Lessons from Southern Cross restructuring

Author: Gemma Varriale | Published: 21 Dec 2011

Restructuring solutions are becoming more complex, more expensive and taking longer to implement, according to Clifford Chance’s restructuring team.

And with pre-packs arriving in continental Europe and the UK preparing a new insolvency regime, practitioners and bankers would be wise to consider the lessons learnt during the firm’s work on the Southern Cross work-out.

Iain White of the firm’s London office said there were times when he wondered whether the days of consensual restructuring had disappeared altogether. Southern Cross, however, proved the model still has huge advantages.

The work-out is nearing completion and has taken most of 2011 to reach this point. The business was able to keep trading during this period, primarily because the landlords of its care homes deferred rent and banks kept their lines open.

But, said White, it was a complex process.

The listed company had leased all of its...