Corporate Restructuring Summit
Tom Kavanagh
Kavanagh Fennell
David Baxter
A&L Goodbody
Introduction
 Insolvency Statistics
 Headline Cases
 Current Trends
 Legal Update
 Asset Disposal & Debt Restructuring Strategies
 Nama Update
 Predictions for 2012
www.InsolvencyJournal.ie
Statistics
37
225
184
1284
1004
124
16
10
Corporate
Receiverships
Examinerships
Jan to Sept 2011
Liquidations
2010
2009
Predicted 2011 total: 1,500 +
*statistics do not include personal asset receivership
source-www.insolvencyjournal.ie
1245
Headline Cases
 Receiverships:
Superquinn; Elliotts; SM Morris;
The Heritage; Celtic Bookmakers
 Statutory Receiverships: Grehan; Daly; Dunne; McNamara
 Share Receivership:
Quinn Group
 Examinerships:
McInerney Group; Xtra-Vision
 Liquidations:
Bowen Construction;Total Fitness
Current Trends
 Lack of liquidity still critical
 Level of enforcement: static
 Restructuring
 Banks showing patience with trading companies
 Auctioneering firms enter market; Allsop auctions
 Other than Google deal, commercial property slow
Lessons from McInerney

Senior lender opposition is very challenging

Secured creditors can be crammed down

Forcing secured creditors to stay in – less feasible

"Exceptional Circumstances" comment by Justice Clarke

Valuation: Examiner’s scheme -v- liquidation/receivership

Expect cross-examination of valuers/experts

Pre-process negotiations may influence a judge
Shadow Director issues
 Current law
 Buzzle -v- Apple, NSW Supreme Court decision (2010)
 If the actions of lender (i.e. extension of credit with
conditions attached) are…
» part of commercial negotiations & relying on
contractual rights
» at arm’s length
» looking after lender’s own interests and
» allow board to exercise some discretion then…
…risk can be mitigated
Other Legal Developments
 Belgard Motors
 Start Mortgages and Kavanagh v Lynch
 Michael McLoughlin (Pharmacy) Limited
 Bankruptcy Reform
 Multi-Unit Developments Act, 2011
Asset Disposal Strategy
Receivership
Asset
Commercial
Appropriate
Asset
Manager
Disposal
Strategy
Trade/Rent
+
Hold MT
Residential
Hotel &
Leisure
Sell Now
Industrial
Package & Sell
Trading
The Push to Restructure
1. Agree a sustainable Senior debt
 Earning / performing loan
2. Agree a structure for residual debt
 Leverage recourse to promoter and their assets
 Incentivise borrower to repay residual debt
 Anti-embarrassment/Confidentiality provisions
NAMA update
 New Insolvency Team to monitor Receiverships
 Challenges by borrowers but also…
…NAMA working with borrowers
 Capability, co-operation & full disclosure
 NAMA seeking undertakings "not to move COMI"
Predictions for next 12 months
 Distressed residential property auctions to continue
 NAMA to try and kick-start commercial property market
 Pre-packs in the retail sector to increase
 A few large, over-leveraged corporates to be
restructured
 Consensual work-outs progressed by banks
 Foreign investment into distressed situations to increase
Corporate Restructuring Summit
Tom Kavanagh
Kavanagh Fennell
David Baxter
A&L Goodbody