FWE-BOOK bankruptcy & corporate restructuring options for troubled enterprises 2 0 0 9 in association with: IMPORTANT COPYRIGHT NOTICE © 2009 Financier Worldwide. All rights reserved. DISTRIBUTION RIGHTS This version of “Bankruptcy & Corporate Restructuring: Options for Troubled Enterprises” is for LIMITED PERSONAL USE ONLY Rights have been granted to the original recipient to store this file on his or her local PC and send it internally to other colleagues within his or her firm. External distribution, to any contact outside the recipient’s firm, in electronic or any other format, is strictly prohibited by the publisher. FWE -BOO K bankruptcy & corporate restructuring options for troubled enterprises 2 0 0 9 Published by Financier Worldwide The Exchange 19 Newhall Street Birmingham B3 3PJ United Kingdom Telephone: +44 (0)845 345 0456 Fax: +44 (0)121 710 5574 Email: ebooks@financierworldwide.com www.financierworldwide.com ISBN: 978-0-9558826-2-3 First edition Copyright © 2009 Financier Worldwide. All rights reserved. No part of this publication may be copied, reproduced, transmitted or held in a retrievable system without the written permission of the publishers. Whilst every effort is made to ensure the accuracy of all material published in Financier Worldwide, the publishers accept no responsibility for any errors or omissions, nor for any claims made as a result of such errors or omissions. Views expressed by contributors are not necessarily those of the publishers. Any statements expressed by professionals in this publication are understood to be general opinions and should not be relied upon as legal or financial advice. Opinions expressed herein do not necessarily represent the views of the author’s firms or clients. Bankruptcy & Corporate Restructuring: Options for Troubled Enterprises 2009 BANKRUPTCY & CORPORATE RESTRUCTURING g Contents About the Publisher _____________________________________________________________________________________ 4 CHAPTER ONE: RESTRUCTURING PROCESSES 5 A new breed of bankruptcy _______________________________________________________________________________ 6 Ultra Stores success in the Chapter 11 fast lane _______________________________________________________________ 7 Restructuring agreements in the Italian insolvency law __________________________________________________________ 9 Bankruptcy and restructuring in Finland – procedures and current issues ___________________________________________ 11 Recovery of assets in Finnish insolvency situations ____________________________________________________________ 12 Compromise under the Estonian Bankruptcy Act _____________________________________________________________ 14 Reorganisation in Estonia – useful tool or just stretching out the inevitable? ________________________________________ 15 Recent trends in practice of restructuring proceedings in Lithuania _______________________________________________ 17 CHAPTER TWO: FINANCIAL RESTRUCTURINGS 19 The strange case of the shifting rescue funding _______________________________________________________________ 20 Financial restructuring in Germany _________________________________________________________________________ 21 Advantages of the APE: Argentina’s prepackaged debt restructuring agreement ______________________________________ 22 CHAPTER THREE: BANKRUPTCY-RELATED M&A 25 General Motors and Chrysler bankruptcies: should we treat them as precedent or aberrations? ________________________ 26 Section 363 sales: the other side of the coin for secured lenders _________________________________________________ 28 Acquisition of distressed assets in Germany – how to avoid the pitfalls ____________________________________________ 29 M&A with the insolvency administrator in Germany ___________________________________________________________ 30 Potential opportunities for distressed transactions in Brazil in view of the Brazilian Judicial Recovery Act _________________ 32 CHAPTER FOUR: CREDITOR ISSUES 35 Preference and fraudulent conveyance litigation: a primer and some recent case law developments in the second (New York) and third (Delaware) circuits regarding defences ______________________________________________________________ 36 Australian schemes of arrangement effecting third party releases _________________________________________________ 38 BVI corporate insolvency – does the sun always shine on creditors? _______________________________________________ 40 Effect of creditors on the restructuring process seen from a Danish perspective _____________________________________ 42 Secured creditors in bankruptcy proceedings – present and future developments ____________________________________ 43 Main elements and risks for creditors under the new Estonian Restructuring Act ____________________________________ 45 www.financierworldwide.com | FW << CONTENTS 1 BANKRUPTCY & CORPORATE RESTRUCTURING 2009 CHAPTER FIVE: LEGAL DEVELOPMENTS - AMERICAS 48 Section 503(b)(9) of the Bankruptcy Code as an impediment to reorganisation ______________________________________ 49 Bankruptcy remote is not bankruptcy proof – new concerns that SPEs will seek bankruptcy relief alongside their corporate parents ______________________________________________________________________________________ 50 Otero Mills: is the protection of a non-debtor’s interests for the benefit of the estate still relevant after the 2007 real estate crash? _______________________________________________________________________________________ 52 Director liability: risk and reward __________________________________________________________________________ 54 Cross-border broker-dealer insolvencies in the age of Lehman ___________________________________________________ 56 Canada’s insolvency laws undergo significant overhaul __________________________________________________________ 58 Recent developments in the Brazilian Reorganisation Law – successor liability and fiduciary transfer _____________________ 60 Recognition and enforcement of trust rights in a bankruptcy proceeding ___________________________________________ 62 CHAPTER SIX: LEGAL DEVELOPMENTS - EUROPE 65 The new German debenture act – a tool for tailor-made bond restructurings _______________________________________ 66 Germany’s new Bond Restructuring Act _____________________________________________________________________ 67 Insolvency law reform in Austria ___________________________________________________________________________ 69 Trends to resolve a debtors’ insolvency in the Czech Republic ___________________________________________________ 71 Two years after the bankruptcy law reform: the Italian experience ________________________________________________ 72 Spain adjusts its insolvency regime to international trends ______________________________________________________ 74 Reforms to Spanish insolvency law spark surprise and unease ____________________________________________________ 76 Russia’s rapidly evolving commercial bankruptcy law ___________________________________________________________ 79 Recent amendments to the insolvency and restructuring regulation in Latvia ________________________________________ 82 CHAPTER SEVEN: LEGAL DEVELOPMENTS - OFFSHORE 84 Has the shareholders’ oppression remedy arrived in Cayman? ___________________________________________________ 85 International insolvency cooperation in Bermuda _____________________________________________________________ 86 CHAPTER EIGHT: TURNAROUND & CORPORATE RENEWAL 89 What were they thinking? _______________________________________________________________________________ 90 Viability of restructuring plans: the influence of vested interests __________________________________________________ 91 Do Australian laws inhibit informal restructuring? _____________________________________________________________ 94 Who’s left to clean out the business world’s Augean stables? ____________________________________________________ 96 2 << CONTENTS FW | www.financierworldwide.com 2009 BANKRUPTCY & CORPORATE RESTRUCTURING CHAPTER NINE: ECONOMIC & MARKET TRENDS 97 What to expect in the coming year ________________________________________________________________________ 98 Liquidity challenges for manufacturing and distribution businesses ________________________________________________ 99 Trends from the frontline _______________________________________________________________________________ 101 Recent developments in the German restructuring and insolvency market ________________________________________ 102 Recent trends in the Norwegian bankruptcy and restructuring market ___________________________________________ 103 Has Asia missed the party? ______________________________________________________________________________ 105 Impact of the global financial crisis on the Hong Kong economy and recommendations for companies on how to cope with the threat _______________________________________________________________________________________ 107 CHAPTER TEN: CONTRIBUTOR GLOSSARY 110 www.financierworldwide.com | FW << CONTENTS 3 BANKRUPTCY & CORPORATE RESTRUCTURING 2009 About the Publisher Financier Worldwide is a leading publisher of news and analysis on the global corporate finance market place. Financier Worldwide delivers in- depth commentary, research, and practical analysis that bridges the gap between theory and practice in the complex world of corporate finance. Through a series of online, print and digital publications, the organisation has become recognised as a leading source of intelligence to the