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Commercial Awareness Update- September 2019
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<blockquote data-quote="Alice G" data-source="post: 13629" data-attributes="member: 1160"><p><strong>25th September 2019 - Welcome to this week’s Commercial News Update!</strong></p><p></p><p><strong></strong></p><p><strong>Topics covered this week are:</strong></p><p></p><p><strong>1. Thomas Cook's Collapse ([USER=1643]@Moni[/USER])</strong></p><p><strong>2. AirBnb Plans to Go Public ([USER=1160]@Alice G[/USER] )</strong></p><p><strong>3. The Government’s Intervention in Cobham’s Takeover and National Security Review Regimes ([USER=1562]@ELA[/USER])</strong></p><p><strong>4. Back to Basics: Law Firm Partnerships ([USER=1]@Jaysen[/USER])</strong></p><p><strong></strong></p><p><strong>************************************************************************************************************************************************************</strong></p><p></p><p></p><p><strong><u>Thomas Cook’s Collapse [USER=1643]@Moni[/USER]</u></strong></p><p><strong></strong></p><p><strong>The Story:</strong></p><p><strong></strong></p><p>On Monday, Thomas Cook, the UK’s oldest travel company went into <a href="https://uk.practicallaw.thomsonreuters.com/Cosi/SignOn?redirectTo=%2f7-107-3978%3ftransitionType%3dDefault%26contextData%3d(sc.Default)%26firstPage%3dtrue" target="_blank">compulsory liquidation</a> after it failed to agree a rescue deal with lenders, shareholders and the UK government. The travel company’s shares had tumbled in recent years, as it <a href="https://www.ft.com/content/9c544cbc-dd42-11e9-b112-9624ec9edc59" target="_blank">failed to adapt</a> to massive shifts in the travel industry and ran into huge profitability and cash flow issues.</p><p></p><p>When it realised that it was on the brink of corporate collapse, Thomas Cook approached the UK government for a bailout of about £150m. However, the government chose not to intervene and stated that the company had systemic issues and, as such, any cash injection would only keep the company afloat for a short period of time.</p><p></p><p>The company’s collapse has left 150,000 holidaymakers stranded and 21,000 jobs at risk. The government is currently putting together a massive repatriation effort to bring back British travelers stuck in various corners of the globe. Although most of Thomas Cook’s subsidiaries have been affected, some of its foreign entities have been able to continue activities.</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>Officially, only Thomas Cook’s British legal entities have entered compulsory liquidation, however many of its European entities have been affected. The company’s German airline, Condor, was forced to request a bridge loan of 200 million euros from the German government in order to avoid a shortfall in liquidity. In addition, many connected businesses in the travel industry are likely to experience weeks to months of turbulence. For example, travel insurers will likely see a surge in insurance claims as customers seek to be reimbursed for cancelled trips.</p><p></p><p>From a legal perspective, restructuring lawyers for all the relevant parties will have a lot of work on their hands. Thomas Cook’s shareholders and lenders will look to salvage what they can of their investments, potentially through asset sales and takeovers. Thomas Cook’s management on the other hand, may be looking to preserve the value of their brand and the control of their non-British subsidiaries. Alix Partners, a restructuring specialist, has been appointed to oversee the liquidation process and Latham & Watkins have also been involved in the negotiations.</p><p></p><p>The collapse has also resulted in a significant political discussion about whether or not the government should step in and bail out businesses whose collapse could cause significant disruption in large industries and, potentially, the economy.</p><p><strong><u></u></strong></p><p><strong><u></u></strong></p><p><strong><u>Airbnb Plans to Go Public [USER=1160]@Alice G[/USER] </u></strong></p><p><strong></strong></p><p><strong>The Story:</strong></p><p></p><p>Last week, Airbnb announced its plans to go public ‘during 2020’ just a day after it reported more than $1bn in revenue for the second quarter of 2019. The company had already raised speculation that it intended to list back in March 2019, but the recent announcement has given the market a more clearly defined intention. There has been little information beyond this; it is still unclear how the company plans to list its shares but there had been consideration of a direct listing back in June. A direct listing is one in which no new shares are offered but existing investors are allowed to sell their current shares, as opposed to an initial public offering (IPO) where new shares are underwritten and sold.</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>Airbnb may be keeping its cards close to its chest because of the mixed results yielded by some of the major IPOs of 2019. Uber and Lyft each had relatively poor performing IPOs because of concerns surrounding profitability and increased regulatory pressure and WeWork’s recent woes have also demonstrated the difficulties companies are confronted with when trying to list. Airbnb has recently muscled in on the hotel industry and the experiences market whilst also facing regulatory challenges itself - one such challenge has meant that lets in London can be for no longer than a 90-day period. Despite decent valuations, the company will no doubt be cautious and sensitive to the problems it may face but the potential capital which could be raised would no doubt be worth the trouble!</p><p></p><p>Law firms are pivotal when drafting the documentation for IPOs. One of the most important documents that would be compiled is the prospectus, a very lengthy document which details everything and anything about the company being listed for the review of potential purchasers of shares.</p></blockquote><p></p>
