Insights

• 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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• Delaware’s strong asset protection laws have long made the U.S. state a destination of choice for individuals and entities worldwide looking to set up a trust.
• International creditors looking to recover assets may feel that pursuing a debtor in Delaware is insurmountable.
• However, it is indeed possible to crack Delaware’s notoriously tough trusts by adopting an aggressive multijurisdictional strategy.

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• 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.

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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.
• Debtors frequently deploy tactics such as fraudulent conveyance to transfer their assets out of reach.
• A recent precedent-setting decision in Dubai’s High Court, secured by Kobre & Kim and local co-counsel, shows another avenue for global creditors to battle recalcitrant debtors and increase their chances of a swift and significant recovery on their cross-border claims.

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• Recent challenging economic conditions in China are putting many PRC companies in distress.
• This puts offshore joint venture partners and private credit lenders at risk, potentially having to attempt a difficult recovery by taking over PRC projects, companies or assets.
• A new Chinese company law may give investors an upper hand by strengthening their information rights, which when combined with a multijurisdictional strategy allow a more effective takeover.

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