Corporate Restructuring Summit

David BaxterA&L Goodbody

25 September 2013

Recent legal developments in Restructuring

Current landscape

New & forthcoming legislation

Pensions & insolvency

Deleveraging update

Current Landscape

Retail examinerships still in vogue

NAMA’s first Irish portfolio loan sale (including a JV arrangement)

Large corporate restructurings - out of court & consensual

New debt holders working through loan books; inter-creditor tensions

remain within syndicates

Steps taken to improve liquidity in property market e.g. R.E.I.T.s

legislation

Impact of IBRC liquidation

New & forthcoming legislation

IBRC Act, 2013

Companies Bill, 2012

Amendments to EU Insolvency Regulation

Personal Insolvency Act, 2012

Land and Conveyancing Law Reform Act, 2013

Land and Conveyancing Law Reform Act, 2013

The legislation addresses a specific loophole arising from ….

…. Start Mortgages Limited v Gunn decision

2009 Act unintentionally removed right of a lender to seek repossession of

registered property where mortgage created pre 1 December 2009

Act does not have retrospective application; key date: 24 July 2013

Possibility of adjournments when principal private residence at play

Companies Bill, 2012

Codification of directors’ duties

Receivership

» More extensive powers; although short of NAMA receivers’ powers

Examinership

» SME examinerships at Circuit Court

Liquidation

» Reducing court’s supervisory role

» Threshold to petition to wind up is now €10,000

Amendment of EU Insolvency Regulation

Review after a decade timely

EC publishes reform proposals in December 2012

Key proposed changes:

» More clarity around COMI – impact on forum-shopping?

» Scope of Regulation extended – inclusion of UK schemes?

Pensions & Insolvency

Key English Supreme Court decision (Nortel/Lehman) on 24 July 2013

Broad powers of UK Pensions Regulator; ranking of contribution notices

Relevance in Ireland

» Irish subsidiary part of group that sponsors a UK DB scheme

» IrishCo a target for UK Pensions Regulator

» Secured and preferential creditors now not at risk

Challenges for DB pension trustees in Ireland

Deleveraging

Core Non-Core Total Disposals Net Amort & other

0

10

20

30

40

50

60

70

17.9

39.0

57.0

21.4

35.6

Bank deleveraging from Dec-10 to Dec-12

€ B

illio

ns

70.0 Close to former indicative 3yr PLAR target €70bn

+ +==

Source: Department of Finance and NTMA

• Cumulative deleveraging at AIB, BOI & PTSB to end-Dec 2012 of €57bn (81% of 3yr target); €20.8bn achieved in 2012

• AIB - disposals are ahead of plan and the programme is nearing completion. Remaining deleveraging required to reach their target is to be achieved through loan work-out and amortisation.

• BOI - has completed it’s disposal plan and the remaining deleveraging is on target and forecast to be achieved through rundown of non-core loan books.

• PTSB - deleveraging programme postponed pending consideration of EC Restructuring Plan.

Loan Portfolio Sales - 2013

Why not more portfolio loan sales in 2013?

Impact of IBRC loan sales

Some unhelpful domestic case law

Preference to sell single assets

For some banks, deleveraging targets have been met

Reaction to pricing on 2012 loan portfolio sales

Banks not in a position to to crystallise losses

Stress-testing banks’ balance sheets in H1 2014