As discussed in our prior blog entitled “New York’s Sovereign Debt Restructuring Proposals,”[1] three bills were introduced in the New York state legislature to overhaul the way sovereign debt restructurings are handled in New York. Those bills sought to implement a comprehensive mechanism for restructuring sovereign debt, limit recovery on certain sovereign debt claims, and amend the champerty defense.
In this note, we provide a high-level overview of key restructuring cases from last year in the US, Asia Pacific and Australia and consider the outlook in 2024 for restructuring transactions.
US
In March 2022, the International Monetary Fund (the “IMF”) assessed Sri Lanka’s public debt to be unsustainable after the country entered the pandemic with thin reserve buffers, high debt levels, and no fiscal space. The IMF’s determination prompted Sri Lanka to begin restructuring its debt the following month. As part of that process, Sri Lanka adopted an “Interim Policy” of suspending debt service on the following affected debts:
The confluence of the COVID-19 pandemic, high inflation, and increased borrowing costs culminated in countries incurring record levels of debt.[1] Despite this global debt crisis, there is currently no comprehensive set of rules or body of law to govern the restructuring of sovereign debt.
In January, we wrote about Highland Capital Management, L.P. and the reorganized debtor’s filing of a petition for a writ of certiorari, by which the reorganized debtor asked the Supreme Court to consider whether section 524(e) of the Bankruptcy Code prohibits non-debtor exculpations.
In this article, we focus on working capital and consider ways a business can seek to weather the storm and preserve all-important liquidity through this challenging period.
Practical Tips
Given the unprecedented challenges presented by COVID-19 globally, what can senior management do in order to manage and mitigate the risk to the company's financial health?
French businesses face significant business disruption, as does any country faced with restrictions in place to curb movement of people because of Covid-19.
In this blog we consider what the restrictions are in France and what help is on offer.
What restrictions are in place and why is this impacting businesses?
The current restrictions, announced on March 16, 2020 by the President of the Republic are designed to minimize contact and travel and will be in place from Tuesday, March 17 at 12:00 p.m., for a minimum of fifteen days.
Une ordonnance, n° 2017-1519 du 2 novembre 2017, porte adaptation du droit français au nouveau règlement européen relatif aux procédures d'insolvabilité (Règlement (UE) n° 2015/848 du 20 mai 2015).
Le nouveau Règlement, révisant le règlement (CE) n° 1346/2000 du Conseil du 29 mai 2000, est entré en vigueur dans les États membres le 26 juin 2017.
L'objectif de l’ordonnance est de :
As 26 June 2017 approaches – the date of entry into effect of the Recast EU Insolvency Regulation (2015/8484/EU) – we look in detail at the new provisions for co-ordinating the insolvency proceedings of members of a pan-European group of companies and consider whether the new proposals for co-operation will be compulsory, the practicalities of who will pay the co-ordinator’s fees and whether the creditors can have a say in the process.
BACKGROUND
It is not always easy to prioritize between the various goals pursued in every insolvency legislation, namely; the continuation of the company, preservation of the jobs, the general economic/public interest and the payment of dividends to creditors.
There is no clear hierarchy in French law amongst these major targets and French case law appears fairly pragmatic. However compared to Insolvency regulations in other countries, French legislation and French case law appear very protective of the interests of the employees.
This seems obvious when one considers, for example,