Corporate Restructuring Summit

1
Corporate Restructuring Summit

• Tom Kavanagh
  David Baxter
• Kavanagh Fennell
  AL Goodbody

2
Introduction

• Insolvency Statistics
• Headline Cases
• Current Trends
• Legal Update
• Asset Disposal Debt Restructuring Strategies
• Nama Update
• Predictions for 2012

3
www.InsolvencyJournal.ie Statistics
37
1284
1004
16
Corporate Receiverships
Examinerships
Liquidations
Jan to Sept 2011 2010 2009
Predicted 2011 total 1,500 statistics do not
include personal asset receivership source-www.ins
olvencyjournal.ie
4
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 ConstructionTotal Fitness

5
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

6
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 Examiners scheme -v-
  liquidation/receivership
• Expect cross-examination of valuers/experts
• Pre-process negotiations may influence a judge

7
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 arms length
• looking after lenders own interests and
• allow board to exercise some discretion then
• risk can be mitigated

8
Other Legal Developments

• Belgard Motors
• Start Mortgages and Kavanagh v Lynch
• Michael McLoughlin (Pharmacy) Limited
• Bankruptcy Reform
• Multi-Unit Developments Act, 2011

9
Asset Disposal Strategy
Receivership
Asset
Disposal Strategy
Commercial
Trade/Rent Hold MT
Appropriate Asset Manager
Residential
Sell Now
Hotel Leisure
Industrial
Package Sell
Trading
10
The Push to Restructure

• Agree a sustainable Senior debt
• Earning / performing loan
• Agree a structure for residual debt
• Leverage recourse to promoter and their assets
• Incentivise borrower to repay residual debt
• Anti-embarrassment/Confidentiality provisions

11
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"

12
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

13
Corporate Restructuring Summit

• Tom Kavanagh
  David Baxter
• Kavanagh Fennell
  AL Goodbody