Cross border restructuring & insolvency 2012-2022: cases and developments

Preface III NextGen – The First Ten Years 1
Hon. Elizabeth S. Stong

Chapter 1 The nortel saga-a tale of two cities 5
Hon. Frank J.C. Newbould, Q.C.

Chapter 2 Agrokor-case 15
Karien van Boekel, Christiaan Zijderveld & Marlene Ruf
2.1 Synopsis 15
2.2 Background 15
2.3 Pre-restructuring corporate structure 17
2.4 Pre-restructuring capital structure 18
2.5 Restructuring triggers 19
2.6 Restructuring proposal 20
2.7 Restructuring negotiation process 22
2.8 Restructuring implementation steps 24
2.9 Post-restructuring capital structure 25
2.10 Relevance of this restructuring 26

Chapter 3 Abengoa, S.A. (Spain) 27
Jose Carles & Montse Mas
3.1 Synopsis 27
3.2 Background and restructuring triggers in 2015 29
3.3 Pre-restructuring debt structure 30
3.4 Restructuring proceeding in Spain: the homologación of a refinancing agreement 30
3.4.1 Overview of the hybrid pre-insolvency and formal insolvency proceedings in Spain 30
3.4.2 Abengoa’s pre-insolvency fi ling and negotiations during the pre-insolvency term 33
3.4.3 Abengoa’s requests for homologación of refinancing agreements in 2016 35
3.4.4 Bondholders’ challenge to the homologación on the grounds of “disproportionate sacrifice” 37
3.5 Post-restructuring debt structure 39
3.6 Post-restructuring corporate structure 41
3.7 Commercial creditors and the forced insolvency proceedings of one of Abengoa’s subsidiaries 42
3.8 Further proceedings outside Spain: US, UK and Mexico 44
3.9 Abengoa’s second restructuring in 2019 45
3.10 Abengoa’s 2020 insolvency proceedings (concurso de acreedores) 47
3.11 Conclusion 48

Chapter 4 Noble Group Limited 51
Neil McDonald, Hannah Crawford, Patrick Mackenzie & Brandon Gale
4.1 Introduction 51
4.2 Noble Group’s Operations 51
4.3 Pre-restructuring Corporate Structure 52
4.4 Pre-2018 restructuring Funded Debt 53
4.5 Noble Group’s Other Liabilities 54
4.6 Circumstances Leading to the 2018 Restructuring 55
4.7 Composition of the Ad Hoc Committee and Dynamic 56
4.8 2018 Restructuring Negotiation Process 56
4.9 Implementation of 2018 Restructuring 58
4.10 Closing Structure following 2018 Restructuring 60
4.11 Noble Trading Group Restructuring - 2021/2022 61
4.12 Conclusion 64

Chapter 5 Stoneway capital restructuring and jurisdictional issues in U.S. and Canadian Bankruptcy Law 65
Luke A. Barefoot, Jack Massey, Marc Wasserman & Kathryn Esaw
5.1 Disclaimer 65
5.2 Key Take-Aways 65
5.3 Stoneway Capital – Background 66
5.4 Pre-Restructuring Corporate Structure 67
5.5 Pre-Restructuring Capital Structure 68
5.6 Restructuring Triggers 70
5.7 Key Events in the Restructuring Process and Restructuring Proposal 71
5.8 Restructuring Implementation Steps 79
5.9 Post-Restructuring Capital Structure 79
5.10 Post-Restructuring Corporate Structure 80
5.11 Comments on Implications of This Restructuring 80

Chapter 6 Vitro’s case 83
Luis Manuel Méjan, Iván J. Romo & Jay Westbrook
6.1 Synopsis 83
6.2 Background & Pre-restructuring 85
6.3 Restructuring 86
6.4 Cross border problems 88
6.5 Approved plan & Take outs 90

Chapter 7A Virgin Atlantic 93
Charlotte Hall, Mark Pugh & Jon Webb
7A.1 Introduction 93
7A.2 CIGA and the legal landscape 94
7A.3 The need for a restructuring 97
7A.4 The Virgin Atlantic restructuring 98
7A.5 Lessons learned 100
7A.6 Conclusion 107

