Although there are occasions when formal insolvency proceedings are unavoidable, there are many cases where a consensual, out-of-court approach is more appropriate and desirable.
We are often engaged to assist creditors, directors and other stakeholders with negotiating standstill agreements or restructuring support agreements to give breathing space to put new terms in place and allow the relevant corporate entity (or group) to continue as a going concern.
In addition, in recent times, the Conyers team has been instructed on high-profile and complex mandates to:
- Implement debt for equity swaps: We are often engaged by ad-hoc groups of creditors to assist with an exchange of all or some of their loans for equity in the relevant debtor company;
- Advise on priorities and security arrangements: We act for new money financiers to ensure that they are afforded priority of repayment over pre-existing senior debt. For example, we are often called upon to advise on the terms of inter-creditor arrangements and to perfect new security packages;
- Assist with liability management: We work with select creditors and stakeholders on new indebtedness within a debtor's existing financing documents. We also assist with asset sale transactions and other strategies to ease short-term liquidity or balance sheet issues;
- Advise on 'Golden Shares': We work with lenders to negotiate veto controls and other protections, which are often recorded in the form of a 'golden share' to guard against specific risks;
- Effect plans confirmed by foreign courts: We work alongside foreign counsel to incorporate new 'offshore' entities and restructure groups as a result of confirmed Chapter 11 plans and UK restructuring plans, for example; and
- Director's duties: We act for individual directors, special committees and boards of directors to implement best practice governance measures in times of distress.
The Cayman Islands has various tools available to assist with court-supervised restructuring, including the use of schemes of arrangement and court-appointed restructuring officers. We have written about those options in recent briefings (for example, here and here).
However, with proper contingency planning and early advice, there may be less expensive and more effective options to achieve the desired outcome. As always, we look forward to discussing these options with new and existing clients at the earliest opportunity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.