Hogan Lovells’ U.S. Business Restructuring and Insolvency Practice head Chris Donoho and partner Ron Silverman, along with Jefferies’ Restructuring and Recapitalization Group co-head Richard Morgner, recently joined Debtwire legal analyst Richard Goldman to discuss current issues concerning cross-border restructurings.

During the discussion, the panel addressed the factors that prompt foreign-based companies to avail themselves of the U.S. Bankruptcy Code in lieu of local insolvency proceedings, the hurdles that such companies must overcome to secure a U.S. court’s administration of their Chapter 11 cases and pitfalls that foreign-based companies may encounter in the U.S.

The panel also reflected on some recent cross-border cases, including Abengoa, Hanjin Shipping, and Baha Mar.

Click here to listen to the podcast.

Over the past several years, the international financial community has witnessed a significant increase in cross-border restructurings of Chinese companies. These restructurings have involved large enterprises with billions of dollars of revenues and indebtedness. The increase in cross-border financings, and therefore restructurings, is tied to the huge debts that Chinese companies, banks and municipalities have been accumulating since the financial crisis of 2008-2009. As central banks have held interest rates at record lows and bought up government debt to stabilize the financial system, investors have increasingly turned to corporate debt issued in emerging markets as a source of higher returns. Chinese companies have capitalized on this appetite for foreign investment and have borrowed $377bn from 2010 to 2014, according to the Bank for International Settlements.

A new wave of foreign investment seems just over the horizon. A regulatory shift was promulgated by the People’s Republic of China’s National Development and Reform Commission (NDRC) circular on administration and filing of foreign debt, which came into effect on 14 September 2015. The NDRC rule is just the most recent in a series of changes that China’s regime has gone through over the last two years that facilitate cross-border Chinese financing and investment.

Continue Reading Restructuring foreign investments in Chinese companies