Tips on Take-Home Exams

You may find yourself taking exams "at home" this semester, or least away from the classroom. But the name “take-home exam” has a specific meaning. Unlike in-class exams that are given at a designated time, take-home exams are generally more flexible. You’re given a set of questions or problems several days in advance of the due date; you work on them gradually, taking as much time as you think is appropriate to prepare, write, and revise your answers. Take-home exams are a pretty standard feature in Humanities and Social Science classes. In the document below, however, they attempt to give advice that will be helpful in the Sciences as well.

Prepare, Think, Write, Revise:  This is your mantra.  As soon as you open your take-home exam instructions, read them carefully; read them multiple times.  Then close the screen and jot down the instructions in your paper notebook in your own words. Make double and triple sure you understand the following:

Read the questions.  Take a walk. No cell phones on this walk.  As you walk, think about the questions (or do one question at a time, one question per walk).  Pull out your handy pocket paper notebook and jot down ideas from time to time.  Remember: if you want to do well, leave your cell phone at home. Trust me on this. 

I find it helps to decide on a number of ideas to aim for.  Walk until you have come up with, say, three points you know you want to make as you answer the question, and three examples you could use to support your ideas.  (If you think of more than three ideas along the way, rejoice.) The numbers help you organize your ideas into categories, and give you a rough outline to work from. Of course, good essays are not a mechanical list of three points!  This is simply a way to get started -- a way to sort out the many ideas that may be darting through your mind.

After you’ve drafted your essays (or solved your problems), get a good night’s sleep.  Revisit your work the next morning; edit for clarity; and add details that support your argument.  

-- Professor Marnie McInnes, English and Peer Advising 

General Strategies for Take-Home Exams in Q Courses

-- Professor Ash Puzzo, Philosophy and Q Program

From a Math Major’s Perspective

I usually start my take-home as soon as possible. I know that the take-home exams, especially in Math and Science, are generally designed to be more challenging than in-class exams. Thus, starting work on the exam early gives me more time to think through the exam questions. I take advantage of the extra time by double-checking my answers. 

Choosing a good workplace is very important. Find a location that is quiet and free of distractions, including other students. I had one interesting take-home exam experience which I will never forget. I was doing my Statistical Model Analysis exam in a busy airport, between two of my flights. I was definitely tired, rushed, and distracted by the noisy passengers and boarding calls every few minutes. It was much harder to focus on the exam questions in the airport than in my quiet dorm room. Thus, finding a good location (and stable Wi-Fi) is the key to doing well. Of course, the tips for general test-taking still apply: have a good rest and get fully prepared before you start to take the exam.

-- Angela Xinye Yang ‘21 

Purdue Owl

I like the advice the Purdue Owl provides for writing essays during in-class exams.  Their detailed examples and strategies work equally well for take-home exams.  Purdue University Online Writing Lab

-- Professor Susan Wilson, Communication & Theatre, S & W Programs

For Classes with a Great Deal of Reading:

-- Tarinni Kakar ‘21 

The Psychology Behind It All

The most important part of the take-home exam is the preparation that comes beforehand.  Make sure to keep up with class reading, take organized notes, and ask any questions you may have. Having a good base of information to use during the exam sets you up to really focus on each question one by one instead of combing through the textbooks on your desk.

I used to make the mistake of relying too heavily on the “open-book” policy that often comes with take-home exams, until I realized that the answers are not always in the reading. You have to understand the material and fully ingest what it's saying.  Use books and notes only as an aide to check details, facts, and figures. 

Also remember that your brain can get tired. Many professors are adding additional and more complex questions because they know that you have more books and notes than you would have in the classroom. Use being at home to your advantage: take a break every now and then. Taking a break allows you to come back to questions with a fresh set of eyes, correct mistakes, and, if need be, add new points. 

-- Helina Samson ‘22

Preparing to Take Your Online Exam

By sectioning your time, you allow yourself to move forward without spending too much time on a single problem. When you have successfully made your way through the entire exam, you can go back to your unfinished sections and try again with a new set of eyes. The extra time benefits you:  if you are really struggling to complete a problem, you can walk away from the exam and return later with a clear mind. I find a great way to clear my head is by taking walks without my cellphone or sitting outside and getting some fresh air. 

-- Olivia Neal ‘22

Tips for Dissenting Stakeholders Challenging a Cram Down (or Up)

Thursday, August 17, 2023

Background

This article considers the key issues a dissenting creditor or shareholder (Dissenting Stakeholder) should consider when challenging a UK Restructuring Plan (Plan) under Part 26A of the Companies Act 2006. For convenience, the article assumes that the proponent of the Plan is the debtor company (Company), and that the Dissenting Stakeholder is a member of the class of creditors (Dissenting Class) that voted against the Plan and is therefore at risk of having the Plan imposed on them by way of a so-called "cross-class cram down" (cram down).