Chapter 7B Virgin Australia’s fi ght for survival 109
Peter Bowden, Megan Lowe & Karen Fanning
7B.1 The Virgin Australia Group 109
7B.2 Background 109
7B.3 Restructuring under the Act 110
7B.3.1 The voluntary administration process and its purpose 110
7B.3.2 Deeds of Company Arrangement 114
7B.3.3 Alternatives to Voluntary Administration currently available in Australia 115
7B.4 The Virgin Australia Administration 120
7B.4.1 Overview 120
7B.4.2 The voluntary administration 121
7B.4.3 The sale to Bain Capital 122
7B.5 Key legal issues 124
7B.5.1 Leasing issues 124
7B.5.2 Bondholder challenges 126
7B.5.3 Covid-19 Voluntary Administrations 127
7B.6 Conclusions 128

Chapter 8 Latam Airlines Group S.A. 133
Lisa M. Schweitzer & Luke A. Barefoot
8.1 Introduction 133
8.2 Background on LATAM 134
8.3 Reason for Filing 135
8.4 Coordination of the Chapter 11 Cases With Other Jurisdictions in Which LATAM Operates 139
8.5 Notable Achievements in the Chapter 11 Cases 141
8.6 The Reorganization Plan & Implementation 149

Chapter 9 Aero inventory 159
Andrew Chan, Rebecca Hennis, Alexander Lawrence Yeo & Jo Tay
9.1 Introduction 159
9.2 Background 159
9.3 Events leading up to the appointment of administrators 160
9.4 The “Core Sales” uplift plan 164
9.5 Reasons for recognition being sought in Singapore 164
9.6 Signifi cance of the Singapore Order 165
9.7 Obstacles in the way of obtaining the Singaporean Order 166
9.8 The Singapore Order 169
9.9 Continuing possible implications of the Singapore Order 170
9.10 Summary of events since the date of the recognition order in Singapore 171

Chapter 10 The Constellation Group’s Reorganization: Relevant Developments in the context of Judicial
Reorganization Proceedings and US Chapter 15 cases 175
Thiago Braga Junqueira, David Schiff, Matthew Masaro & Octavio Pedroso
10.1 Overview on the Constellation Group and the Events Leading Up to its Insolvency Filings 175
10.2 Insolvency Proceedings in Brazil 177
10.3 Chapter 15 of the U.S. Bankruptcy Code 178
10.4 Jurisdiction of Brazilian Courts to Rule on Judicial Reorganization Proceedings Filed by Foreign Corporate Debtors 178
10.5 Jurisdiction of Brazilian Courts According to the Constellation Case 180
10.6 Rights and Remedies of Noteholders to Discuss and Vote on the Plan of Reorganization 184
10.7 The Brazilian Experience With Noteholders and the Constellation Case 186
10.8 Center of Main Interest (COMI) and Foreign Main or Nonmain Proceeding Inquiries 188
10.9 Enforcing a Foreign Plan in the United States 192

Chapter 11 Steinhoff International Holdings N.V. 197
Paul Kuipers, Marc Noldus & Niels Vermunt
11.1 Synopsis 197
11.2 Background 198
11.3 Pre-restructuring structure 199
11.4 Restructuring triggers 199
11.5 Restructuring proposal 200
11.5.1 Lock-up and stakeholder landscape 200
11.5.2 Implementation of fi nancial restructuring 201
11.5.3 Drivers for a “global solution” and publication of settlement term sheet 202
11.6 Restructuring negotiation process 203
11.6.1 Negotiating the Steinhoff Group Settlement 203
11.6.2 Consent for implementation of the global settlement 204
11.7 Restructuring implementation steps 204
11.7.1 Implementation options 204
11.7.2 The SoP plan 206
11.7.3 Approval and sanctioning of proposals 209
11.7.3.1 General voting mechanism in SoP proceedings 209
11.7.3.2 The committee of representation in large SoP proceedings 211
11.7.3.3 The sanction hearing 213

Chapter 12 Europe: key developments and emerging themes 219
Michael Veder & Ignacio Tirado
12.1 Introduction 219
12.2 Cross-border insolvency proceedings 221
12.3 Preventive restructuring frameworks 226
12.4 Outlook: harmonization of substantive and procedural insolvency law 233

Chapter 13 U.S. restructuring in the last decade: key developments and emerging themes 237
Angela Libby
13.1 Part I: Overview of select key industries: Energy, Retail and Airlines 237
13.1.1 Energy 237
13.1.2 Retail 240
13.1.3 Airlines 242
13.2 Part II: Overview of Select Key Players: Rise of Ad Hoc Committees, Equity Committees 243
13.2.1 Ad Hoc Creditors’ Committees 244
13.2.2 Offi cial Committees of Equity Holders 245
13.3 Part III: Overview of Select Key Trends 246
13.3.1 Restructuring Support Agreements 247
13.3.2 Prepackaged Bankruptcies 248
13.3.3 Exit Financing Trends 250
13.3.4 Roll Ups 251
13.3.5 DIP with Equity Features 253
13.3.6 Backstopped rights offerings 255
13.3.7 Unimpairment Plans / Gifting to Junior Classes 258
13.3.8 Unimpairment of general unsecured creditors 260
13.3.9 Gifting to junior stakeholders 261

