Fulcrum creditors definition

View the related practice notes about Fulcrum creditors

Demergers—glossary of terms

Demergers—glossary of terms B Buy out This is the purchase of a company or a controlling interest in a corporation’s shares. This often happens when a company’s existing managers wish to take control of the company. C redemption-reserve'>Capital redemption reserve A non-distributable reserve into which amounts are paid following a redemption or share buyback in accordance with CA 2006, s 733. The company may use the capital redemption reserve to pay up new shares to be allotted to members as fully paid bonus shares. Capital reduction demerger This method involves a capital reduction of the parent company of the target group, in consideration for which the demerged business is transferred to a new company, which in turn issues shares to the shareholders. See Practice Notes: Demergers—an introduction for corporate lawyers and Reduction of capital—a quick guide. For specific tax information see: Capital reduction demergers. Chapter 11 Refers to debtor-in-possession restructurings under chapter 11 of the US bankruptcy code. Class rights A company having a share capital may have separate classes of shares. A type of share will form a separate class if the rights attached to it differ from those attaching to other shares of the company. Different classes of shares include ordinary shares, preference shares, deferred shares and redeemable shares. For further information, see Practice Note: Class rights and variation of class rights. D

Private Equity guide to acquiring and managing distressed portfolio companies

equity'>Private Equity guide to acquiring and managing distressed portfolio companies This note aims to: • provide practical guidance to PE firms (and other funds) looking to acquire a distressed/insolvent company • provide practical guidance to PE firms as shareholders of a distressed/insolvent company • explain a PE firm's position in most types of corporate insolvency/restructuring situations • provide advice on what a PE firm can do to maximise its position if a company becomes distressed Following the 2007/8 credit crunch, when there were few M&A deals, PE funds (including special situations funds) looked to acquire distressed businesses, with a view to turning them around and adding them to their list of portfolio companies. This type of distressed investment is counter-cyclical and may be a useful way to diversify risk within a portfolio. Alternatively, existing PE shareholders need to be aware of the risks if their portfolio company enters the 'zone of insolvency'. Whilst a company is operating normally, the interests of a company's creditors and shareholders are generally aligned. However, once it enters the 'zone of insolvency', the duties of the directors of the company switch to being owed to the creditors (see Practice Note: Directors’ duties: companies in financial difficulties). As to when the duties switch, Hellard v Carvalho in the matter of HLC Environmental Projects (in liquidation) found that definite insolvency is not a pre-requisite for the duty