Aug

New Covid restructuring rules save property bridging loan firm from liquidation

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The first restructuring plan for a mid-sized company under the government debt relief measures introduced during Covid have saved a well-known property investment finance company that specialises in bridging loans.

Amicus Finance, formerly known as Capital Bridging, entered administration in January 2019 appointing Begbies Traynor to act as agent for the company.

Amicus, which is a PLC with a plush central London office (pictrured), was heavily impacted by Covid-19 and Brexit, which had a substantial impact on its clients’ ability to sell property and therefore pay off loans as liquidity in the property market dried up. The joint administrators therefore concluded that it could no longer continue in administration.

Amicus has a loan book of £437 million provided by Hartford Growth, which had provided funding during the administration, and crowd funding platform Crowdstacker.

A competitor, Mint Bridging Finance, at one point offered to buy its loan book but was rebuffed.

Nevertheless, Amicus now has a brighter future after agreeing a restructuring plan, a new tool introduced into Part 26A of the Companies Act 2006 in June 2020 by the Corporate Insolvency and Governance Act 2020.

Rushed through

This legislation, which was rushed through parliament at the height of the pandemic, made the most significant changes to UK insolvency law in a generation, giving struggling companies more time and space to organise their debt and other financial liabilities.

Amicus Finance is the first mid-market sized business to have such a restricting plan agreed by the High Court, and without this it would have entered liquidation, says legal firm Pinsent Masons, which acted for one of its joint administrators.

Instead, the restructuring plan, which compromised the claims of creditors and permitted an exit from the administration, has restored the company as a going concern.

The bridging loan sector can trace its birth back to the 2008 global financial crisis when many traditional high street lenders exited the property investment market leaving many developers and landlords high and dry – and so the the short-term lending or bridging sector was born.

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