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High Court authorises first mid-market restructuring plan in landmark case

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A restructuring plan for a mid-market company has been approved by the High Court for the first time in a case undertaken by the restructuring team at BTG Advisory.

Mark Fry, Jamie Taylor, and Kirstie Provan, Partners at BTG Advisory, are the joint administrators of Amicus Finance plc, a short-term property finance company which has continued to trade since being placed into administration in December 2018. The administrators proposed a restructuring plan at a sanction hearing on 11 August in order to prevent the company having to file for liquidation.

A restructuring plan is a new restructuring tool introduced in June 2020 into Part 26A of the Companies Act 2006 by the Corporate Insolvency and Governance Act 2020, and is similar in nature to the more established Scheme of Arrangement process, whereby stakeholders are divided into categories for both voting purposes and also in regard to their treatment under the proposal. However, where the restructuring plan differs is in the allowance for dissenting classes of stakeholders to be bound: this is known as “cross-class cramdown”.

Despite a dissenting creditor, Crowdstacker Corporate Services Limited (CCSL), attempting to block the proposed Amicus Finance restructuring plan, the High Court agreed to cramdown the creditor, ruling in favour of the administrators. This is only the second fully opposed cross-cramdown decision, and the first involving the cramdown of a secured creditor, making this a landmark case and one which is hugely significant in the UK restructuring world.

Due to the joint impact of Covid-19 and Brexit having a detrimental impact on the realisations of Amicus Finance, the administrators felt that the continuation of the administration was no longer a financially viable option. The joint administrators, therefore, sought to use Part 26A of the Companies Act 2006 to propose a restructuring plan to provide an exit route from administration which would allow the company to continue as a going concern and place creditors in a better position than if the company was placed into liquidation.

The restructuring plan negotiated the claims of five separate classes of creditors: expense, senior secured, junior secured, preferential and unsecured. The company’s secured creditors were Hartford Growth (Trading) Limited (HGTL), and Crowdstacker Corporate Services Limited. While HGTL were supportive of the restructuring plan, Crowdstacker had fully opposed the proposal, and argued that they should be placed in a separate creditor class to HGTL. The court, however, was satisfied that secured creditors would be no worse off if the restructuring plan was implemented than in the event of the ultimate liquidation of Amicus Finance.

The restructuring plan of Amicus Finance represents the first plan of its kind to be proposed by an administrator and pulls into sharp focus the reality that although a company has been placed into administration, it can still be rescued as a going concern even when opposed by secured creditors. Following the ruling, Mark Fry, Jamie Taylor and Kirstie Provan will continue as restructuring plan administrators of Amicus Finance plc.

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