Claim Monetization & Dilution

• 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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• 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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• Emerging commercial opportunities in South Korea are opening doors for investors worldwide.
• Foreign investors and trade partners continue to face significant challenges when navigating disputes with chaebols, given their dominant position and the complexities of the Korean legal landscape.
• Utilizing antitrust authorities may be one component in building an aggressive and effective strategy.

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