[QUOTE="Alice G, post: 13629, member: 1160"] [B]25th September 2019 - Welcome to this week’s Commercial News Update![/B] [B] Topics covered this week are:[/B] [B]1. Thomas Cook's Collapse ([USER=1643]@Moni[/USER]) 2. AirBnb Plans to Go Public ([USER=1160]@Alice G[/USER] ) 3. The Government’s Intervention in Cobham’s Takeover and National Security Review Regimes ([USER=1562]@ELA[/USER]) 4. Back to Basics: Law Firm Partnerships ([USER=1]@Jaysen[/USER]) ************************************************************************************************************************************************************[/B] [B][U]Thomas Cook’s Collapse [USER=1643]@Moni[/USER][/U] The Story: [/B] On Monday, Thomas Cook, the UK’s oldest travel company went into [URL='https://uk.practicallaw.thomsonreuters.com/Cosi/SignOn?redirectTo=%2f7-107-3978%3ftransitionType%3dDefault%26contextData%3d(sc.Default)%26firstPage%3dtrue']compulsory liquidation[/URL] after it failed to agree a rescue deal with lenders, shareholders and the UK government. The travel company’s shares had tumbled in recent years, as it [URL='https://www.ft.com/content/9c544cbc-dd42-11e9-b112-9624ec9edc59']failed to adapt[/URL] to massive shifts in the travel industry and ran into huge profitability and cash flow issues. When it realised that it was on the brink of corporate collapse, Thomas Cook approached the UK government for a bailout of about £150m. However, the government chose not to intervene and stated that the company had systemic issues and, as such, any cash injection would only keep the company afloat for a short period of time. The company’s collapse has left 150,000 holidaymakers stranded and 21,000 jobs at risk. The government is currently putting together a massive repatriation effort to bring back British travelers stuck in various corners of the globe. Although most of Thomas Cook’s subsidiaries have been affected, some of its foreign entities have been able to continue activities. [B] Impact on Businesses and Law Firms:[/B] Officially, only Thomas Cook’s British legal entities have entered compulsory liquidation, however many of its European entities have been affected. The company’s German airline, Condor, was forced to request a bridge loan of 200 million euros from the German government in order to avoid a shortfall in liquidity. In addition, many connected businesses in the travel industry are likely to experience weeks to months of turbulence. For example, travel insurers will likely see a surge in insurance claims as customers seek to be reimbursed for cancelled trips. From a legal perspective, restructuring lawyers for all the relevant parties will have a lot of work on their hands. Thomas Cook’s shareholders and lenders will look to salvage what they can of their investments, potentially through asset sales and takeovers. Thomas Cook’s management on the other hand, may be looking to preserve the value of their brand and the control of their non-British subsidiaries. Alix Partners, a restructuring specialist, has been appointed to oversee the liquidation process and Latham & Watkins have also been involved in the negotiations. The collapse has also resulted in a significant political discussion about whether or not the government should step in and bail out businesses whose collapse could cause significant disruption in large industries and, potentially, the economy. [B][U] Airbnb Plans to Go Public [USER=1160]@Alice G[/USER] [/U] The Story:[/B] Last week, Airbnb announced its plans to go public ‘during 2020’ just a day after it reported more than $1bn in revenue for the second quarter of 2019. The company had already raised speculation that it intended to list back in March 2019, but the recent announcement has given the market a more clearly defined intention. There has been little information beyond this; it is still unclear how the company plans to list its shares but there had been consideration of a direct listing back in June. A direct listing is one in which no new shares are offered but existing investors are allowed to sell their current shares, as opposed to an initial public offering (IPO) where new shares are underwritten and sold. [B] Impact on Businesses and Law Firms:[/B] Airbnb may be keeping its cards close to its chest because of the mixed results yielded by some of the major IPOs of 2019. Uber and Lyft each had relatively poor performing IPOs because of concerns surrounding profitability and increased regulatory pressure and WeWork’s recent woes have also demonstrated the difficulties companies are confronted with when trying to list. Airbnb has recently muscled in on the hotel industry and the experiences market whilst also facing regulatory challenges itself - one such challenge has meant that lets in London can be for no longer than a 90-day period. Despite decent valuations, the company will no doubt be cautious and sensitive to the problems it may face but the potential capital which could be raised would no doubt be worth the trouble! Law firms are pivotal when drafting the documentation for IPOs. One of the most important documents that would be compiled is the prospectus, a very lengthy document which details everything and anything about the company being listed for the review of potential purchasers of shares. [/QUOTE]
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Commercial Awareness Update- September 2019
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