Freshfields leads as Cattles restructuring completes

Allen & Overy (A&O), Ashurst, Clifford Chance and Freshfields Bruckhaus Deringer have all advised on sub-prime lender Cattles’ £2.3bn restructuring.

Two years ago the company was on the verge of collapse after six directors were suspended following the discovery of financial irregularities.

The sub-prime lender will leave the London Stock exchange on Monday. The restructuring, which returns Cattles and 19 subsidiaries to solvency, involved four schemes of arrangement and an innovative agreement with the Financial Services Compensation Scheme (FSCS) to deal with Cattles’ liabilities in respect of payment protection insurance policies.

New private company Bovess, which was created for the purchase, will buy Cattles’ shares for £5.3m. Cattles’ equity was worth around £1.5bn before it was plunged into financial crisis.

Freshfields acted for Cattles. Restructuring partner Adam Gallagher, dispute resolution partner Neil Golding and corporate partner Gareth Stephenson all led on the deal. In 2009 the firm won a dual role when Cattles suspended three senior executives, advising the company as well as leading a review into its finances (11 March 2009).

A&O, led by banking partners Trevor Borthwick, Michael Castle and Gordon Stewart, and litigation partner Andrew Denny, advised the lenders’ coordinating committee.

Norton Rose advised Bovess, with banking partner Farmida Bi and corporate partner Stephen Rigby leading the deal.

Partner Simon Baskerville headed the Ashurst team that advised Cattles’ bondholders.

Clifford Chance advised the private placement note holders, led by insolvency partner Adrian Cohen and litigation partner Roger Leese.

“The sheer complexity of this restructuring sets a new benchmark,” said Borthwick at A&O. “It’s the first time that an agreement of this kind has been made with the Financial Services Compensation Scheme and the whole restructuring may lead to more financiers accepting that litigation after the fact can never adequately replace good due diligence.”

Herbert Smith, led by restructuring and insolvency partner Laurence Elliott, acted for the FSCS. Lawrence Graham was instructed by Freshfields to act as conflict counsel to
Cattles. Restructuring partners Nick Pike and Tom Withyman took the lead roles.