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This chapter starts by introducing the Brady Plan which aimed to address the debt crisis that occurred in the developing countries during the 1980s. The chapter also looks at new developments which have taken place in the area of sovereign debt restructuring since the Brady Plan. These are the EU sovereign debt crisis, and the ongoing Argentine litigation in New York. The former is a debt crisis that was originated in Greece in late 2009 and has been taking place in other Euro-areas ever since and has affected Portugal, Ireland, Spain, and Cyprus. The ongoing Argentine litigation in New York relates to a claim initiated by a hedge fund to collect on defaulted debt obligations issued by Argentina based on the breach of the pari passu clause. The pari passu clause is a standard clause in public or private international unsecured debt obligations.

Chapter 10 provides an overarching introduction to the topic of sovereign debt, presenting the main finance options, the players, the available restructuring options and tools, and the peculiar dynamics of these types of restructuring due to the lack of a cross-border international framework. Moreover, the sovereign nature of the debtor poses an even bigger challenge, altering the whole dynamics of the system since the debtor cannot be ‘forced’ to pay due to the absence of other mechanisms available in the corporate context (ie the appointment of and administrator or the liquidation of the debtor) and the creditor must settle or litigate, which poses even greater challenges.

This chapter starts by introducing the Insolvency Act 1986 and the Insolvency Rules 1986. It argues that for the most part they work effectively in the rescue or liquidation of companies. Special insolvency regimes have been put in place for a number of important industries in order to meet the situation where the application of the normal corporate insolvency law to a monopoly company causes essential services to be interrupted. The area governing both banks and investment firms has undergone more recent reforms with the introduction of the Financial Services Act 2012, the Financial Services (Banking Reform) Act 2013, and with the move to implement the Bank Recovery and Resolution Directive. Specific measures concerning the broader special administration and insolvency arrangements are addressed, looking at the treatment of depositors and client assets and explaining the priority accorded to them during the administration and insolvency procedure.

Chapter 7 explains the key features of the resolution regime and how it applies to both banks and investment firms. It specifically looks at the reforms introduced by the Financial Services Act 2012, the Financial Services (Banking Reform) Act 2013, and the move to implement the Bank Recovery and Resolution Directive 2015 (as well as The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020, which implement the BRRD and the BRRD II post Brexit) to put in place a special regime for banks and investment banks. The chapter discusses the specific measures concerning the broader special administration and insolvency arrangements. The chapter looks at the treatment of depositors and client assets and explains the priority accorded to them during the administration and insolvency procedure.

This chapter looks at the background of the Banking Act 2009 and various other reforms in the UK. While the Banking Act 2009 was originally introduced to deal with banks in distress it has been significantly modified to apply to a range of UK institutions such as building societies, investment firms, and central counterparties and banking groups. The 2009 Act provides the ‘appropriate regulator’, and the Bank of England as resolution authority provides the tools to deal with a UK institution that is experiencing financial difficulties. The chapter also looks at the recovery and resolution plans that are now an integral part of the decision-making process for the authorities as they decide how best to prepare an institution in advance of crisis.

Chapter 6 explains the main provisions of the UK’s Banking Act 2009. Part 1 of the Banking Act gives the authorities the tools to deal with banking institutions in financial difficulties and replaces the temporary special provisions regime that was provided by the Banking (Special Provisions) Act 2008 (BSPA) with a permanent Special Resolution Regime (SRR); Part 2 introduces the Bank Insolvency Procedure (BIP), which provides for the winding up of a failed or failing bank; and Part 3 introduces the Bank Administration Procedure (BAP) for use where part of a failing bank’s business has been transferred, by means of the SRR, to a private bank or a bridge bank. The transposition of the Bank Recovery and Resolution Directive (BRRD) has extended the resolution regime to investment banks and financial groups. The chapter also explains objectives to safeguard depositors and client assets and money. The chapter also explains the resolution techniques to assist the resolution process. The chapter also looks at the UK’s relationship and responsibilities with the European Union in resolution post Brexit.

The chapter discusses instances where the restructuring plan demands that the debtor be made subject to a formal insolvency system. The applicable laws are determined in accordance with the EC Regulation on Insolvency Proceedings if the debtor has its centre of main interests (COMI) in one EU Member State and assets in another Member State. If the COMIs of individual group companies are situated in the same Member State, the EC Regulation can be used to group together the administration of group insolvencies, or once the recast EC Regulation comes into force, to implement voluntary group coordinator proceedings. Any restructuring plan may include moving a debtor’s COMI to take advantage of a more flexible insolvency regime. This chapter describes the framework and key features of the EC Regulation including the concept of COMI, its application to group insolvencies, ‘COMI shifting’, and the provisions of the recast EC Regulation.

This chapter considers the response to the European banking and sovereign debt crisis, which resulted in the introduction of the Bank Recovery and Resolution Directive (BRRD). It also considers the Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM) which will be implemented to facilitate the supervision and resolution of certain financial institutions in the Eurozone. The chapter looks at the consequences of these reform measures and explains the salient features of the new framework of supervisory and resolution intervention. It also looks separately at the EBA technical standards and guidance where necessary to assist the interpretation of the provisions in the directive.

Chapter 9 explains the salient features of the European framework of resolution. It will also explain separately the European Banking Authority (EBA) technical standards and/or guidance where necessary to assist the interpretation of the provisions in the directive. It explains the key features of the Bank Recovery and Resolution Directive 2015 (BRRD). It also looks at the lessons learnt resulting in revisions (as part of the European Banking Package) introduced by BRRD II and SRMR II adopted in 2019. The chapter also explains the key features of the Banking Union with specific reference to the Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM) and their respective roles in bank resolution for those Member States participating in the Banking Union.

Chapter 2 provides an overview and analysis of the European Restructuring Directive. It starts with an analysis of the motivations for the Directive and of criticisms which have been advanced in the scholarship. The chapter then continues with an analysis of the provisions of the Directive. There is a particular focus on difficult issues which arise in interpreting the language of the Directive, and on the optionality which the Directive provides Member States. Examples of implementation from Germany and the Netherlands are also included. The chapter concludes with a brief analysis of avenues for cross-border recognition of European restructuring plans.

This chapter starts by presenting the case for a comparative approach of the UK and US models for financial restructurings of companies in financial difficulties. It argues that a comparison is useful as the systems used to deal with financial problems are actually very dissimilar. The US has its chapter 11 regime, which is a statutory process under the Bankruptcy Code. This allows a company to restructure under court protection and does not require proof of insolvency. The English system has, by contrast, a mixed approach of contract, common law, and statute and no formal regime specifically designed to achieve a financial restructuring of secured debt. The chapter also considers what changes have occurred since the first edition of this book was published.