Insolvency law: area of practice
Restructuring and insolvency lawyers act for insolvency practitioners, companies in financial distress and their creditors and other stakeholders.
The scope of a restructuring will depend on the company’s financial state and the attitude of its creditors and other stakeholders.
What does a typical insolvency or restructuring case involve?
A major restructuring might involve the company’s debt being fully re-profiled and the company’s creditors taking all or part of the equity in exchange for writing down their debt. Very often, not all of the company’s stakeholders will consent to the restructuring proposals, meaning that the deal must be implemented via a formal restructuring or insolvency process (eg an English scheme of arrangement).
If a company cannot be saved, lawyers will work with the company or its creditors to appoint insolvency practitioners who will realise and distribute the company’s assets.
Typically, a full-blown restructuring or insolvency process will last six to twelve months, but especially complex matters can last for years. Other transactions can be much shorter – for example, a deal to provide emergency funding might compete in a matter of weeks.
The practice area tends to attract a lot of media attention if a well-known company goes into a restructuring or insolvency process. For example, when Carillion entered into liquidation in January 2018, this attracted months of media interest and parliamentary scrutiny.
The peaks and troughs of being an insolvency solicitor
Much of the work is transactional, and so often comes in peaks and troughs. Hours can be long and anti-social at busy times, particularly when working on cross-border transactions or if a company is in urgent financial distress.
If the downside of working on cross-border deals is the need to work across time zones, one of the upsides is the opportunity for travel abroad to attend restructuring discussions or foreign court hearings. The bulk of our work, however, tends to take place in London.
In the past few years, I have worked on restructuring a bank, an offshore drilling company, and a pharmaceutical company (among others). One of the highlights is getting exposure to a great variety of businesses. It is really interesting and constantly challenging to learn about different industries and the issues that affect them.
One of the downsides is that many large restructurings take a long time to complete and are immensely varied, so it can be difficult for junior associates to build up a book of experience quickly.
The type of work you’ll be given as a trainee solicitor in insolvency law
This is a fast-paced department with plenty of opportunities for trainees to use initiative and take responsibility from an early stage. Many transactions will require input from specialist teams and local counsel. A trainee might be responsible for tracking these workstreams and updating the rest of the core team and client on progress.
Other common trainee tasks include reviewing and reporting on finance documents, preparing corporate structure charts, and drafting insolvency forms.
Clients expert restructuring lawyers to understand what is happening in the market, and so a trainee might also get involved in one of our industry focus groups to assist with researching trends.
What impact will Brexit have on insolvency law?
It remains unclear whether or not Brexit will diminish the UK’s role as one of the global restructuring centres. Potential challenges include recognition of UK insolvency and restructuring proceedings within the EU, and other jurisdictions continuing to develop their processes to present an attractive alternative to post-Brexit UK.
What particular skills do you need to be a successful insolvency solicitor?
- The ability to work in a team: restructuring lawyers work closely with specialist departments and other professional advisers, eg financial advisers.
- Commercial nous: restructuring lawyers often get involved in shaping the deal, so need to understand what is driving the restructured any commercial impediments to getting the deal done.
Types of law practised in insolvency law
- Capital markets.
MORVYN RADLOW is an associate in the financial restructuring and insolvency group at WHITE & CASE LLP. She graduated with a degree in law and French from the University of Strathclyde.