Since coming into law in June 2020, only 20 companies have applied to restructure their balance sheet pursuant to a Plan. Dissenting Stakeholders have not fared well so far. Notwithstanding that only six of the 20 Plans have resorted to cram down, Dissenting Stakeholders have succeeded in only three of the six cases.

Of those three, one failed because the Company applied prematurely. On the Company's own evidence, the "Relevant Alternative" (as discussed below) was insolvent administration, which it anticipated would not occur for approximately 18 months from the date of the Company's application. The court observed, within that period of time, that the Company's fortunes could turn favourably. In the remaining two Plans, the Dissenting Stakeholder was HM Revenue and Customs (HMRC), a creditor considered to be in a special category given its secondary preferential status in respect of certain claims (National Insurance and PAYE) in administration, as well as its critical public function as collector of taxes.

Whilst HMRC is in a category of its own, principles applicable to creditors generally can be elicited from the cases.

The legislation that introduced the Plan is still relatively new and case law continues to evolve, so there is plenty of scope for arguments to develop. To state the obvious, of all the nuances and inconsistencies in the cases, one thing is crystal clear: a Dissenting Stakeholder must advocate its case in court. It is insufficient to simply vote against the Plan.

The Plan legislation is only three years old and the case law is still developing. Dissenting Stakeholders should think beyond existing case law when preparing their case, and look to Chapter 11 and elsewhere for inspiration.

In particular, Dissenting Stakeholders should:

A Dissenting Class will be crammed down provided that both of the following conditions are satisfied:

In addition to the above, whether or not a Plan is sanctioned and the Dissenting Stakeholders are crammed down will ultimately be a question of the court's discretion.

The below considers how a Dissenting Stakeholder should approach the preparation of its case by reference to the above criteria.

The Relevant Alternative is whatever the Court considers would be most likely to occur in relation to the Company if the Plan were not to be sanctioned. To date, the accepted Relevant Alternative has invariably been a value destructive formal insolvency process, whether that is administration or liquidation. The extent of the court's enquiry has thus been limited.

However, depending on the facts, there is scope for Dissenting Stakeholders to argue a wider universe of alternatives. The Dissenting Stakeholder's task is to cast doubt on the Company's evidence. In this respect, lessons from Chapter 11, where the baseline is not necessarily a Chapter 7 liquidation, might be helpful.

Dissenting Stakeholders should consider whether a Relevant Alternative might properly be a foreign restructuring or insolvency process if the Company has a connection to a foreign jurisdiction because of its jurisdiction of incorporation or otherwise, or be a process under the terms of the Company's contractual matrix (e.g., a distressed disposal under an Intercreditor agreement or a liability management exercise under a bond indenture).

Separately, Dissenting Stakeholders should query whether:

If the Company fails to satisfy the evidential burden, the question of whether the Dissenting Stakeholders would be "no worse off" in such a Relevant Alternative may then fall to be considered.

This question involves a range of considerations, some of which are considered below

The Company must establish, on the balance of probabilities, that no Dissenting Stakeholder would be worse off under the Plan than in the Relevant Alternative.

The Dissenting Stakeholder should therefore consider whether it can cast doubt on the Company's case, such that the Company fails to satisfy its evidential burden. The following points can be drawn out of the cases so far.

Although the test is fundamentally one of valuation, case law has confirmed that a Dissenting Stakeholder need not necessarily adduce its own competing valuation evidence. As such, the onus is on the Company's management to provide accurate forecasts and assumptions. Thus, Dissenting Stakeholders may discredit the Company's evidence simply by scrutinising, criticising and undermining it. There will be no cram down if the Company is unable to refute the challenge and satisfy the court that the Dissenting Stakeholder would not be any worse off than in the Company's Relevant Alternative. In this regard, the evidential burden on the Dissenting Stakeholder is relatively low. It must simply provide a factual basis for the challenge — it is not required to satisfy the court that it would be better off.

This tactic was successful in the case of Great Annual Savings Company Ltd (GAS). In its capacity as Dissenting Stakeholder, HMRC scrutinised the Company's valuation figures without adducing its own alternative valuation evidence and successfully persuaded the court that the Company had failed to satisfy its evidential burden. Over many pages of analysis, the court combed through the Company's valuation evidence and found it to have been unexplained, internally inconsistent and without independent scrutiny in critical respects. Even though the Company had commissioned an independent expert to compile a report of the recovery analysis in the Relevant Alternative, that report was based entirely on figures provided by the Company, without any independent scrutiny or analysis.

The court specifically mentioned the following data points:

Returns from sources other than the Company's assets may be included when valuing the Dissenting Creditor's rights in the Relevant Alternative, thereby raising the bar for the benefit of the Dissenting Stakeholder. This is because the terms of the legislation apply the "worse-off" test by reference to the recovery under the Plan vs. the Relevant Alternative (not as against its rights against the Company specifically).

