The European Commission ("Commission") has released a consultation paper to evaluate the merits of introducing measures to support secondary markets for distressed debt and the development of a new, contractual-based loan security obligation.

Consultation

Cancellation of debt a key element of most restructurings generally triggers taxable income. The German tax authorities had issued an administrative decree (the "Tax Restructuring Decree" - Sanierungserlass), however, declaring that, upon the satisfaction of certain requirements and conditioned on forfeiture of any loss carry forwards, the cancellation of debt income ("CODI") would not be taxed.

The recentThomas Cook refinancing and Cortefiel scheme of arrangement offer contrasting examples to investors of the risks and rewards of adopting a hold-out position in complex multijurisdictional restructurings.