Effective 1 November 2009, this website is no longer being updated. Please see AFME's new website at www.afme.eu. For content specific to the EHYA, please see the page for AFME's new Leveraged Finance Division.

Press Release

Release Date: 18 March, 2009
Contact: Travis Larson, +1-202-962-7357, tlarson@sifma.org

EHYA Insolvency Reform Roundtable Attracts Government Attention

London, 18 March 2009 – On 4 March, the European High Yield Association (EHYA), an affiliate of the Securities Industry and Financial Markets Association, together with University College London’s Bankruptcy, Restructuring and Insolvency Institute co-hosted a roundtable entitled “Is now the time for the UK to adopt a formal proceeding for restructuring distressed companies?” An overflow crowd heard government representatives, academics, professional bodies, company directors, investors, industry practitioners, and members of the judiciary debate four proposals the EHYA has put forward to create a formal procedure for restructuring distressed companies. Individual views varied, but one common theme did emerge: all participants seemed to agree that the UK approach to large company rescue is deficient in at least one or more significant ways that the EHYA’s proposals could usefully address.

The intent of the roundtable was to spur a formal consultation on the proposals by the UK government’s Insolvency Service (IS). The IS has since issued an official record of the proceedings (click here to read), which it will present to Labour MP Pat McFadden, Minister for Employment Relations and Postal Affairs at BERR. McFadden’s portfolio includes the IS.

Gilbey Strub, managing director of the EHYA, said, “We are pleased to see the UK government’s first public action on the EHYA proposals. Engaging in the roundtable debate and presenting the official record to the Minister is an important step toward meaningful reform. We believe that the company rescue regime could be modernised relatively easily if the government makes it a priority. Given the rate of job loss in this economy, the time to elevate company rescue to a prominent place on the government agenda is now.”

Andrew Wilkinson, Co-Chair, EHYA European Insolvency Reform Committee added, “We are heartened to see that this discussion has renewed attention to the need for swift UK insolvency reform, and to the specific provisions outlined in the EHYA’s proposals. The level of attendance and the trend toward consensus on important points demonstrate that this issue should occupy a prominent place in the IS agenda. We look forward to consulting with them more formally in the coming weeks and months.”

The event featured several panel discussions and used the EHYA’s proposals as a starting point to stimulate a broader debate among the panellists, who brought very different perspectives on the current system. Topics included the effectiveness of current restructuring provisions, recent lessons from high profile insolvency cases, conclusions of comparative academic studies of insolvency procedures in other countries, the relative merits of Chapter 11 versus the UK informal approach, the conceptual divide between liquidation and going concern valuation, and judicial perspectives on what it would take to create insolvency courts.

The UK is in a minority of jurisdictions that have no insolvency proceeding dedicated solely to restructuring financially distressed companies. Nearly all large restructurings in the UK are out-of-court, ad hoc negotiations, without a predictable legal framework or meaningful precedent to guide the process. The EHYA proposals provide insolvent major corporate entities with the appropriate legal tools to effect restructurings that preserve maximum value for the widest range of stakeholders, those tools include a stay of enforcement, court supervised valuation, cramdown, and super-priority funding.

The record of the roundtable is posted on the EHYA website and will be posted on the IS website in due course.


_ _ _


The Securities Industry and Financial Markets Association brings together the shared interests of more than 600 securities firms, banks and asset managers. SIFMA's mission is to promote policies and practices that work to expand and perfect markets, foster the development of new products and services and create efficiencies for member firms, while preserving and enhancing the public's trust and confidence in the markets and the industry. SIFMA works to represent its members’ interests locally and globally. It has offices in New York, Washington D.C., and London and its associated firm, the Asia Securities Industry and Financial Markets Association, is based in Hong Kong.