Amicus Finance: a trailblazing exit from administration

Amicus Finance PLC (in administration) was last week the first company awarded sanction for a restructuring plan whilst in administration. Despite significant resistance from an aggrieved secured creditor (Crowdstacker), who challenged the relevant alternative and asserted conflicts of interests for the administrators, Sir Alastair Norris sanctioned the restructuring plan proposed by the Administrators, and permitted the return to solvency of the Company. A summary of the restructuring plan can be found here in our previous article.

Perhaps disappointingly to onlookers, Sir Alastair Norris did not offer a detailed judgement, but merely ordered that the administrators’ appointment would not cease on the date of his order, but rather the restructuring plan effective date, and that costs would be reserved. It remains to be seen whether Crowdstacker will seek to appeal.

Costs challenge

An interesting element for plan proponents more generally came in the form of Mr Justice Snowden’s judgment for the Amicus convening hearing, which was handed down shortly before the sanction hearing commenced.

Mr Justice Snowden had (at the convening hearing) been asked to make an order for costs for Crowdstacker and, rather than holding the issue over to sanction, determined to award Crowdstacker GBP75,000 plus VAT, being a portion of their costs, as an expense of the administration. He did so on the basis that:

• Crowdstacker’s challenges at the convening hearing in respect of class composition did succeed (given that the class Crowdstacker and HGTL were proposed to be by the plan company in was then split); and
• there was significant contribution by Crowdstacker’s counsel to the debates in court which gave rise to amendments to the explanatory statement.

This order is the first court-ordered costs contribution associated with a restructuring plan. We however see this as being of limited comfort to challengers and unlikely to cause an uptick in challenges brought against restructuring plans. Moreover, as the jurisprudence regarding restructuring plans becomes more developed, the instances where challengers can shape restructuring plans in this way ought to become more limited – except in instances where a proposed plan goes beyond what has been sanctioned in other plans so far. The more significant impact in our view is that companies (or even administrators) pursuing more novel restructuring plans will need to consider making provision for those sorts of awards.

Implications for restructuring plans

The Amicus case had a very particular set of facts, and there were significant issues brought to the attention of the Courts – however not significant enough for the Court to refuse to sanction the plan. It is, however, now clear that a new exit route is available to administrators where the particular circumstances allow. In instances where:

• there is value to be gained through a speedy resolution of the administration, perhaps owing to the complexity of the issues or the time required for issues to be worked out;
• where there is sufficient capital (or funding available) to pay the associated fees; and
• where there is a supportive group of creditors willing to vote in favour of a restructuring plan, a restructuring plan may be the most prudent course of action for administrators to take.

This case also sets the stall for the restructuring plan as an increasingly versatile tool in the restructuring landscape in the UK, and the willingness of the judiciary to ensure its agility and power means that we are likely to see more imaginative use of this tool – along with a rising level of comfort for those proposing plans which sit squarely within the scope of the regime. Interestingly this also demonstrates that there is real value for the restructuring plan when deployed in the mid-market place. Our involvement in some of the most ground-breaking restructuring plans put forward since the implementation of CIGA 2020 leaves us ideally placed to support corporates (and administrators alike) in engaging this powerful tool to address complex restructuring requirements.