Weil Gotshal & Manges LLP
7 Experts
6 Contributions by Weil Gotshal & Manges LLP Experts
PRACTICE NOTES
This Practice Note sets out the principal tax considerations where creditors move to enforce security over the assets of a distressed company or corporate group. Related Practice Notes in this series address tax issues concerning:
acquisitions of distressed debt, and
debt restructurings (ie waivers, debt/equity swaps or renegotiations)
In addition, Tax and distressed debt—checklist of points to consider distils the main tax points to bear in mind when dealing with distressed debt in general. This Practice Note reviews the enforcement routes open to creditors of troubled businesses and the consequences that may follow. For a detailed look at the loan relationships provisions on debt releases, see:
Loan relationships—impairment and debt releases
Loan relationships—impairment and debt releases: connected companies
Types of enforcement
As explained in Practice Note: Tax and distressed debt—debt restructurings, lenders will frequently engage in a
Tax
PRACTICE NOTES
Executive summary
a reconstruction or amalgamation scheme—commonly termed a transfer scheme (transfer scheme)—constitutes a form of scheme of arrangement pursuant to section 900 of the Companies Act 2006 (CA 2006)
transfer schemes are not commonly encountered in practice. The limited reported instances of approved transfer schemes concern solvent corporate reorganisations
the process and formalities mirror, in broad terms, those for a scheme of arrangement under CA 2006, s 895 (section 895 scheme) (see: Schemes of arrangement—overview and Practice Note: The Practice Statement for Part 26 schemes and Part 26A restructuring plans (2025)). That said, when considering whether to sanction a transfer scheme, the court’s powers under CA 2006, s 900 are more extensive than those exercised on a section 895 scheme
in a transfer scheme, the transferor and transferee companies must share substantially the same
Restructuring & Insolvency
PRACTICE NOTES
Practice Note
This Practice Note sets out the principal tax considerations where a company facing difficulty repaying external borrowings looks to reorganise and restructure its external debt commitments.
Companion Practice Notes in this series address tax matters connected with and arising in relation to:
acquisitions of non-performing loans
the enforcement of debts
Additionally, the checklist ‘Tax and distressed debt—checklist of points to consider’ summarises the main tax points to bear in mind when dealing with distressed debt more generally...
Tax
PRACTICE NOTES
Practice Note
Shifts in the economy can lead to sales of distressed debt portfolios. In such periods, banks commonly look to cut balance sheet exposure to underperforming companies or individuals, while private equity and similar funds pursue returns by buying these portfolios and then securing realisation or repayment of the underlying liabilities. This Practice Note sets out the tax considerations relevant to an acquisition of a distressed debt portfolio. For the purposes of this Practice Note, distressed debt is described as non-performing loans (NPLs). NPLs may comprise, for instance, residential mortgage lending or corporate borrowings...
Related Practice Notes
debt restructurings (ie waivers, debt/equity swaps or renegotiations)
enforcement of debts
In addition, Tax and distressed debt—checklist of points to consider summarises the principal tax points to address when approaching distressed debt more generally...
Tax
PRACTICE NOTES
This Practice Note explores the implications of the US Supreme Court’s decision in Harrington v Purdue Pharma LP, 144 S.Ct. 2071 (2024), which struck down the availability of non‑consensual third‑party releases, for the recognition and enforcement of those releases in Chapter 15 proceedings. Although the Purdue ruling still bars such releases in US Chapter 11 matters, numerous foreign insolvency regimes authorise non‑consensual third‑party releases. Before Purdue, US bankruptcy courts in Chapter 15 routinely and consistently recognised and enforced foreign proceedings and plans containing non‑consensual releases (see Practice Note: US Chapter 15 overview). After Purdue, Chapter 15 courts have, in practice, largely continued this approach, where justified under sections 1521 and 1507 of the Bankruptcy Code, applying comity and Chapter 15’s objectives, though some courts have more closely reviewed efforts to broaden relief beyond what the foreign court approved. This Practice Note
Restructuring & Insolvency
CHECKLISTS
This checklist highlights the principal tax considerations when handling distressed corporate debt, addressing in turn:
acquisitions of non-performing loans
debt restructurings (ie waivers, debt/equity swaps and renegotiations)
enforcement of debts
For fuller analysis of the points signposted here, see Practice Notes:
Tax and distressed debt—acquisitions of non-performing loans
Tax and distressed debt—debt restructurings
Tax and distressed debt—enforcement actions available to creditors
Acquisitions of non-performing loans
This part summarises the tax considerations when a buyer takes on existing UK debt at a discount to face value:
Where should the purchaser be located?
will interest paid by the borrower to the purchaser be subject to withholding tax?
if the purchaser is non-UK resident, can relief be obtained under a double tax treaty?
to what
Tax
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