Support for UK EV Transition Comes in an Unexpected Form

In an article authored for Automotive World, London finance and restructuring partner Wayne Beck discusses legislation passed by the U.K. government in 2020 that could provide the tools needed to help the automotive sector thrive in uncertain times.

Beck highlights the Corporate Insolvency and Governance Act 2020 that introduced a new “restructuring plan” to stand alongside the existing “scheme of arrangement.” He explains that restructuring plans bear a lot of similarities to schemes of arrangement, but they are arguably more relevant for companies in the automotive sector facing financial difficulties due to a stand-out difference: “cross-class cramdown”.

Beck notes that the restructuring plan may be the ideal tool to compel a company’s stakeholders to unite behind a plan for the future and may be what is needed to find some breathing space while pressure inevitably grows on the U.K. government to step up and provide sufficient support to what is an essential sector of the U.K. economy.