Claim Monetization & Dilution

• Delaware’s Domestic Asset Protection Trusts (DAPTs) have earned the state a reputation as a premier jurisdiction for shielding assets from creditors.
• These trusts attract individuals and entities around the world seeking strong legal protections.
• While international creditors may view asset recovery efforts in Delaware as daunting, it is possible to overcome these protections with a strategic, multijurisdictional approach.

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• As private debt continues to grow rapidly as a global asset class, investors and asset managers must remain vigilant to the increasing risks that accompany this expansion.
• With deal complexity on the rise, these risks are particularly acute in cross-border, high-value credit arrangements.
• A coordinated multi-jurisdictional strategy enables creditors to secure more substantial leverage in pursuit of favorable recoveries in response to defaults. 

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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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• A new Memorandum of Understanding (MoU) between the Dubai Courts and the Abu Dhabi Global Market (ADGM) Courts marks a significant step forward for creditors seeking to enforce claims in the UAE.
• By establishing mutual recognition of judgments and awards, the MoU brings greater clarity to a legal landscape long seen as complex and uncertain.
• In light of this progress, creditors operating in the UAE should consider proactive strategies to enhance their recovery prospects across both offshore and onshore systems.

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• Kobre & Kim has effectively supported judgment debtors navigating the financial, legal, and strategic challenges associated with adverse judgments, arbitration awards, and defaulted bonds and loans.
• By mitigating enforcement risks while minimizing the need for significant financial outlays, the firm reduced the value of claims by more than US $10 billion.
• Withstanding a proactive creditor requires a coordinated, multi-jurisdictional approach leveraging an aggressive set of cross-border tools, as our team described below.

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