Workouts are increasingly becoming a global reality and this book brings together 23 senior specialists from across the globe to provide a comprehensive discussion of out-of-court debt restructurings (a.k.a. workouts).
Workouts are increasingly becoming a global reality and this book brings together 23 senior specialists from across the globe to provide a comprehensive discussion of out-of-court debt restructurings. The unique cohesion of legal, business, financial and accounting experience brought to together in this book provides the international workout practitioner with the tools to achieve a comprehensive understanding of the workout process.
"Events of the last decade remind us that debt restructuring is an integral and challenging part of international commercial practice. Cross-Border Debt Restructurings presents an accessible and comprehensive treatment of this multi-faceted topic, and provides an overview of the laws, mechanics and strategies of debt restructuring. The contributors to this impressive work include financiers, lawyers and other practitioners, who offer the reader the benefit of their experience through the detailed examination of specific topics of interest and multiple case studies. This effective blending of theory and practice makes Cross-Border Debt Restructurings a valuable resource for practitioners and academics alike." Mickey Kantor, Former US Commerce Secretary /Former US Trade Representative
"a comprehensive, authoritative and multidisciplinary practitioner's manual on debt restructurings on a global basis could not be more opportune. Consequently, I am sure that the entire Euromoney audience will undoubtedly celebrate the novelty of this book and be overjoyed with and, perhaps, enriched by this distinct, unique piece of work on one of the hottest subjects on the international financial arena." From the Foreword by Emilio J. Cárdenas, Past President, International Bar Association.
"It is rare that one can find in a single volume a comprehensive treatment of both sovereign and corporate debt restructuring techniques and case studies. Although the two branches of this discipline -- sovereign and corporate -- have much in common (and this book skillfully identifies the areas of congruence), there are very significant differences. Cross-Border Debt Restructurings assembles an impressive cast of experts who can speak with authority about the latest techniques in both sovereign and corporate debt workouts. The editors have marshaled these contributions into a coherent and highly readable text." Lee C. Bucheit, Partner, Cleary, Gottlieb, Steen & Hamilton LLP
Part 1 deals with the basics of debt restructurings and is intended to provide in-depth material (a manual) on the A to Zs of workouts for both beginners and well-seasoned practitioners. Topics covered include:
a description of the historical evolution of workout practices, principles and approaches from the origins of sovereign debt default to the launching of our new global approach to restructurings, including the workout decalogue;
an introduction to the subject of out-of-court debt restructurings;
an overview of the restructuring dilemma: out-of-court versus in-court solutions and middle-of-the-road alternatives;
an elaboration on the different stages, elements and aspects of the workout process;
an overview of the main financial analysis techniques used by workout professionals; and
a review of the main strategies, options and solutions used in current restructurings.
Part 2 deals with special topics on restructurings. Subject matters covered include:
an elaboration of various early warning signs of distress;
an overview of the United States Chapter 11 rules, prepackaged solutions and cross-border insolvency issues, including ancillary proceedings, all from the perspective of a global workout case;
a practical description of the main United States securities law issues related to exchanges, exit consents, tender offers and other securities law matters affecting the restructuring of international capital market instruments;
a narrative explanation of the historical evolution of sovereign debt restructurings;
an introductory chapter on the hot topic of collective action clauses;
a description of the peculiar issues associated with restructuring transactions financed on a non-recourse, project financing basis; and
an analysis of the implications and issues arising out of political risk insurance coverage when applied to workout matters.
Part 3 describes the East Asian and Argentine crises experiences and also presents four workout case studies in Central Europe, Latin America, Eastern Europe and East Asia to provide practical examples of the application of all concepts dealt with in the book in actual or theoretical transactions.
