Lessons to be learnt in the conduct of English CVAs with non-UK creditors

Lessons to be learnt in the conduct of English CVAs with non-UK creditors

This article looks at a recent Irish case on international elements of Company Voluntary Arrangements advanced by the English company Monsoon ahead of Brexit changes. Written by Mark Cullingford of Thrings LLP.

Apperley Investments Ltd (and others) v Monsoon Accessorize Ltd [2020] IEHC 523

As any person following the restructuring of UK retail operations and EU retail operations will know, the management of long-term leases and of rights and obligations of landlords and tenants and a compromise of debt, claims for dilapidations and future rent have been a key feature of successive Company Voluntary Arrangements (CVA) proposals and Scheme of Arrangements for many years.

It is common for English Companies to have many non-UK creditors and for many UK businesses to operate satellite operations in establishments in other EU countries. It is equally common for there to be UK establishments and creditors of EU-based companies.

That trend may increase as Brexit leads to changes of structural strategy for multinational businesses.

Regulation (EU) 2015/848 on insolvency proceedings will provide (until 1 January 2021) for the automatic recognition in one Member State of insolvency procedures initiated in the EU Member State where a company has its Centre of Main Interests. That means that those ‘Main Proceedingswill apply the laws of that country to all creditors. The positions of different creditors in different states is not harmonised (so local preferential creditor status may differ, for example). That is fairly well known, but the exceptions to that are less well known or understood.

A key exception is the need to respect rights in rem created in property in a particular Member State so that, for example, mortgages over land are respected, such that the local law applicable to the location of the land or other immovable will be applied.

The position for leases of land or ‘a contract conferring the right to acquire or make use of immovable property’ is plainly material to all business operating in multiple state locations.

The impact of

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.