Stephen Phillips

Partner

London


Read full biography at www.orrick.com
Stephen Phillips is Co-head of the European Restructuring team and is based in London. He has extensive experience in advising banks, bondholders and corporate groups on restructuring, corporate and banking matters.

Chambers UK notes that Stephen is described by one client as "very savvy from a commercial point of view. He understands what goals we are trying to achieve and finds a legal way to get us there." He has published several articles in leading business sector titles and is regularly quoted in national and sector press.

  • Acted for the trustee of bonds on the insolvency filing for Afren plc.
  • Advised Reachlocal, and subsequently Duff & Phelps in its role as administrator of Reachlocal, on the pre-packaged sale in administration of Reachlocal UK's digital marketing business.
  • Acting for an ad hoc bondholders' committee of bondholders of Waste Italia.
  • Acting for an alternative credit provider in potential debt investments in distressed African and European oil production companies.
  • Advising a hedge fund in its exposure to Lehman Brothers Europe.
  • Advising a UK healthcare business within a CMBS structure in a strategic options review process.
  • Advised the Industrial Union of Donbass on the restructuring of its $3.5 billion of debt.
  • Advised Magyar Telecom BV, a holding company of Invitel ZRT, the Hungarian telecoms company, in a strategic review of its capital structure in respect of its $425m of Notes.
  • Advised the Senior Steering Committee in relation to the restructuring of the debt of CTL Logistics, the Polish freight logistics company.
  • Advised Macquarie Bank in relation to the refinancing of its senior debt to Max Petroleum PLC.
  • Advised Jefferies and its affiliates in connection with a restructuring through a Luxembourg share pledge enforcement of Klöckner Pentaplast, one of the world's largest suppliers of plastic films and the provision of approximately €630 million of new debt facilities provided by Jefferies to fund the prepayment of existing senior facilities of Klöckner Pentaplast as part of the recapitalization.
  • Advised the junior committee of bondholders which held a significant amount of lower tier two bonds in government owned, Bank of Ireland, one of Ireland's leading banks.
  • Advised the Steering Committee of lenders in the restructuring of the debt of a holding company of one of the leading Kazakh banks, which completed in December 2011.
  • Advised the special servicer of a €250 million CMBS German real estate loan following the occurrence of default.
  • Advised the Steering Committee of Lenders on the restructuring of a $3 billion loan to a holding company of Bawag PSK, one of Austria's leading banks.
  • Advised Oy Sanitec (a leading European bathroom porcelain manufacturer) on the restructuring of its €880 million senior facility and €135 million second lien facility.
  • Advised Nordic Capital on the restructuring of Thule, the car box company.
  • Advised the committee of mezzanine lenders to Treofan, a German packaging company in a debt equity swap which enabled the mezzanine lenders to take control of the Treofan group.
  • Advised UPM, a leading Nordic paper manufacturer, in relation to their intended purchase of the Myllykoski and Rhein Papier Group.
  • Advised a leading UK investment bank on its €800 million exposure to a German property company.
  • Advised Basis Pac Rim, a leading Australian hedge fund, on its restructuring following the onset of the 2007/8 global financial crisis.
  • Advised the bondholders committee in the restructuring of the bonds of British Energy plc, the leading UK nuclear electricity producer.
  • Acting for EBX in the purchase of a FPSO vessel which was implemented via a security enforcement.

Posts by: Stephen Phillips

Debtwire European Distressed Debt Market Outlook 2017

 

The 2017 Debtwire European Distressed Debt Outlook report surveyed 100 distressed investors and 30 private equity funds to establish the outlook for 2017.  Jointly sponsored by Orrick and Greenhill, the report predicts that European restructurings will hit their next peak in 2017, with respondents citing interest rate rises (22%), geopolitical conflict (21%) and Brexit (16%) as the most important macroeconomic factors driving this trend.  READ MORE

English Law Schemes of Arrangement: Class Composition

 

Focus on the AB InBev and SABMiller merger

Having received the sanction of antitrust regulators in Europe, the U.S., China and South Africa, the planned merger of brewing giants AB InBev and SABMiller was scrutinised this week by the High Court in London on a topic very familiar to those acquainted with English law restructurings: class composition. The outcome of the hearing, that not all members of SABMiller should be considered to be in the same class for scheme voting purposes, raises some interesting questions around class composition because of the unusual circumstances of the proposed merger. READ MORE