Author
Cross-Border Debt Restructurings: Innovative Approaches for Creditors, Corporates and Sovereigns
Author and Editor
Esteban C. Buljevich is a principal counsel in the legal department of the International Finance Corporation (IFC), a member of the World Bank Group. Since 2002, Mr. Buljevich has been working in the Buenos Aires office of the IFC and is a member of the Argentine Recovery Team. As such, he has been actively involved – as lead counsel and workout banker – in all recovery efforts of the IFC’s portfolio in Argentina, which amounted to approximately US$2 billion as at 2002. Mr. Buljevich is a business lawyer with significant experience in workouts, project financing, mergers and acquisitions (M&A), banking and capital markets, securitisation and structure finance and private equity transactions on a global basis. Prior to becoming a member of the Argentine Recovery Team, Mr. Buljevich was active within IFC in new business transactions and restructuring work in Latin America, Eastern Europe and Asia. Before joining IFC in 1996, Mr. Buljevich worked in New York and Argentine law firms as well as in an Argentine conglomerate. He also served as a clerk for a Federal Criminal Court for the District of Buenos Aires. Mr. Buljevich holds a JD degree from the University of Buenos Aires (1989), an MBA from L’Ecole des Ponts et Chaussées of Paris and the University of Belgrano (1992), a graduate degree in investment banking from the New York University (1996) and an LLM from Georgetown University (1999). Esteban C. Buljevich is a contributor to Project Finance–Selected Issues in Choice of Law, published by Euromoney Books in 1996. He is also the author of Project Financing and the International Financial Markets, published by Kluwer Academic Publishers in 1999. Since 2001, he has been a faculty member of the International Law Institute in Washington, DC. He frequently provides lectures and presentations at conferences and seminars relating to topics of his professional expertise. He is a member of the Buenos Aires and New York bars and of various professional organisations, including the American Bar Association, the International Bar Association, the Association of International Petroleum Negotiators and the International #Law Institute.
Co-editor: María Eugenia Rodríguez Beltrán, Full-time Co-editor Assistant Editor: Katherine Meighan, International Finance Corporation
Contributors: Santiago Alsina, MBA Banco de Inversiones Theodoor Bakker, White & Case Gregorio Charnas, MBA Banco de Inversiones Margaret B. Cole, Babcock & Brown Sam Coleman, Citigroup Eric D. Cruikshank, International Finance Corporation Andrés de la Cruz, Cleary Gottlieb Steen & Hamilton Douglas A. Doetsch, Mayer, Brown, Rowe & Maw James W. Giddens, Hughes Hubbard & Reed Aaron L. Hammer, Freeborn & Peters Sara Hanks, Clifford Chance Kenneth Hansen, Chadbourne & Parke Paul Kearney, European Bank for Reconstruction and Development E. Gayle McGuigan Jr., International Finance Corporation Katherine Meighan, International Finance Corporation Peter R. Moyers, Hughes Hubbard & Reed Madlyn Gleich Primoff, Kaye Scholer Augusto Repetto, Overseas Private Investment Corporation María Eugenia Rodríguez Beltrán, Full-time Co-editor Wendy Rosenthal, Clifford Chance John D. Taylor, Mayer, Brown, Rowe & Maw Charles van der Mandele, International Finance Corporation
Table of Contents
Cross-Border Debt Restructurings: Innovative Approaches for Creditors, Corporates and Sovereigns
Table of Contents
About the book — an introduction By Esteban C. Buljevich
Part I: The Basics
Chapter 1: The workout decalogue: The new global approach to debt restructurings Esteban C. Buljevich
Introduction Historical background on sovereign debt default — a brief summary The London Approach The INSOL Lenders Group; INSOL Principles The new global approach to debt restructurings: The workout decalogue
Chapter 2: Out-of-court debt restructurings: a.k.a. workouts Esteban C. Buljevich
The starting point — out-of-court debt restructurings Core principles of workouts The ten workout banker mottos Conclusion — the basics of a recovery effort
Chapter 3: The restructuring dilema: out-of-court versus in-court; the middle-of-the-road alternative Esteban C. Buljevich
Introduction The out-of-court approach The judicial approach The middle-of-the-road alternative; prepackaged plans Conclusion
Chapter 4: The restructuring process: workout phases and standstill period Esteban C. Buljevich and María Eugenia Rodríguez Beltrán
Introduction Inception of a workout Main phases of a restructuring process Standstill relief and standstill period Conclusion
Chapter 5: The restructuring process: steering committees and professional advisers, disclosure of information and distressed debt trading Esteban C. Buljevich and María Eugenia Rodríguez Beltrán
Introduction Steering committees Disclosure of information Distressed debt trading Conclusion
Chapter 6: Restructuring process: relationship among creditors and new money E. Gayle McGuigan Jr. and Esteban C. Buljevich
Introduction Dealing with creditors New money financing Conclusion
Chapter 7: Anatomy of a restructuring: the diagnosis Gregorio Charnas and Santiago Alsina
Introduction to financial analysis Liquidity analysis Analysis of liabilities Analysis of assets Analysis of contracts Conclusions of diagnostic analysis
Chapter 8: Anatomy of a restructuring: the prognosis Gregorio Charnas and Santiago Alsina
Introduction Development of a new business plan Valuation of a troubled company as a going concern Valuation in liquidation Sustainable debt level and capital structure analysis Analysis of restructuring alternatives Conclusion
Chapter 9: Anatomy of a restructuring: the treatment Katherine Meighan and Esteban C. Buljevich
Introduction Restructuring strategies for creditors and debtors Building the restructuring proposal — the foundation Escalating levels of treatment — from waivers to reschedulings to restructurings Treatment options for reschedulings Treatment options for restructurings Conclusion
Part II: Special Topics
Chapter 10: Signs of financial distress Eric D. Cruikshank and E. Gayle McGuigan Jr.
