Natasha is the deputy chair, a managing partner and head of Boies Schiller’s London office. Acting on behalf of funds, investment banks, corporations and governments, Natasha’s practice focuses on high-stakes international litigation and arbitration, with particular experience in contentious restructurings and insolvency. Natasha is recognised by The Legal 500 and Chambers UK as a leading banking litigator and by Super Lawyers, Who’s Who Legal and Lawdragon as a leading commercial litigator. Natasha was listed by Financial News as one of the 100 Most Influential Women in European Finance in 2020.
What inspired you to specialise in restructuring and insolvency proceedings?
The opportunity to work with sophisticated clients on complex, contentious restructurings with a view to protecting clients’ interests, driving value, and solving complex legal and commercial problems. I also wanted a career that would continue to challenge me; the work is cutting-edge, every case is different and each one provides an opportunity to learn and develop.
What challenges do you usually encounter in your work acting for noteholders in credit disputes?
The focus areas for challenges which we work on before the courts are valuation and use of creditor rights, which includes voting, fairness, enforcement and use of administration. By their nature we expect restructurings to become more contentious around traditional standstill/negotiations.
We acted for the McLaren noteholders in summer 2020 (in the middle of lockdown) challenging McLaren’s use of the “J. Crew trapdoor” loophole whereby we successfully defeated attempts to trapdoor out assets to raise new finance, in breach of indenture and intercreditor provisions. The proceedings were heard on an expedited basis, in light of the McLaren group’s stated position that, without a resolution in these proceedings (in its favour) it would face insolvency within two to three weeks.
What’s been your most interesting case to-date, and why?
Acting for the noteholders of Canary Wharf in a hard-fought battle against the issuer who was seeking to collapse the structure and redeem the notes without paying “spens” (which is a form of make whole). The issue was one of interpretation of complex securitisation documents. We were successful at first instance and achieved an outstanding settlement for the clients ahead of the hearing before the Court of Appeal.
What rights do creditors have when voting in insolvency proceedings and what challenges do they present?
The Assenagon and Redwood cases are relevant to bonds and bank debt, as they prevent creditors abusing their majority positions in consensual restructuring votes under the documents. Essentially, these cases mean, for example, that secondary market debt purchasers’ attempts to block restructurings may increasingly be subject to the court’s scrutiny.
How do you anticipate the market for restructuring and insolvency to respond following the end of widespread government support to business?
As the government withdraws its state aid post-covid-19, I anticipate there being three waves of companies that will need to restructure. First, there will be a cleansing of underperforming companies that should have filed for bankruptcy or been restructured a long time ago but have been artificially propped up by government aid. The second wave will be industry specific; those which have been so severely damaged by covid-19 for example retail and hospitality, companies which were mildly distressed before will tip into distressed and need to restructure. Finally, companies which were able to survive because their covenants have been very, very light but weren’t sustainable in the longer term nor performing, will need to be restructured in the traditional way.
In addition, we will see a continuation of intercreditor disputes, as with McLaren. And we’ll continue to see an uptick in sponsors versus creditor litigation, as participants seek to take advantage of documents which don’t really work in an effort to extract further value.
How is valuation currently being approached in the English courts?
Development of jurisprudence on valuation is long overdue in English courts, especially relative to the US’s Chapter 11 where extensive jurisprudence exists.
In the new Corporate Insolvency and Governance Act 2020 (“CIGA”) valuation evidence will be central because out-of-the-money creditors can have their rights varied but be excluded from the vote. Key will be where value breaks to exclude creditors from voting or participating in the restructuring plan. Furthermore, a dissenting class can be crammed down if one in-the-money class supports the vote and the company can demonstrate that a dissenting class receives no less than it would in “relevant alternative”, which would apply without the plan.
It is also relevant for CVAs, which are used, for example, in retail and hospitality to restructure lease obligations. Valuation of a lease claim aims to determine the claim amount for the vote and its value/categorisation to meet the fairness test – in comparison with similar leases (horizontal test) and insolvency (vertical test).
Furthermore, valuation will come into play in defence against loan to own tactics from both distressed investors and the competitors of businesses which are trading undervalue due to covid-19. These investors and competitors will likely use voting powers in debt purchased at a discount to depress a borrower value and to credit bid the debt to acquire a business at discount. In such instances, challenges around appropriate valuation and voting fairness will be used to resist such moves.
What challenges does Brexit pose for lawyers and clients facing restructuring and insolvency proceedings?
The English legal system has many superior features to Europe, including due process, outstanding judges and sophisticated courts. If there is to be a challenge, it is more likely to come from the US and its very sophisticated Chapter 11 legislation. With regards to Brexit specifically, there is a lot of uncertainty surrounding the new legislation; and uncertainty creates risk – I do think people are anxious about that. The end of reciprocal recognition in the EU of English insolvency and restructuring processes will create additional uncertainty which will generate further litigation.
Natasha Harrison is highly sought-after for her strong expertise in cross-border insolvency and investor disputes.
Natasha is a managing partner of Boies Schiller Flexner, and the head of the firm's London office.
Acting on behalf of funds, investment banks, corporations, and governments, Natasha’s practice focuses on high-stakes international litigation and arbitration. She has extensive experience in all types of finance and business disputes, including distressed debt investments, investments in special situations and emerging markets, sovereign debt investments, securitisations and complex finance arrangements, and has litigated many of the most important investor disputes of the last decade. She is regularly retained on behalf of clients to provide strategic litigation advice and to lead and coordinate large international commercial disputes.
Natasha is recognised as a leading banking litigator by The Legal 500 and Chambers UK, as well as by Super Lawyers, Who’s Who Legal and Lawdragon as a leading commercial litigator. She won Best in Litigation at the Euromoney Women in Business Law Awards (2015), was named one of Financial News’s Rising Stars of Legal Services in 2013 and The Lawyer’s Hot 100 2011 for banking litigation.
Natasha has also been named a HERoes Woman Role Model for the second year running. The HERoes Women Role Model Executives list celebrates 100 women who are leading by example and driving change to increase gender diversity in the workplace. Natasha was honoured for fostering, advancing, and accelerating diversity as part of her business strategy, and for building a team in London with more than 40 percent female partners.
Natasha opened the London office of Boies Schiller Flexner in 2014, which has "very quickly established itself as a leading litigation practice".