Weil have acted for Mike Pink, Richard Heis and Ed Boyle of KPMG as special administrators of MFGUK in connection with a CVA proposal to its remaining ordinary creditors, which will facilitate the winding-up of the estate for the benefit of the creditors.
Since MFGUK went into administration over 6 years ago (the largest European collapse of a credit institution since Lehman), the administrators have made a number of material settlements and realisations, which have simplified the estate considerably and permitted distributions to ordinary unsecured creditors of 90p in the pound to date.
However, due to certain complex issues relating to certain key remaining assets and liabilities, they do not expect to be able to make any material further distributions for another 2 years (at least) and they expect it will take considerable further time (8-9 years) to finalise the winding-up of the estate and make a final distribution.
The CVA, if approved, will give creditors the option to exit the administration early in exchange for a cash payment that brings their total return to 99.75p in the pound. Creditors can also choose to remain in the estate in the medium term, or participate in the funding of the exit payments and remain in the estate long-term, in exchange for a beneficial interest in the upside on the claims of the exiting creditors and medium-term creditors.
The CVA provides optionality for creditors and is anticipated to significantly reduce the number of creditors of the estate (currently around 3,500), resulting in substantial cost savings going forward, which will benefit all creditors. The CVA also provides for a streamlined process for resolving the remaining assets and liabilities of MFGUK and making further distributions to the remaining creditors in the medium and the long term.
The creditors’ and members meetings in respect of the CVA are scheduled to take place on 12 December 2017, with the anticipated implementation date of the CVA being 15 January 2018.
The preparation of the CVA was led by London Partner and Head of Weil’s London Restructuring team, Adam Plainer together with Partner Mark Lawford, Of Counsel Linton Bloomberg and senior associates Jenny Davidson, Tayyibah Arif and Chris Ballantyne.
Plainer commented “This is a ground-breaking proposal which offers creditors a very good outcome and will substantially reduce the number of outstanding creditor claims”.