Pathways for Global Bondholders to Effectively Oppose Unjust UK Restructuring Plans

English courts have been welcoming to delinquent global bond issuers, particularly due to the ability to cram down dissenting creditors. However, as recent court decisions show, the tide may be turning – creditors who take swift and forceful action can find a path to success, even against the biggest industry players.

May 18, 2023

England has become a forum of choice for delinquent global bond issuers seeking to restructure their debt. This is due to increasingly debtor-friendly restructuring rules, particularly those enabling a cram down of dissenting creditors.

There are ways for bondholders to resist cram down strategies from even the biggest bond issuers, whether in the English courts or by litigating issues in offshore jurisdictions of incorporation. Swift, muscular and creative opposition can make a material difference:

Accomplishing these goals requires the fortitude and independence to take firm positions against major financial institutions and other industry players.

Global bondholders now have better prospects of moving the needle in England. A recent decision of the English courts shows that it can and will halt a restructuring plan that disadvantages bondholders. This is the second such occasion on which the court has applied the brakes.

In one of the most recent cases, the court did not like the fact that the directors threatened to place the company into formal insolvency if the court did not give its’ sanction by a particular date. Holding a gun to the judge’s head proved to be a bad idea. Nor did the court like the company’s subjective choice as to which creditors should be viewed as “essential.” Similar criticisms were leveled by the High Court in another recent case, also rejecting a restructuring plan.

Taken together, pathways are opening up for global bondholders to challenge restructuring plans. By deploying swift, muscular and creative strategies – even against major institutions – they can see greater chances of success at protecting their interests.


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