Debt restructurings—enforcement
Produced in partnership with Jenny Doak of Weil Gotshal & Manges LLP
Debt restructurings—enforcement

The following Tax practice note produced in partnership with Jenny Doak of Weil Gotshal & Manges LLP provides comprehensive and up to date legal information covering:

  • Debt restructurings—enforcement
  • Types of enforcement
  • Exercising a power of sale
  • Appointing a receiver
  • Administration
  • End of an accounting period
  • Grouping
  • Tax as an expense of administration
  • Foreclosure
  • Transferring property to lender
  • More...

This Practice Note outlines the tax issues that are relevant where creditors seek to enforce their security over the assets of a company, or corporate group, in distress.

Other Practice Notes in this series cover the tax issues relating more specifically to:

  1. acquisitions of distressed debt, and

  2. debt restructurings

In addition, a Checklist summarises the key points to consider when dealing with distressed debt.

This Practice Note discusses the types of enforcement actions available to creditors of distressed companies.

For a closer look at the technical provisions dealing with debt releases in the loan relationships legislation, see Practice Notes: Impairment losses and debt releases and Impairment and debt releases—connected companies.

Types of enforcement

As discussed in Practice Note: Debt restructurings—acquisitions of distressed debt, lenders will often participate in a restructuring of a distressed group’s debt in order that the underlying business may survive. Enforcement by the lenders of their security is usually only pursued as a last resort.

Where security is to be enforced however, there are a number of options available depending on the rights available to the lender:

  1. exercising a power of sale

  2. appointing a receiver

  3. appointing an administrator, and

  4. foreclosure

Other, less commonly used, methods of enforcement (not considered further in this Practice Note) include:

  1. taking possession of the secured assets—note that this option is only available at the discretion of the court and is rarely invoked; and

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