VO L . 3 7 | N O .

0 6 INTERNATIONAL

Investigating Insolvency
Trends in India

Serbia: Bankruptcy
& Reorganization in a
Developing Nation

A Time of Transition in the

U.K. Restructuring Space

JULY/AUG 2024

Reforming Insolvency Frameworks

TO FACILITATE
ECONOMIC RENEWAL
 This is your deal.
Let’s talk about exit strategies.

• A data analysis and appraisal partner pinpointing and monitoring the underlying value of your assets.
• A liquidation partner maximizing your underperforming assets.
• A financial partner sharing market intelligence and capital.

ASSET INTELLIGENT

New York I Los Angeles I Boston I Chicago I Houston I Toronto I 888-55-TIGER I TIGERGROUP.COM

JCR September 2024.indd 1 6/26/24 10:56 AM

 VO L . 3 7 | N O . 0 6

JULY/AUG 2024
CONTENTS
COLUMNS
3 Guest Editor

4 My Take

5 Leader Board

FEATURES
6 R
 eforming Insolvency Frameworks
to Facilitate Economic Renewal

10 Investigating Insolvency Trends in India

14 S
 erbia: Bankruptcy & Reorganization
in a Developing Nation

20 A
 Time of Transition in the
U.K. Restructuring Space

24 Credit Bidding in Australia

30 
A Promising Refinement to
Restructuring & Insolvency in the UAE

34 
The Rise of the CRO & Rescue
Financing in Asia

HAPPENINGS

6
36 Newcomers

38 Connections: North America

40 Connections: International

Reforming Insolvency
Frameworks to Facilitate
Economic Renewal
 TURNAROUND MANAGEMENT ASSOCIATION
JOURNAL STAFF 2024 TMA EXECUTIVE BOARD* TMA CHAPTER PRESIDENTS*
Publisher
Scott Y. Stuart, Esq.
President BOARD OF TRUSTEES Alabama Minnesota
Allen Wilen, CTP Hanna Lahr Heather Rachel
Steven F. Agran
Editor-in-Chief President-Elect Arizona New Jersey
Nicholas Leider Angela M. Allen Kevin Pearce Alan J. Brody
Rachael L. Smiley
Gene K. Arenson Atlanta New York – Long Island
Graphic Designer Chair
Karen White Jane W. Mitnick Mica Arlette Sean Harding Hernan Serrano

Advertising Sales Corporate Secretary John D. Baumgartner Australia New York – Upstate
Josef W. Mintz Zina Edwards Scott J. Bogucki
Scott Zeller, Director, Sponsorship & Business Development Matt Becker
p: +1 312 578 2047 e: [email protected] VP – Conferences Austria New York City
Cameron Belyea
Jennifer M. Meyerowitz Andreas Pleninger Kathleen Aiello
Image Sponsor Pauline P. Chow
iStockphoto.com Vice President – DE&I Brazil Nigeria
Janine Figueiredo Daniel A. DeMarco Luiz Fabiano Silveira Dele Bello-Williams
About the Journal Stephen Emerson Saragiotto
VP – Communications Northeast
The Journal reaches more than 9,000 industry-related pro­­f­essionals. California – Northern Ryan Mulcunry
The Journal of Corporate Renewal (ISSN 1094-0472) is published by the Anne Pichler Jennifer K. Faubion
Matthew Jon Olson
Turnaround Management Association, a not-for-profit organization VP – Finance Mark E. Felger Northern Ohio
and the premier professional community dedicated to c­ orporate Sally C. Barton California – Southern Rick Szekelyi
renewal and turnaround management. Articles in the Journal express Shanté George Sasha M. Gurvitz
the opinions of their authors and do not ­necessarily reflect the views VP – Certification Northwest
Stephen B. Gerald Canada – Montréal Huey H. Lee
of the directors, ­officers, or members of TMA. Articles in the Journal Frank P. Turner
are intended as an information source and should not be c­ onstrued Michael S. Goodman Pierre Marchand
VP – Chapter Relations So. Ohio/No. Kentucky
as specific advice. Readers should not act on the information in the Canada – Toronto Joe Lehnert
Journal without first c­ onsulting a qualified professional advisor. Robert Patrick Frank Grell
Anamika Gadia
VP – Education Neil Gupta Philadelphia/
TMA STAFF Brian F. Gleason, CTP Carolinas Wilmington
Peter S. Hartheimer Robert J. Ronald S. Gellert
Chief Executive Officer VP – International Michael E. Jacoby Tramantano Jr.
Scott Y. Stuart, Esq. Pittsburgh
Relations
Allen G. Kadish Chesapeake Aimee Elizabeth Rice
Eva Ringelspacher
Assistant Controller Wanya du Preez
Jill Kirshenbaum Rocky Mountain
Eldron Burbridge VP – Membership
Chicago/Midwest Andrew Rieke
Frank Grimaldi Jay H. Krasoff Jack R. O’Connor
Coordinator, Member & Chapter Support Romania
Phyllis Collins Chair – CRRC Jeanine A. Krattiger Chile Nicoleta Mihai
Michael A. Rosow Ernesto Solis
Jeffrey C. Krause Serbia
Executive Assistant Chair – Chapter
Savanh Denton Jennifer E. Mercer Connecticut Ivana Matic
Presidents’ Council William McAndrew
Rachel J. Mauceri John A. Mueller Southeast Asia
Marketing & Communications Manager
Czech Republic Matt Becker
Mathew Elpern Vice Chair – Chapter Sari B. Placona
Petr Smutny
Presidents’ Council Southern Africa
Director of Membership Jonathan P. Reimche
Robert Saunders Detroit Tiaan Herbst
Elfi Gabriel Heidi J. Sorvino Katie Montague
Member at Large Spain
Director of Operations Lilies Lanway Marc Skapof Finland Fedra Valencia Garcia
Adam Gilgour Jennifer L. Stam Ane Ahnger
Member at Large Sweden
Senior Marketing Coordinator Elizabeth Aboulafia Bryce A. Suzuki Florida Nils Aberg
David Weinstein, CTP
Talayah Goodlow Member at Large Amy J. Swedberg Switzerland
France Roger Bischof
Senior Manager of Education Vlad Nastase Neema T. Varghese John Lloyd
Ashleigh Hill Chapter Member at Large Tennessee
Germany Blake Roth
Paul M. Lopez
Project Manager Oliver Kehren
Texas – Central
Ashlynn Hill Chapter Member at Large
India Angelo DeCaro Jr.
Stan Mastil
General Manager, TMA Europe Rocky Ravinder Gupta
Texas – Dallas/Ft.
Helen Jacobi Chapter Member at Large
Indiana Worth
Joseph Richman Rhett Rowe Vickie L. Driver
Senior Finance Director Ex Officio Member
Tom Jurczak Italy Texas – Houston
Scott Y. Stuart, Esq. Roger Olivieri Arsalan Muhammad
Chapter Support Specialist
Japan Turkey
Erin Kobat
Yoshinobu Konomi Önder Yilmaz
Editor-in-Chief, Journal of Corporate Renewal *E xecutive Board members and Chapter Presidents Louisiana United Kingdom
Nicholas Leider Joseph Briggett Joanne Rumley
are ex officio members of the Board of Trustees.
Senior Director, Marketing & Communications Mexico West Michigan
Jodi Talley Samuel Suchowiecky Jeremy Cosby

