Key legal and regulatory developments driving and shaping M&A
The global COVID-19 pandemic continues unabated and the resulting economic dislocation can be expected to continue for some time. While government intervention and measured responses from financial institutions have tempered the immediate impact of the crisis, the road ahead for the world economy and our global businesses remain of deep concern. Undoubtedly more business failures are on the horizon. In this issue we examine new developments in a number of the tools available for financial restructurings. These changes, in the United Kingdom, Germany, and the Netherlands, are designed to incorporate some of the benefits of restructuring available under chapter 11 in the United States.
In the UK, the Corporate Insolvency and Governance Act 2020 (CIGA) entered into force this summer, is the most wide-ranging change to the UK corporate insolvency framework for a generation. We are beginning now to see instances of UK and non-UK debtors actively considering and seeking to avail themselves of the new procedures and protections available in evaluating and implementing their restructuring options. An article about CIGA walks us through this new act and its implications.
Next, we offer an article on the EU Preventive Restructuring Frameworks Directive which permits a restructuring at an earlier stage than currently allowed under German law. This past September, the German Federal Ministry of Justice presented a ministerial draft act which goes far beyond the mere implementation of the EU Directive and promises to herald a dramatically new era in restructuring in Germany.
And in the Netherlands, there is also being introduced pre-insolvency restructuring legislation. The proposed law, referred to as WHOA, introduces schemes of arrangement and has been the center of attention of Dutch restructuring professionals for quite some time now. We present an update on the current status of the proposed law.
Finally, two additional articles focus on key areas that impact restructurings, tax and litigation. Tax considerations often determine the structures used to implement corporate restructurings. We discuss those different structures and the tax impact. On the litigation front, we report on a recent decision of the Canadian Supreme Court on the legitimacy of the use of litigation funding agreements as an interim financing in an insolvency proceeding.
Enjoy the issue and stay safe.
Bankruptcy, Financial Restructuring and Insolvency
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In this issue, we cover a broad spectrum of ‘hot button issues’ for boards and companies operating internationally.
On May 26 2021, the district court of The Hague rendered a ground-breaking judgment in collective action proceedings initiated by several non-governmental organizations (including Friends of the Earth (Milieudefensie)) (the NGOs) against Royal Dutch Shell plc (Shell). The NGOs claimed, in short, that Shell had to reduce its overall CO2 emissions by at least 45% from 2019 levels, by the end of 2030 (the Target Reduction). The court ruled in favour of the NGOs and ordered Shell to reach the Target Reduction (the Shell Case). This is stated to be the first time that a court ordered a company to reduce its CO2 emissions in line with the climate goals included in the Paris Agreement.
© Norton Rose Fulbright LLP 2021