Introduction Early recognition of financial distress Ad hoc corporate distress and systemic financial distress Systemic financial distress Warning signs for financial institutions Warning signs for corporate borrowers Conclusion
Chapter 11: United States bankruptcy reorganisations under Chapter 11 Douglas A. Doetsch and Aaron L. Hammer
Introduction Structure of the Bankruptcy Code; bankruptcy rules Eligibility for reorganisation Commencing a Chapter 11 case Venue Debtor-in-possession Automatic stay Creditors’ committee and other committees Continued operation of the business — debtor-in-possession Meeting of creditors Chapter 11 Trustee Examiner Conversion or dismissal of the case Reorganisation plan: formulation Disclosure statement Plan solicitation and class acceptance Modifications of the plan Confirmation of the plan The effect of confirmation Conclusion
Chapter 12: United States prepackaged Chapter 11 cases Madlyn Gleich Primoff and Wendy Rosenthal
Introduction. Why a prepackaged case? Types of prepackaged cases The prepackaged process Strategic considerations Prenegotiated cases Statutory bases for prepackaged cases Recent trends Conclusion
Chapter 13: Cross-border insolvency and bankruptcy: concepts, conventions, and case studies Douglas A. Doetsch and Aaron L. Hammer
Introduction Fundamental concepts in cross-border insolvencies International treaties and conventions Administration of cross-border insolvency proceedings Case studies in cross-border insolvencies Conclusion
Chapter 14: Ancillary proceedings under the United States Bankruptcy Code James W. Giddens and Peter R. Moyers
Introduction to ancillary proceedings Statutory provisions dealing with ancillary proceedings Commencement of proceedings Opposition by a party in interest Injunctive relief The turnover of assets Standards for relief Choice of law Abstention Limited appearance Conclusion
Chapter 15: United States securities laws affecting cross-border debt restructurings Sara Hanks
Chapter 16: Sovereign debt restructurings Andrés de la Cruz
Introduction The foundation of sovereign debt restructurings From the gunboats to the courts Restructuring sovereign debt in the Bretton Woods era Conclusion
Chapter 17: Collective action clauses and workouts Augusto Repetto, María Eugenia Rodríguez Beltrán and Esteban C. Buljevich
Introduction International sovereign bonds Collective action clauses — types and characteristics Legal constraints on the use of collective decision-making provisions Report of the Group of Ten Working Group on Contractual Clauses Recent progress Conclusion
Chapter 18 : Restructuring project finance transactions John D. Taylor
Introduction What is project finance? Project finance transactions in distress Lender remedies: alternatives to restructuring Restructuring project financings: “non-financial” restructuring Restructuring project financings: financial restructuring Intercreditor issues Conclusion
Chapter 19: Political risk insurance and project workouts Kenneth Hansen
Introduction Background Lessons from workouts Lessons from claims Conclusion
Part III: Case studies on workouts
Chapter 20: The London Approach, and the East Asian and Argentine financial crises experiences Esteban C. Buljevich
The East Asian crises The Argentine Approach
Chapter 21: A Central Europe case study: Nová Huť a.s. Charles van der Mandele
Introduction The onset of the financial crisis The restructuring The unexpected outcome Conclusion Lessons learned
Chapter 22: A Latin American case study: Galicia restructuring Sam Coleman
Introduction Government and judicial actions affecting the banking system Impact on Banco Galicia Role of regulators Capitalisation and Liquidity Rescue Plan (“Plan Galicia de Capitalización y Liquidez”) Role of the steering committee The players Objectives of the restructuring Financial constraints Principles for the restructuring Structure of the offer Summary results Risk factors Conclusion: challenges and lessons learned
Chapter 23: An Eastern Europe case study: The PLK Bank case Paul Kearney
Introduction PLK Background and financial information Causes and nature of financial distress of PLK Restructuring of PLK Conclusions and lessons learned
Chapter 24: An Asian restructuring case study Margaret B. Cole and Theodoor Bakker
Factual overview Financing structure First debt moratorium Restructuring process Restructuring plan Conclusion — The Group’s repudiation to the agreed plan Lessons learned
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