Insights

• Kobre & Kim secured landmark judgments in Belize and Trinidad & Tobago recognizing a multi-billion-dollar International Center for Settlement of Investment Disputes (ICSID) award against Venezuela, believed to be the largest arbitration award enforcement in each jurisdiction’s history.
• These wins open new pathways for ICSID award recognition in the Caribbean and underscore the firm’s cross-border enforcement capabilities.

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• 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. 

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• Creditors pursuing claims against sovereign states may find new opportunities.
• A recent U.S. court decision opens the door to recoveries once thought out of reach, reinforcing the value of well-planned, globally coordinated strategies to maximize returns and speed up enforcement.

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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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• 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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• 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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• 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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• When a debt issuer falls into distress, Israeli investors need advice informed by deep knowledge of international insolvency and enforcement regimes, coupled with capabilities to aggressively protect and pursue their rights across the relevant jurisdictions. 
• Israel’s recent adoption of the Model Law on Cross-Border insolvency puts creditors on a firmer footing to leverage global insolvency tools by coordinating foreign and Israeli proceedings.
• A multi-jurisdictional approach allows international investors and creditors to gain leverage toward a favorable recovery.

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• As creditors find ways to crack Delaware’s trusts, debtors should remain mindful of the debtor-friendly features of Delaware trust law.
• Delaware allows individuals to shield assets through a domestic asset protection trust (DAPT), where the trust's settlor is also the trust’s beneficiary. Using DAPTs, a settlor can shield his or her assets from creditors while retaining the right to benefit from those assets.
• Although DAPTs are inherently robust, settlors should take every precaution to maximize their protective measures.

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• The December 2024 Chapter 15 filing of Brazilian cement group Intercement is the latest in a series of insolvency cases involving Brazilian companies with cross-border implications.
• Navigating the multijurisdictional aspects of distressed situations could prove both demanding and rewarding for international creditors and investors.
• Since a recent bankruptcy law was enacted, several tools have become available in Brazil for international creditors looking to improve their leverage.

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• Creditors and investors in sovereign debt are riding a wave of new opportunities driving returns with global public debt projected to exceed US$100 trillion by the end of 2024, making it possible to reap higher returns on claims against sovereigns previously thought too difficult to enforce.
• A well-thought-out strategy can increase returns and accelerate enforcement timelines.

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• International investors and other claimants have long struggled to enforce cross-border claims in the United Arab Emirates (UAE) and the wider Middle East.
• Recent UAE courts decisions informing how they approach enforcement against debtors, including sovereigns, have signalled that the tides may be turning in creditors’ favor.
• As China looks to consolidate its new investment model for China-Middle East collaboration, this issue may particularly impact PRC-based investors with an eye on the region.

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• Economic ties between Latin American and Chinese businesses continue to deepen. There are unique risks involved if a dispute arises with the Chinese company.
• Even if an organization or investor succeeds in an arbitration or litigation against a Chinese company, the Chinese legal system’s intricacies may create barriers to getting the company to pay.
• Latin American companies and investors should consider cross-border strategies to increase their leverage.

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• 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.

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