Indah Kiat – A Scheme Pulped

On 12 February 2016 Snowden J handed down his judgment in Indah Kiat International Finance Company B.V. [2016] EWHC 246 (Ch). Indah Kiat International Finance Company B.V. (“Indah Kiat”), part of the global Asia Pulp & Paper Group (one of the world’s largest pulp and paper manufacturers), applied for an order convening a meeting of scheme creditors to consider and, if thought fit, approve a proposed scheme of arrangement (the “Scheme”) under Part 26 of the Companies Act 2006. One creditor, APPIO, opposed the Scheme on various grounds and in this hearing sought an adjournment on the basis that insufficient notice was given to the creditors of the convening hearing.

The Indah Kiat judgment neatly follows a similar judgment of Snowden J in Van Gansewinkel Groep BV [2015] EWCG 2151 (Ch) only a few months earlier. In this case Snowden J took the opportunity to review the current law on jurisdiction relating to schemes of arrangement, and, arguably, to raise the jurisdictional hurdle. He noted that in recent years, schemes of arrangement have been increasingly used to restructure the financial obligations of overseas companies that do not have their centre of main interest or an establishment or any significant assets in England, and stated that companies seeking approval of a scheme would be well advised “to ensure that greater detail is provided, both in the explanatory statement and in the evidence before the court”. Additionally, and more importantly for Indah Kiat, he commented on the judgment in re Telewest Communications plc (No 2) [2005] 1 BCLC 772 that the court will not generally sanction a scheme if it finds a “blot” in the scheme such that the scheme will not have the effect that the company and creditors intend. This is key in the underlying message of Snowden J’s Indah Kiat judgment.

Whilst schemes of arrangement have become increasingly popular to compromise creditors’ claims in a pragmatic manner which may not be available in the jurisdiction of incorporation of the relevant debtor, the judgments in Van Gansewinkel and, more specifically, in Indah Kiat, make it clear that the English courts will not compromise the integrity of this highly effective restructuring tool where the parties invoking the court’s jurisdiction act other than with the “utmost candour”.

READ MORE

VIDEO: Debtwire European Distressed Debt Market Outlook 2016

Orrick partner and co-head of Europe Restructuring Stephen Phillips recently joined a Debtwire panel on potential high yield restructurings in Europe and current volatile market conditions at the 12th European Distressed Debt Market Outlook. Several videos from the launch are now available on Debtwire’s site.

sphillipsdebtwire

For more information, please contact Stephen.

 

Debtwire European Distressed Debt Market Outlook 2016

Distressed investors did not witness the anticipated wave of European high yield restructurings in 2015, but with significant stock market declines and a growing sense of economic anxiety, participants in the 12th European Distressed Debt Market Outlook expect a marked increase in restructuring activity in 2016. Despite improved European growth and stronger U.S. economic data, falling commodity prices (particularly oil) and the higher number of high yield bonds trading at distressed levels suggest another year of volatility is in store.

Orrick partner and co-head of Europe Restructuring Stephen Phillips recently joined the Debtwire panel addressing these issues. For more information, please contact Stephen.

To access the full report, click here.

Orrick Launches Report on Restructuring European High Yield Bonds

Over the past few years the European high yield bond market has been on a roll. Issuance has increased, yields have come down and the default rate has been close to zero. Institutional demand for European high yield bonds has been exceptional. Yet a near zero default rate is an historic anomaly which cannot go on forever. What happens when liquidity dries up and issuers default? How should issuers protect themselves and manage creditors threatening to enforce security? What are the key issues for stakeholders to implement a high yield restructuring? How can conflicts of law be managed where the bond is New York law governed, the intercreditor agreement is English law and the guarantors and assets are spread throughout Europe? Drawing on our European and US restructuring experience we address these issues in our report on Restructuring European High Yield Bonds.

If you would like to receive a printed copy of this report, please let us know.

