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:
Election of Joe Graham to Partner
Joe Graham was elected partner in the New York office. This year, Joe played a leading role in the chapter 11 cases of Avaya, Benefytt and Diamond Sports. He regularly advises on out-of-court restructurings, bankruptcy litigation and distressed investments. Joe earned his J.D., magna cum laude, and his B.A. from the University of Notre Dame.
Kelley Cornish Inducted into “M&A Advisor Hall of Fame”
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.
On April 19, 2023, the U.S. Supreme Court unanimously held in MOAC Mall Holdings LLC v. Transform Holdco LLC that Section 363(m) of the Bankruptcy Code is not jurisdictional. The decision requires parties timely to invoke that provision, or else risk forfeiting its protections. The decision also continues the Supreme Court’s trend of interpreting statutes to be non-jurisdictional (and thus waivable or forfeitable) in the absence of a clear congressional statement to the contrary.
Background
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.
Fifth Circuit Remands Bankruptcy Court’s Refusal to Abstain from Adjudicating Uri Storm-Related Pricing Claims |
On December 5, 2022, in In re Global Cord Blood Corp., 2022 WL 17478530 (Bankr. S.D.N.Y. Dec. 5, 2022) (“Global Cord”), the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) denied recognition of a proceeding pending in the Grand Court of the Cayman Islands (the “Cayman Proceeding” and the court, the “Cayman Court”) because it was more like a corporate governance and fraud remediation effort than a collective proceeding for the purpose of dealing with reorganization or liquidation, as Chapter 15 of the Bankruptcy Code requires.
The thing that strikes you the most about Paul, Weiss is the depth of the practice. They just have a large number of senior partners, all of whom are of an outstanding quality.
- Chambers USA, Band 1 for Bankruptcy/Restructuring (Nationwide and NYC) and "Bankruptcy Law Firm of the Year" in 2019