Chapter 14 UK restructuring in the last decade: key developments and emerging themes 263
Sarah Paterson
14.1 Introduction 263
14.2 Stabilization and creation of liquidity 265
14.3 Encouraging the Consensual Deal 268
14.4 Disclosure 271
14.5 Costs 275
14.6 Conclusion 278

Chapter 15 Latin American insolvency regimes 281
Fernando De Ovando, Gilberto Gornati, Fernando Hernández,
Luis Manuel Mejan, Roland Pettersson Stolk & Diana Talero
15.1 Argentina 282
15.1.1 General overview 282
15.1.2 The Insolvency process 283
15.1.3 Cross-border cooperation 286
15.1.4 Highlights and challenges of the regime 288
15.2 Brazil 288
15.2.1 General overview 288
15.2.2 The insolvency process 289
15.2.3 Cross-border cooperation 291
15.2.4 Highlights and challenges of the regime 292
15.3 Colombia 292
15.3.1 General overview 292
15.3.2 The Insolvency process 294
15.3.3 Judicial validation of out-of-court reorganization agreement: 296
15.3.4 Cross-border cooperation 297
15.3.5 Highlights and challenges of the regime 298
15.4 Mexico 299
15.4.1 General overview 299
15.4.2 The Insolvency process 300
15.4.3 Cross-border cooperation 302
15.4.4 Highlights and challenges of the regime 302
15.5 Venezuela 303
15.5.1 General overview 303
15.5.2 The Insolvency process 304
15.5.3 Cross-border cooperation 305
15.5.4 Highlights and challenges of the regime 306

Chapter 16 Asian restructuring in the last decade: key developments and emerging themes 307
Shuai Guo, Ming Dong, Eloise Matsui, Yuri Sugano & Harold Foo
16.1 Introduction 307
16.2 China: Peking University Founder Group Company Limited 309
16.2.1 General Overview of the PRC Bankruptcy Law 309
16.2.2 Background of the Founder case 311
16.2.3 Phases of the restructuring process 312
16.2.4 Highlights of the restructuring process 314
16.2.4.1 Landmark determination on the enforceability of keepwell deeds under the insolvency context 314
16.2.4.2 Competitive, market-oriented appointment of strategic investors 316
16.2.4.3 Effective use of sale-type restructuring 316
16.2.4.4 Flexible, high-proportioned and comprehensive plan for debt settlement 317
16.2.5 Comments on importance of the regime 318
16.3 Hong Kong: Re Winsway Enterprises Holdings Ltd (“Winsway”) 318
16.3.1 General overview of scheme of arrangement under the laws of Hong Kong 319
16.3.2 Background 320
16.3.3 The Winsway restructuring 321
16.3.4 Why was this scheme and the decision of Harris J important? 321
16.3.4.1 Consent fees 322
16.3.4.2 Foreign law debt 322
16.3.4.3 Chapter 15 recognition 324
16.3.5 Other concluding remarks – avoiding provisional liquidation 324
16.4 Japan: Japan Airlines 325
16.4.1 Background 326
16.4.2 General Overview of the Insolvency Proceedings in Japan 327
16.4.3 Phases of the Restructuring Process 328
16.4.4 Highlights of the Restructuring Process 329
16.4.4.1 Ensuring Liquidity: Rescue Financing 329
16.4.4.2 For JAL’s Stable and Safe Operations 329
16.4.5 Labour Cost Cuts 330
16.4.6 Cross-border Aspects 331
16.4.7 Comments on Importance of the Regime 331
16.6 Singapore: Development of Cross-border Insolvency 331
16.6.1 Overview of Singapore’s cross-border regime 332
16.6.2 Common law beginnings 333
16.6.3 Pre-Model Law 333
16.6.3.1 Recognition of Foreign Liquidators from COMI Jurisdiction 334
16.6.3.2 Recognition and Assistance to Foreign Rehabilitation Proceedings 335
16.6.3.3 Recognition of Foreign Voluntary Winding Up 335
16.6.3.4 The Gibbs Principle 336
16.6.4 The Model Law 336
16.6.5 Conclusion 338

Closing remarks 339
Iván J. Romo, Lynette Janssen, Sebastiaan van den Berg

Biography of authors 341