Corporate Restructuring Summit
David Baxter
A&L Goodbody
27 September 2012
Overview
 Personal Insolvency Bill
 Update on key cases in 2012
 eircom Restructuring
Personal Insolvency Bill
 Reform of law = condition of Troika bail-out programme
 Key features: reform bankruptcy; creation of an Insolvency
Service; & 3 non-judicial debt settlement arrangements
 Debt Relief Notices: unsecured debt up to €20,000
 Debt Settlement Arrangements: unsecured debt; > €20,000
 Personal Insolvency Arrangements: unsecured & secured (the
latter up to a max of €3m)
Change to Bankruptcy regime
 Automatic discharge after 3 years
 Existing bankruptcies
 Bankruptcy tourism:
» Will it ease up?
» UK courts’ reaction to date
ECB concerns with Bill
 “Unprecedented“ reforms…. introduced “without the
benefit of an economic impact assessment“
 €3m cap too high? Covers debt on: PPRs, buy-to-lets &
business debt. Significant uplift in default rates?
 Debtor co-operation should expand beyond obligation to
secured creditors as regards PPR
 Shorter review period of PIA regime
Personal Insolvency Bill – Next Steps
 Bill published – June 2012
 Committee Stage
 Come into law – Q1, 2013?
 Insolvency Service
Recent key cases
 Ulster Bank v Deane & others [June 2012]: On Demand
facilities & Parole Evidence Rule
 O’Connors Nenagh Shopping Centre [December 2011]:
fraudulent preference & dominant intention to prefer
 Treasury Holdings v NAMA [July 2012]: pre-enforcement
engagement required?
Recent key cases
 Ulster Bank v Roche & Buttimer [March 2012]: enforcement
of guarantees & undue influence
 Reox Holdings plc [July 2012]: relief for guarantees on
upward only rent reviews
 Start Mortgages revisited: EBS v Gillespie [June 2012];
McEnery v Sheahan [July 2012]; Woodchester v Reade
[August 2012]
Recent key cases
 Examinerships:
» Mr. Binman [November 2011]: lack of full disclosure
» McSweeney Pharmacy Group [December 2011]: better return
in a trading receivership?
» Atlantic Home Care [June 2012]: re-gearing of leases
» Cappoquin Chickens [August 2012]: creditor petition;
management functions vested in examiner
eircom Restructuring: overview
 One of the largest financial restructurings in EU in 2012
 Options of jurisdiction to restructure
 Examinership chosen
 Change in ownership
 The Group’s debt reduced from €4.08  €2.35 bn
eircom Group debt profile, pre-restructuring
Net Debt Profile (€1000m)
Timeline of Restructuring
Engagement with
Stakeholders
M&A
process
Examinership
starts
Interloper
bid
rejected
Section 24
Hearing
Co-Comm set-up
MidMarch
Q2 - Q4
2011
Feb
2012
Day 44
Day 1
11 June
2012
Day 51
Day 50
Day 55
29 March
Waiver
put in
place
Senior Lenders’ Creditors’
Lock-up
entered into offer accepted meetings
Completion
eircom: why was Examinership a
success?
 Key infrastructure asset; strong cash flow; 5,000+ jobs
 Use of lock-up by senior lenders; confidence in process
 Low creditor approval threshold
 Effective implementation by main 3 stakeholders
 Significant PR planning
PR & Examinership
Examiner in bid to save 566 jobs at linen supply firm
The Irish Times
Fleming Group thrown a lifeline by High Court
Protection now extended to three companies owned by the developer
Irish Independent
600 jobs at risk as examiner appointed
to waste company
Irish Independent
Examiner in at loss-making Aer Arran as debts mount
firm must secured fresh investment
Irish Independent
Troubled
eircom Restructuring: take-away points
 A pre-negotiated plan works
 Payment of pre-petition liabilities justifiable
 An out-of-the-money creditor can get nil
 The courts tend to back the examiner
 The courts like speed
eircom Restructuring: a final thought
Dublin: a new, favoured EU restructuring forum?
Corporate Restructuring Summit
David Baxter
A&L Goodbody
27 September 2012