Client Alert
APCOA Parking: Can the Amendment of Governing Law Provisions in Finance Documentation Provide a Global Gateway to U.K. Schemes of Arrangement?
April 25, 2014
By G. Alexander Bongartz& Luc A. Despins
The recent case of APCOA Parking has set a precedent by allowing yet more non-English incorporated debtors to implement financial and corporate restructurings using English schemes of arrangement. The APCOA Parking case endorses the premise that a simple amendment to the governing law and jurisdiction clause in finance documents could be a sufficient basis to give the English court jurisdiction to sanction a scheme of arrangement involving a non-English company, even when there are no other prior legal or factual connections to England. As a consequence, international companies may seek to use an English scheme of arrangement where a restructuring of financial indebtedness (whether secured or not) in their home jurisdictions is not available absent a damaging and more costly insolvency/bankruptcy process. Whether U.S. debtors looking to effect balance sheet restructurings will now consider using the flexible benefits of English schemes of arrangement as a viable alternative to chapter 11 cases remains to be seen. The APCOA Parking case, however, opens up the possibility that U.S. debtors will attempt to avail themselves of a scheme and then seek recognition of that scheme in the United States through a chapter 15 proceeding. We reported on this type of forum shopping in a previous client alert.
Contributors