Conversely, the Dissenting Stakeholder should scrutinise the returns that the Company asserts would accrue to the Dissenting Stakeholder under the Plan.

The courts have made it clear that they will not entertain arguments as to alternative Plans, or whether the Plan is the "best plan or the only fair arrangement available". Thus, it seems that it is not open to a Dissenting Stakeholder to argue that another Plan would yield better recovery. The courts will not choose between two contrasting exams of the likely returns under the Plan. The court's enquiry is limited to deciding whether, on the balance of probabilities, the Dissenting Stakeholder would be no worse off under the Plan than in the Relevant Alternative (thereby emphasising the importance of challenging the Company's evidence regarding the Relevant Alternative).

If the court finds that the first two conditions for sanctioning the Plan are satisfied, the last vestige for the Dissenting Stakeholder is to persuade the court that it should not exercise its discretion to sanction the Plan. It is worth pointing out the court's approach to its exercise of discretion: it must affirmatively determine that the Plan is fair. It is not the case that the court will sanction the Plan unless it finds the plan to be unfair.

The court will consider whether the Plan is "fair" and, in doing so, will weigh a variety of factors, including the following:

Together, these questions boil down to whether the Plan provides a fair distribution of the benefits generated by the restructuring between those classes who have agreed to it and those who have not, notwithstanding that their interests are different. In other words, is one class getting too much or too little for no valid reason?

A Chapter 11 style enquiry has been hinted at being appropriate, insofar as one court said, "This exercise may involve comparing the Plan with other possible alternative structures to the effect that 'things could and should have been done differently'". It is worth thinking of the outer limits of this: would this be an opportunity for a Dissenting Stakeholder to argue that an alternative Plan would have been fairer?

The courts are becoming alive to the possibility of a "stitch up", a situation where the shareholders and principal financial creditors have negotiated with the sole purpose of capturing value that should properly be allocated to the Dissenting Stakeholder. In such a case, the Plan should be viewed as operating unfairly. In GAS, the court was of the view that this was such a case, even though the Company had sought to communicate openly with Dissenting Stakeholders about the Plan. This was because the end result was still a Plan which involved a serious imbalance in the way anticipated benefits of restructuring were to be allocated.

If the Dissenting Stakeholder is "out of the money" on the Relevant Alternative, there is generally little scope for challenging the Plan on the basis of discretion. This is partly because a class of creditor in respect of which none of its members has a "genuine economic interest in the Company" can be excluded from voting to consider the Plan under s.901C(4) of the Act.

Note the distinction, in this regard, with the "worse-off" test, where the comparison is referable to the Dissenting Stakeholder's recovery under the Plan.

In other words, in determining whether a class is "out of the money" for the purposes of exercise of discretion, the court will not attribute value to returns that it would receive from sources other than the Company's assets in the Relevant Alternative.

In a recent case, the court refused to exercise its discretion to sanction a Plan even though the Dissenting Stakeholder was "out of the money". It held that there was no rigid rule equating "out of the money" creditors with a creditor who has a "legitimate interest" in opposing the Plan.

The Dissenting Stakeholder, HMRC, was held to have had a "legitimate Interest" in the "Plan outcome" because it had an ongoing interest in the Company's subsidiary entities in the form of claims against them, even though the court accepted that HMRC would not have recovered anything from the Company itself. This reasoning is surprising given the well-established principle of corporate separation.

However, the court also ruled that there was a "blot" on the Plan on the basis that it was conditional on HMRC agreeing to compromise its indebtedness against the subsidiaries, a condition that HMRC had not agreed to.

On the face of the judgment, it does not seem like the court considered the two issues to be inextricably intertwined.

Due process

If the Company has not provided proper notice, or if the Explanatory Statement is inadequate or incorrect, this will be a matter to which the court will give due weight.

Categorisation of critical creditors

The court will scrutinise the Company's categorisation of critical service providers and suppliers whose claims are not proposed to be compromised under the Plan. The test is whether the relevant creditor is 'essential,' such that the board has respectable commercial reasons for classifying them as such.

Directors' duties — English law

It should not be forgotten that the directors of an English Company are susceptible to various categories of personal liability when the Company continues to trade through insolvency. Dissenting Stakeholders should consider probing the tension between directors' duties to consider creditors' interests when approaching insolvent liquidation (and the primacy to attribute to those interests) on the one hand, and the treatment given to Dissenting Stakeholders under a Plan. This could be a fruitful source of Dissenting Stakeholder enquiry in future cases.

Dissenting Stakeholders should continue to watch for any amendments to the law and procedure of Plans. The government recently published a "Post Implementation Review" of the Plan and other legislation implemented by the Corporate Insolvency and Governance Act. Proposals for reform include the following:

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