Director, Sponsorship & Business Development

Scott Zeller

2024 EDITORIAL ADVISORY BOARD

TURNAROUND MANAGEMENT ASSOCIATION Michael Brandess Seth Moldoff
Jenna Birkhold
300 South Wacker Drive, Suite 2400 Husch Blackwell LLP Umpqua Bank
Accordion
Chicago, Illinois 60606
p: +1 312 578 6900 turnaround.org Cameron Belyea Robert Katz, CTP Spencer Ware
Clayton Utz Eisner Advisory Group LLC AlixPartners

Lauren P. Berret Natalie Levine Ken Yager

EisnerAmper LLP Cassels Brock Newpoint Advisors
 GUEST EDITOR

International Restructuring
In This Moment
BY CAMERON BELYEA, JULY/AUGUST GUEST EDITOR

debt defaults arose because of matters Providing a southern European

beyond their control. Similarly, many perspective, Ivana Matic, with IM
early religious texts provide for debt Consulting Ltd and president of the
releases to the poor and unfortunate. TMA Serbia Chapter, attributes success
to Serbia's pre-pack reorganization
From around the 14th century, merchant- plan (PPRP). Ivana's article sets out
based debt defaults were dealt with the process for PPRP, examining its
somewhat differently, European merits and drawbacks and addressing
lawmakers adopting Islamic mudaraba key challenges in its execution.
ideas, limiting the liability of individuals
for defaulting debts of trading enterprises Next, Lindsay Hingston and Michael
to the value of their original investment. Atkinson, with Freshfields, discuss some
England, eventually, developed the of the more interesting restructuring
limited liability construct of a company and corporate rescue situations, trends,
to restrict personal liability of investors. and practices emerging in the U.K.
Cameron Belyea, a senior
partner with Clayton Utz, led Over the past decade or so, the trade-off Much like the U.K., Australia is seeing a
TMA Australia and now sits between fixing penalty on defaulting surge in restructuring, with insolvency
as a TMA Global trustee and a debtors of the “ill-luck” kind and the appointments increasing by 47.98%
member of TMA’s International encouragement of entrepreneurial zeal to compared to the same period in 2023.
Committee. He leads contested grow economic wealth has seen a lot of Mark Gillgren, James Hewer, and
debt and capital markets debate, planning, and law development Adriano Poncini, of Clifford Chance
engagements across formal put into framing laws to facilitate Australia, discuss credit bidding as a
court and arbitral processes business renewal, restructuring support, restructuring and insolvency tool.
and informal mediation, ad and turnaround planning and results.
hoc, and advisory roles. Next, Nathan Stubing and Kit Weng, with
As global laws develop and we look to FTI Dubai, discuss the implementation of
adopt the good in other systems and insolvency legislation in the United Arab

