Everything you need to know
Especially one with important implications for creditors in the future but the recent case of DeepOcean Group Holding BV is just such a case.
DeepOcean Group is made up of three separate but connected companies from an undersea cable laying and trenching group (CL&T) that specialise in providing critical subsea services and support to the global offshore industry.
Sadly, industry changes and the global pandemic have contributed to the poor performance of the CL&T group, which placed a financial strain on the wider DeepOcean Group.
Three restructuring plans were created for the businesses which comprised four creditor classes including secured and unsecured creditors, landlords and owners of two vessels chartered by one of the companies.
Two of the plans were approved with the required majority following virtual creditor meetings but one failed as less than 75% of unsecured creditors failed to back the plan.
The case made its way to court quickly and DeepOcean persuaded the judge that if the proposed restructuring couldn’t be completed then the alternatives would be administration or even liquidation.
Under the terms of the relatively new Corporate Insolvency and Governance Act 2020, there is a provision – widely referred to as the “cross class cram down” or (CCCD) – that allows a court to impose a restructuring plan on creditors if certain conditions can be satisfied .
In this case, it was proven that the creditors would not be financially worse off if the restructuring went ahead than if an alternative outcome had occurred.
Cross class cram down in action
We’ve written previously on the theoretical power of the CCCD so it’s interesting to see it deployed for the first time in forcing creditors to accept a course of action they had initially voted against.
Chris Horner, Insolvency Director with BusinessRescueExpert, thinks the change will have an overall positive impact. He said: “Insolvency practitioners have various strategies we use like tools, specifically designed to fit the circumstances of different scenarios companies face.
“There’s never been a one-size-fits-all approach to insolvency and while processes like CVAs or pre-pack administrations are versatile, they aren’t appropriate or desirable for everyone.
“Some of the new measures, especially the insolvency moratoriums, will be really useful for smaller businesses to build a survival plan and get back to a stronger position even quicker.”
While confronting financial difficulties might appear daunting for some businesses, it can also be the ideal opportunity to make the critical changes necessary to first survive and then be in the best shape to thrive when conditions change.
The first step is to get a professional point of view on what obstacles you’re facing – and you can do that right now by getting in touch to arrange a free, initial virtual consultation with one of our expert advisors.
We can arrange a convenient time to discuss your business and what steps you can take – immediately and in the short term – to protect your company for the long term.