Bond indentures and loan agreements often include make-whole provisions to provide protection to lenders and investors in the event of debt repayment prior to maturity. Make-whole provisions work to compensate the investor/lender for any future interest lost when the issuer/borrower repays the note prior to a specific date.

The make-whole premium is based on a present value calculation that discounts the payments that would have been received had the debt not been repaid, and is intended to make the investor/lender whole for the payments remaining on the bond/note. A recent Third Circuit decision suggests that the way make-whole provisions are drafted in debt instruments can be crucial in determining the applicability and enforceability of make-whole premiums.

Continue Reading Third Circuit enforces make-whole premium for secured lenders in Energy Future Holdings bankruptcy

The Singapore parliament recently passed a bill bringing in U.S. Chapter 11-inspired changes to its debt-restructuring framework, including provisions allowing (i) courts to approve financing with priority ahead of existing senior secured facilities; (ii) courts to approve a scheme even if there are dissenting creditor classes; and (iii) international assistance proceedings.

These provisions borrow heavily from the existing provisions in the U.S. Bankruptcy Code.

In light of these changes and the impact on future restructurings, we hosted a webinar on the current and coming use of U.S. Chapter 11 and Chapter 15 proceedings in Asian restructurings.

Some of the topics discussed included:

  • Why Asian debtors might look to a Chapter 11 solution over other procedures such as Schemes of Arrangements;
  • How the equivalent provisions in the U.S. Bankruptcy Code are applied and the key concepts parties will need to be familiar with; and
  • The likely need for U.S. counsel to provide expert testimony in Singapore proceedings regarding the application and interpretation of the new U.S.-based provisions.

Click here to view the webinar.

Addressing licensing agreements in bankruptcy presents unique issues. End-User License Agreements (“EULAs”) are specific software license agreements in which the licensor provides the end-user/licensee—under the guise of a sale—a personal and non-transferable license to use the purchased software. Given the unique nature of a EULA, how is such a license treated in bankruptcy?

Continue Reading End user license agreements in bankruptcy

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

Marblegate

The United States Court of Appeals for the Second Circuit held in Marblegate Asset Mgmt., LLC v. Educ. Mgmt. Fin. Corp., No. 15-2124-CV(L), 2017 WL 164318 (2d Cir. Jan. 17, 2017) that Section 316(b) of the Trust Indenture Act (“TIA”) prohibits only non-consensual amendments to an indenture’s core payment terms, overturning the decision from the United States District Court for the Southern District of New York, which had taken a more expansive view of the TIA in holding that Section 316(b) prohibited impairing the practical ability to collect payment under an indenture.

Continue Reading Second Circuit narrowly interprets Section 316(b) of the Trust Indenture Act

What if anything is different?
This article by Joe Bannister previously appeared in Oil & Gas Financial Journal on 16 May 2016, click here to go the original article.
NO ONE with any interest in or knowledge of the oil and gas industry can deny that the present market conditions are anything other than challenging. However, oil price volatility and the problems it creates at the pumps, on the rigs, and in the markets is nothing new. Dependent upon one’s age and perspective, the present turmoil is merely another example of the sort of disruption and havoc played on corporate and personal budgets by the 1970 energy crisis and its aftermath. From the mid-1980s to September 2003, the inflation adjusted price of a barrel of crude oil was generally less than US$25 per barrel.  Continue reading

 

Berau Capital Resources Pte Ltd (“Berau”), a special purpose vehicle incorporated to raise funds on behalf of an Indonesian mining and coal company, initiated proceedings in the High Court of the Republic of Singapore pursuant to section 210(10) of the Companies Act on July 4, 2015.

On July 10, 2015, Berau filed a petition for recognition of the Singapore proceeding in the Bankruptcy Court for the Southern District of New York (the “New York Bankruptcy Court”) under Chapter 15 of the Bankruptcy Code.  In a decision makes it more likely that foreign companies with New York law governed securities will be able to utilize Chapter 15 even if they otherwise have no U.S. connections, the New York Bankruptcy Court granted recognition to Berau’s Singapore proceeding and held that not only had Berau satisfied Bankruptcy Code section 109(a) because it had established an attorney retainer account in New York, but that Berau’s indenture governed by New York law and containing a New York choice of forum clause constituted Berau’s property in New York that also satisfied Bankruptcy Code section 109(a).  Continue reading