Milbank LLP recently acted for Flint Group, a leading global supplier of printing and packaging products, in the extension of its credit facilities. The transaction extended the maturity dates of Flint Group’s revolving credit and term loans by approximately two years, and introduced amended interest and other documentary terms.
The transaction was implemented using a series of parallel schemes of arrangement in England, and involved complex pre-implementation structuring including changing the governing law and jurisdiction of relevant credit agreements to English law.
The English Court’s decisions in the Flint Group schemes of arrangement developed a number of important aspects of English case law:
- The schemes are believed to involve the first scheme of arrangement to be proposed by a Swedish company, adding to the strength of the scheme of arrangement as a cross-border restructuring tool.
- The schemes were amongst the first to take place electronically under COVID-19 protocols, with adaptions needed for remote Court hearings and the holding of electronic creditor meetings and voting processes.
- The schemes were the first to be subject to the new Practice Statement on Schemes of Arrangement that was issued on 30 June 2020 (see our previous Client Alert). The Court also considered various related procedural issues such as timing of notices and the impact of lock-up agreements on the overall scheme process.
- The schemes re-emphasised that the Court’s jurisdiction to sanction the scheme comprises two separate questions to be considered at different stages of the scheme process: the existence of jurisdiction (to be considered at the first (convening) hearing) and the exercise of the Court’s discretion (to be considered at the second (sanction) hearing).
- The Court considered the impact of a number of changes to the jurisdiction clauses of the credit agreements that were carried out as part of the overall scheme process. These involved changing from New York jurisdiction to “symmetric” English jurisdiction and then to “asymmetric” English jurisdiction.
- The schemes added to the developing case law on consent fees and their impact on the composition of creditor classes for voting purposes.
- The Court considered questions of foreign recognition in Europe the context of Brexit transitional arrangements, and in the United States of America on principles of comity rather than, as has become more common practice, by seeking recognition under Chapter 15 of the U.S. Bankruptcy Code.
- The schemes established that a power of attorney conferred by a scheme can be used to validly execute a document by deed. The Court held that the provisions of section 1 of the Powers of Attorney Act 1971 (which requires a power of attorney itself to be executed as a deed) do not apply to a power of attorney given pursuant to a scheme because a scheme is given effect by statute (i.e. by the Companies Act 2006). This decision follows a recent decision of the Scottish Court of Session in Re Premier Oil [2020] CSOH 39 on the same subject.
The Milbank team was led by Financial Restructuring partners Nick Angel and Jacqueline Ingram and European Leveraged Finance and Capital Markets partner Tim Peterson with support from Financial Restructuring associates Elin Gosby and Natalie Raine, Financial Restructuring trainee Navine Hussain and European Leveraged Finance and Capital Markets associates Andrew Bechtel, Karen Chen and Frankie Mosely.
