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.
The United Kingdom is pushing its overseas territories, including offshore centers such as the British Virgin Islands and Cayman Islands, to publicly identify ultimate beneficial owners of corporate structures.
This loss of privacy for ultra-high-net-worth individuals with legitimate needs could see their reputations and interests threatened by unwarranted scrutiny.
Proper preparation can help individuals and their advisors to not only limit potential damage, but also allow them to react expediently if a crisis arises.
