UK emerging as restructuring capital of Europe

The UK has come under fire from critics over its anti-competitiveness for
businesses. But one area where the country is excelling is enticing companies to
make the leap to British shores to clinch better restructuring deals.

It seems the UK is becoming an alluring place for European companies to take
advantage of our more favourable restructuring and insolvency laws, highlighted
by recent judgements concerning IMO Carwash and Wind Hellias, which saw both
companies move their centres of main interest to Britain.

Creditors and insolvency practitioners are welcoming the relocations as the
UK has “creditor friendly” options available to businesses.

Some of the advantages include the mixture of restructuring choices that can
be used, consistency with having one practitioner oversee the insolvency process
and less involvement from the courts.

IMO Carwash, which operates throughout Europe and is frequently spotted
around the UK under the name ARC, had an estimated debt of £400m.

Advisers PricewaterhouseCoopers organised a restructuring plan benefitting
creditors, using a cocktail of recovery tools.

“We used both an administration and scheme of arrangement simultaneously to
sell the businesses,” said Mike Jervis, restructuring partner at PwC. “The
flexibility you get from an administration and restructuring scheme in the UK,
you just don’t get those techniques that are flexible or creditor friendly in
other jurisdictions. The methods wouldn’t be replicated or available elsewhere.”

Jervis added that creditors have a “greater say” when it comes to
restructuring in the UK – our insolvency regime is more “creditor friendly”.

That friendliness stems from European countries having court-dominated
insolvency requirements and a lack of flexibility in the procedures on offer to
stricken companies.

“In European jurisdictions it’s commonly up to the courts to decide who gets
appointed to the company, the creditors don’t have much of a say,” said Devi
Shah, restructuring partner at global law firm Mayer Brown.

She added this can slow the process down especially when trying to sell

There is a more “consistent” approach to restructuring in the UK, she adds.

For insolvency options to take place in France or Germany, a company has to
apply to the courts in each of the countries, regardless of where the centre of
main interest (COMI) is. This means that each country will have its own
insolvency practitioner, taking yet more time to arrange a sale or

“Where insolvencies involve groups of companies, they may not be dealt with
consistently as a different office holder may be appointed in each
jurisdiction,” she said.

Another example includes Luxembourg’s Wind Hellias, the telecoms company.

Earlier this year the company announced it was changing its COMI to the UK,
and just weeks later the group announced it was considering restructuring its

“The more tried and tested it is, the more attractive it becomes as an
option,” said Shah. “It is better for the company and the creditors in the long
run and I see this as being a steady trend.”


It makes a change to see creditors backing insolvency practitioners
rather than capping their fees. But we need to make sure branding the UK the
“insolvency capital of the world” doesn’t have negative connotations.

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