Reflections on a busy year and the outlook for 2016
Property assets sold from structures over which Deloitte was appointed totalled over £2 billion, including the sale of the iconic ‘Gherkin’ in central London for over £700 million.
Regulator-driven insolvency appointments over offshore investment vehicles and the streamlining of group structures whilst extracting maximum value were common themes over the past year.
IOM Fund Court Liquidation
Following actions initiated by the Isle of Man regulator, Sarah Sanders and Alex Adam were appointed as Joint Controllers to investigate an Isle of Man incorporated qualified investment fund which held a Channel Islands Securities Exchange listing.
The investment fund had been suspended for over 12 months prior to the controllers’ appointment. Lending irregularities in the underlying UK property structure prompted the regulator to take action and, following an initial appointment as Controllers, the regulator filed an application to wind up the fund and ultimately appoint the Controllers as Liquidators.
This complex case has a number of challenges including multiple jurisdictions, investment structure, security issues, oversight, service provider performance and allegations of civil and criminal wrongdoing.
We also saw a growing appetite from directors, mindful of their personal risk position, to use insolvency specialists to undertake part or all of the wind-down process.
A point of interest in two separate, larger simplification cases, was that the secured lenders consented to a waiver of some or all of their loans to ensure that heavily indebted structures could be wound down on a solvent basis, thereby avoiding uncertain and potentially protracted insolvent liquidations.
2016 outlook…only the strongest will survive
Regulator-driven insolvency appointments in Guernsey and the Isle of Man during 2015 acted as a reminder that regulatory bodies across the offshore market will take action to wind down businesses where necessary.
Historically, it has been over-leverage, litigation and ownership disputes which led to the demise of offshore structures. However, the ever more demanding regulatory environment in which we operate, coupled with a potential period of rising interest rates, means entities may well find themselves under increased scrutiny from the regulators as they seek assurances over their viability, sustainability and conduct. Consequently in 2016 we could well see further actions leading to wind down or restructure.