International creditors are facing a shrinking pool of available capital for repayment on their claims in Brazil and Latin America.
As companies struggle to navigate ever-increasing amounts of debt, there are strategies US dollar noteholders can take to improve their position and fast-track a swift recovery.
The changing businessenvironmenthas 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.
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.
A Kobre & Kim client received a recent ruling by the New York Supreme Court that eases global bondholders’ ability to monetize claims.
Justice Joel Cohen found Zhu Xinli, the sole director of Huiyuan Juice subsidiary Huiyuan Beijing, personally liable for more than US $114 million.
The decision means that bondholders increasingly have monetization options against recalcitrant debtors, including the ability to collect at par from well-heeled decision-makers when the primary obligors may be effectively insolvent, judgment-proof, or even already in bankruptcy proceedings.
The ability of bondholders to sue bond issuers to enforce their rights without going through the cumbersome process of instructing a bond trustee has long been in question.
However, an important ruling in New York court, obtained by Kobre & Kim on behalf of a group of international bondholders, took the first step in establishing standing.
This decision potentially removes key barriers to enforcement in key offshore jurisdictions such as Cayman and the British Virgin Islands (BVI), as well as Hong Kong.
Many Brazilian and Latin American companies that borrow in US dollars are facing a growing mountain of debt.
As international creditors eye a shrinking pool of capital available for repayment, US dollar noteholders may be left at the back of the line relative to onshore creditors.
However, there are a number of options at USD noteholders' disposal that could improve their position and increases their chances of recovery.
The ability of bondholders to sue bond issuers to enforce their rights without going through the cumbersome process of instructing a bond trustee has long been in question.
However, an important ruling in New York court, obtained by Kobre & Kim on behalf of a group of international bondholders, took the first step in establishing standing.
With New York law governing a vast amount of emerging market company debt, this could allow global bondholders to dramatically speed up creditor response times.
