Corporate Restructurings: Snapshot of 2020
February 2, 2021
Globally, governments (as well as central banks, regulators and international financial institutions) introduced a variety of measures to support businesses through the economic shock related to the pandemic. Temporary measures included relaxing insolvency laws, introducing government-backed loans, freezes on loan enforcement and relax regulatory capital requirements for banks. Monetary authorities introduced measures including asset purchase programs, corporate bond purchasing schemes and interest rate cuts.[1]
The UK government implemented major financing schemes to help businesses bridge COVID-19 related disruption to their cash flows. The Coronavirus Business Interruption Loan Scheme (“CBILS”) and the Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) offer support to eligible UK companies in the form of business loans, overdrafts, invoice finance and asset finance.[2] The Covid Corporate Financing Facility (“CCFF”) also provides funding support by purchasing eligible commercial paper issued by non-financial businesses which are considered to make a material contribution to the UK economy.[3] The Bounce Back Loan Scheme (“BBLS”) supports small- and medium-sized businesses by providing eligible companies with smaller value term loans. The Future Fund provides convertible loans, on a match- funded basis, to businesses driving innovation in the UK. These schemes have been widely utilised and each of the CBILS, CLBILS, BBLS and Future Fund schemes have since been extended to January 31, 2021, while the CCFF will remain open for new purchases from eligible issuers until March 22, 2021. This support allowed many businesses access to emergency funding.
Cleary Gottlieb advised Celsa Group UK which in summer became the first company to access the UK government’s special emergency funding for strategically important companies. The restructuring involved the negotiation of a bespoke facility agreement with the UK government and amendments to Celsa’s existing facilities to address the liquidity and other challenges arising as a result of the pandemic.[4] Cleary Gottlieb also advised Codere, the Spanish gaming company, which secured emergency funding during the summer to bridge its liquidity gap to a restructuring and additional capital raise.[5]
[1] See our alert memorandum: COVID-19 Toolkit for Sovereigns: Support, Stimulus and Debt Management Measures.
[2] See our alert memorandum: COVID-19: Coronavirus Large Business Interruption Loan Scheme.
[3] See our alert memorandum: COVID Corporate Financing Facility Explained.
[4] See: Celsa Group UK in Emergency Financing Provided by UK Government.