A review of 2014’s legislation

A review of 2014’s legislation

Our panel of experts examines the impact of 2014’s legislation on restructuring and insolvency lawyers and their clients.

The experts

Jennifer Marshall, partner, and Helen Pattinson, PSL, Allen & Overy LLP

David Steinberg, restructuring and insolvency partner, Clifford Chance LLP

What were the key legislative developments in 2014?

Jennifer Marshall and Helen Pattinson: The extension of the special resolution regime under the Banking Act 2009 to investment firms, recognised central counterparties and banking group companies is key. Other legislative developments, whose impact is yet to be fully felt, include:

  • approval of the final text of the Bank Recovery and Resolution Directive 2014/59/EU (BRRD)
  • publication of the Graham Review into pre-pack administrations—the government has passed enabling legislation to give effect to the recommendations if not followed voluntarily
  • the Small Business, Enterprise and Employment Bill with insolvency-related proposals on director disqualification and creditor compensation awards and various changes to a liquidator’s/administrator’s powers (some fundamental)
  • the European Account Preservation Orders Regulation (EU) 655/2014, enabling bank accounts to be frozen across Europe, but not in the UK, on a single application (January 2017)

David Steinberg: As far as our firm’s restructuring and insolvency practice is concerned, the key legal developments in 2014 have arisen in the fields of cross-border pre-insolvency restructuring and post-2008 financial crisis fall-out. Further, 2015 and beyond seem to promise more of the same.

In the UK, we saw the continued roll-out and expansion of the statutory regime for the resolution of banks and other financial institutions. These first saw the light of day in the Banking Act 2009 (which introduced a number of stabilisation options which can be invoked by the responsible UK regulator once it becomes clear it is likely that the relevant financial institution will fail to meet its capital requirements). However, the most radical and draconian stabilisation mechanic in the regulator’s armoury—bail-in—was included in amending legislation towards the end of 2013 and should become effective in December 2014. It will enable the responsible regulator to impose a mandatory subordination or equitisation of unsecured creditors’ claims in order to restore the financial institution to solvency.

Now, this outcome is by no means a novelty for creditors of UK banks. As recently as December 2013, the holders of Tier 1 and Tier 2 bonds issued by the Co-operative Bank plc saw their debt holdings converted to a mixture of equity and new subordinated debt through implementation of a complex restructuring involving linked exchange offers and a creditors’ scheme of

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About the author:

Neeta has been working as a paralegal in Banking and Insolvency for the past 4 and a half years.

She started her legal career at Allen & Overy in 2008 in the midst of the global financial crisis and the collapse of Lehmans where she gained most of her experience.

Neeta also did a short stint in litigation at the Revenue and Customs Prosecutions Office. Neeta graduated with a 2:1 honours degree from University of London, Queen Mary College and went on to obtain a distinction from the College of Law in the Legal Practice Course. She moved to Lexis®PSL in April 2013.