Recent EU Insolvency Regulation

The EC Regulations on Insolvency Proceedings (the “EIR“) came into force throughout the European Union (the “EU“) (except Denmark) on May 31, 2002 with the purpose of setting out the rules governing where in the EU insolvency proceedings should be opened, which law applies to the proceedings and to ensure that such proceedings are recognized across the EU. EIR provided that a company should file in the jurisdiction where its center of main interest or “COMI” is located and that there was a rebuttable presumption that this is the jurisdiction of incorporation. This led to a number of EU groups filing in the jurisdiction of the head office – for example the Rover Group had many offices around the EU but its insolvency process was run out of the UK. In addition groups frequently file where it is apparent that an insolvency procedure in a particular jurisdiction may have some advantages, for example the Eurotunnel group which has English and French companies which operate the tunnel filed in France to take advantage of a French insolvency procedure. It is often the case that European groups avail themselves of English scheme and administration procedures. In over 10 years of insolvency practice in the EU the benefits of this experience has led to a new Recast Regulation on Insolvency 2015/848 (the “Recast Regulation“), which was published by the European Parliament and Council on May 20, 2015. It came into force on June 26, 2015 and applies to relevant insolvency proceedings from June 26, 2017. This client alert addresses the key features of the Recast Regulation:

  1. a broadened scope, covering a range of commercial insolvency proceedings such as the Italian reorganization plan procedure which were not previously within the ambit of the regulation;
  2. a framework for group insolvency proceedings, which will allow for the coordination of insolvency procedures at an EU level;
  3. COMI – there is no mention of the controversial two year look-back period initially proposed by the European Parliament, but the presumption that COMI is in the place of the registered office will not apply if the registered office has shifted in the preceding three months;
  4. interconnected insolvency registers – national insolvency registers may be accessed on the European e-Justice Portal; and
  5. provisions which allow the officeholder in main proceedings to give an undertaking to foreign creditors to avoid secondary proceedings in other member states being opened.

Read More.

 

Investing in Southern Europe

Leaving aside the drama of the Greek crisis, Southern Europe is in recovery from a long recession.  Our recent panel of experts discussed investment opportunities in Italy, Spain and  Portugal.

Topics covered include the nature of the opportunities they are working on and the commercial environment facing investors who are looking to undertake  new money debt,  equity and distressed debt investments in the region. The audience was updated on the significant recent developments in the  insolvency laws in Spain and Italy which are designed to facilitate corporate restructuring. We also addressed some of the English law restructuring procedures which investors have used where local law measures have not proved suitable.

The live video presentation from this event is available here, and the presentation materials from this seminar are also available at this link.

The Restructuring Mid-Summer Review: Europe and the Emerging Markets

For those focused on the debt restructuring market, the Greek sovereign crisis (covered extensively in our recent updates1) has drowned out news of other debt restructuring matters this year. Our Alert below addresses key trends in Europe and the Emerging Markets this year which may have gone unnoticed given the understandable emphasis on Greece.

Opportunities for Distressed Debt Funds to buy attractively priced distressed corporate assets and work them out have been few and far between in recent terms. Prices of distressed assets have been high, and often par lenders have decided to extend and amend loans (rather than engage in loan sales to funds or effect fundamental work outs of problem loans). Risk has not been fairly reflected in the price of either primary or secondary market debt. The risk/reward dynamic has been skewed in favour of high risk and low yields; not an attractive combination. The main driver of the activities of Distressed Debt Funds is the default rate. In the 2015 Deutsche Bank Annual Default Survey, Deutsche Bank commented, ‘We can’t overstate how low defaults are…the 2010-2014 cohort [of High Yield Bonds] is the lowest 5 year period for HY defaults in modern history’. Hence, the low level of distressed debt activity.

Poor European growth rates, the difficult backdrop of the Greek debt restructuring talks, and major geopolitical risk, have yielded surprisingly few loan defaults and insolvencies in recent times. In Europe, restructuring activity has tended to be concentrated more in Southern than Northern Europe.

Read more.

Bank Resolution in Greece

The result of Sunday’s referendum (July 5, 2015) which rejected the latest proposed bailout by the European authorities was unequivocal. The next steps in this crisis are far less clear, ranging from a swift renegotiation of the terms of the bailout together with an injection of liquidity into the Greek banking system in the most benign scenario to, at the other end of the spectrum, Greece exiting the Eurozone and attaining “pariah status” in the international capital markets.

In this client alert we focus on one aspect of the issues facing Greece – the liquidity crisis facing the Greek banks. We discuss bank resolution procedures available to the Greek authorities.

Read More.