Insights

• Delaware’s Domestic Asset Protection Trusts (DAPTs) have earned the state a reputation as a premier jurisdiction for shielding assets from creditors.
• These trusts attract individuals and entities around the world seeking strong legal protections.
• While international creditors may view asset recovery efforts in Delaware as daunting, it is possible to overcome these protections with a strategic, multijurisdictional approach.

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• Chinese companies and individuals with ties to the U.S. face increasing regulatory and enforcement risks.
• The U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) are expected to intensify their investigations and enforcement efforts
• Those potentially affected should act early and decisively to mitigate exposure, navigate emerging challenges, and safeguard commercial opportunities.

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• As private debt continues to grow rapidly as a global asset class, investors and asset managers must remain vigilant to the increasing risks that accompany this expansion.
• With deal complexity on the rise, these risks are particularly acute in cross-border, high-value credit arrangements.
• A coordinated multi-jurisdictional strategy enables creditors to secure more substantial leverage in pursuit of favorable recoveries in response to defaults. 

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• The changing business environment has exacerbated financial challenges, eroding asset values, and driven a spike in defaults. Large distressed debt positions cannot always be monetized through consensual restructurings.
• Over the past 24 months, Kobre & Kim has enforced distressed debt, including offshore US dollar bonds, valued at more than US $2 billion in jurisdictions that span Asia, the Middle East, Offshore, North America, and Latin America.
• To successfully monetize credit, it is essential to deploy strategies that leverage a combination of cross-border asset recovery in onshore and offshore jurisdictions, as well as creative out-of-court approaches to facilitate the voluntary resolution of claims.

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• A new Memorandum of Understanding (MoU) between the Dubai Courts and the Abu Dhabi Global Market (ADGM) Courts marks a significant step forward for creditors seeking to enforce claims in the UAE.
• By establishing mutual recognition of judgments and awards, the MoU brings greater clarity to a legal landscape long seen as complex and uncertain.
• In light of this progress, creditors operating in the UAE should consider proactive strategies to enhance their recovery prospects across both offshore and onshore systems.

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• Kobre & Kim has effectively supported judgment debtors navigating the financial, legal, and strategic challenges associated with adverse judgments, arbitration awards, and defaulted bonds and loans.
• By mitigating enforcement risks while minimizing the need for significant financial outlays, the firm reduced the value of claims by more than US $10 billion.
• Withstanding a proactive creditor requires a coordinated, multi-jurisdictional approach leveraging an aggressive set of cross-border tools, as our team described below.

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• The U.S. government's rapidly shifting tariff policies are further straining an already challenged sector, disrupting shipping volumes and adding instability to global supply chains.
• Individuals and businesses tied to international shipping, particularly those based in Greece and Cyprus, may face heightened exposure to these measures
• Stakeholders and their trusted advisors should consider taking proactive, precautionary measures to mitigate potential disruptions and protect their business interests.

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• Kobre & Kim won a second ruling by a New York court granting a motion for summary judgment. 
• This reaffirms bondholders’ standing to directly enforce a global note issued by Chinese property developer Glory Health without going through the bond trustee.
• The ruling removes another barrier to executing aggressive, multijurisdictional monetization strategies in defaulted bond enforcement campaigns.

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• Global public debt has surpassed US $300 trillion, providing creditors and investors in sovereign debt with new opportunities.
• Pursuing sovereign assets can be complex, time-consuming, and highly public, often involving legal battles across jurisdictions and public scrutiny.
• Adopting cross-border strategies that move beyond the traditional litigation playbook that sovereigns expect can improve recovery outcomes and shorten enforcement timelines.

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• Emerging commercial opportunities in South Korea are opening doors for investors worldwide.
• Foreign investors and trade partners continue to face significant challenges when navigating disputes with chaebols, given their dominant position and the complexities of the Korean legal landscape.
• Utilizing antitrust authorities may be one component in building an aggressive and effective strategy.

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• The U.S. Securities and Exchange Commission (SEC) has recently shifted its approach to regulating the digital asset industry.
• This change has resulted in the dismissal or suspension of several high-profile cases against major cryptocurrency businesses.
• However, this regulatory retreat does not preclude private plaintiffs from pursuing legal action.

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• It is now established that keepwell agreements—commitments made by a parent company in the People's Republic of China (PRC) to uphold the financial stability of its subsidiary—are enforceable under Hong Kong law.
• Beyond enforcing keepwell agreements in the PRC, unsecured creditors should proactively expand their recovery overseas to improve their prospects for recovery.   

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• Emerging technologies are creating new reputational risks for ultra-high-net-worth individuals.
• These create new challenges for reputation lawyers, courts, and governments worldwide as they adapt existing tools and introduce new legislation to cover uncharted territories. 
• As bad actors' technological capabilities rapidly evolve and fraudulent activities become increasingly sophisticated, the right tools can aid in mitigating risks and combating harmful online narratives.

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• Debtors worldwide often attempt to shield their assets from collection by transferring them to Florida homesteads due to the broad and immediate protection against enforcement afforded by Florida’s constitution to homeowners.
• A recent ruling by the United States District Court for the Southern District of Florida in favor of a Kobre & Kim client marks an important step in addressing potential abuses of this protection.
• As possibly the first ruling to acknowledge that creditors may be able to collect against Florida homesteads purchased with proceeds from frauds not committed against them, it sets a precedent that could enhance creditors’ ability to enforce claims against debtors attempting to shield assets through homestead protections.

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• Kobre & Kim continues to strengthen its commitment to Greater China through additional investment in key recent hires.
• Building on its expertise in cross-border disputes, the firm has experienced a significant rise in demand in Greater China for international asset recovery, joint venture shareholder disputes, and government enforcement defense.

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