R
bring some comity between approaches, Emirates that took effect May 1, 2024.
emedies for dealing with it is appropriate that the TMA's Journal
defaulting debtors have come a of Corporate Renewal asks leading Lastly, we have Singapore, where Matt
long way—physical bondage in practitioners around the world to speak Becker, president of TMA Southeast
ancient Babylon, sale into slavery in about developments in local systems. Asia (SEA) and leader at Deloitte SEA,
ancient Rome, and wage servitude of and Vera Lim, director of Deloitte
both debtors and families across many To begin, Christophe André and Singapore write about the substantial
Eurasian and Middle Eastern legal Lilas Demmou, of the OECD, role of the Chief Restructuring
systems were traditional punishments based in Paris, provide a global Officer (CRO) and rescue financing
of defaulting debtors. Abhorrent debtor perspective in a fascinating feature in Asia's dynamic business market.
prisons, taking away freedoms, were not on reforming insolvency frameworks
to facilitate economic renewal. Uniformity of thinking, sharing of
abolished across Europe and the United
emerging ideas, and working together
States until the mid and late 1800s.
Although India is vast, its economic makes TMA such a strong thinking
wealth is still driven by micro, small, and organization, its members acting
Punishments were meted out whether
medium enterprises. Rocky Ravinder as the architects and participants in
the failure to repay arose because Gupta, president of TMA India, provides further turnaround outcomes. J
of misconduct or hard luck. There insight into India's restructuring July/Aug
were some exceptions, the Code of landscape by outlining the trends and Amna Parvez, a lawyer with Clayton 2024
Hammurabi (1780 BCE) permitting challenges that have emerged since Utz, provided significant assistance in Journal of
debtors to escape the harsher forms the implementation of the Insolvency the guest editing duties for this issue Corporate
Renewal
of punishment if able to establish and Bankruptcy Code 2016. of the Journal of Corporate Renewal.
3
 MY TAKE

The Appreciating Value

of Membership
While the TMA brand is strong and for others to learn from. An example
more non-members find value in of that is the recent formation of a
organizational opportunities, those committee headed by former TMA
who become and remain members help Global Chair Holly Etlin, CTP, along
our organization shine. Membership with TMA member Bruce Smith, in
matters, and it is the essence of TMA, bringing together those from the TMA
serving as the gateway to professional community who will support learning
development and important tracts to aid our members in best
leadership opportunities that helps networking and business development
our standout organization thrive. practices, as we honor the memory
of TMA luminary Sheila Smith, CTP.
One need only look to the example of
our global leaders to understand the From friendships formed to business
impact being a member of TMA has on opportunities shared, membership is
the fraternal community built on trusted not just about occasionally touching
relationships that make a difference and sampling the power of TMA. It
to TMA and the complex matters our is about member engagement and
members manage. There are so many developing your professional profile
example of what membership in TMA to become that one connection that
Membership matters because it means and how our members thrive. lets you stand out through TMA.

also means support of common TMA Global President Allen Wilen, TMA members have built personal
CTP, in exemplifying the power and professional profiles that support
causes that enhance personal and of membership, shows it best, not opportunities only available through
only in the many leadership roles our organization. Members step up
professional growth, where TMA he has held in TMA, but in how he and assure member value is created
rewards the loyalty and commitment and elevated. This is what members
becomes a vehicle of opportunity of other TMA members, where he do, as they mentor others about both
for others to learn from. looks to TMA members first to afford what TMA has to offer and the power
them business opportunities. of TMA membership as part of the
story of our professional journeys.
Likewise, TMA Global President-Elect

I
Rachael Smiley has shown the power So as we experience and enjoy all
n this summer of TMA activity, I
of connectivity, not only in her rise to the great opportunities TMA has to
want to take time to focus on two
leadership that started not so long ago offer, prioritize membership and
critically important aspects of
when she became chapter president of make it matter. Make it matter in
what it means to be part of TMA—
TMA Dallas-Ft. Worth, but in how she, how you engage for yourself and
membership and leadership.
as a member and leader, has parlayed with others to share the power of
the power of membership into many membership, allowing us to continue
Membership matters, and time and
business opportunities, most recently to build upon the strong and
again we are reminded of that in so
in an international representation empowering house that is TMA. J
much of how all of us engage with
from a connection made at the 2024
opportunities all throughout TMA.
Distressed Investing Conference.
The value membership is found from
July/Aug building one’s personal brand to
2024 Membership matters because it
creating trusted relationships that last a
also means support of common Scott Y. Stuart, Esq.
Journal of professional lifetime. It all starts with the
causes that enhance personal and TMA Global CEO
Corporate one connection that connects you with
Renewal professional growth, where TMA [email protected]
what it means to be a member of TMA.
becomes a vehicle of opportunity @TMA_CEO
4
 LEADER BOARD

Passing the Torch

BY JOSEPH RICHMAN, FTI CONSULTING, TMA GLOBAL NEXTGEN LEADERSHIP
COMMITTEE CO-CHAIR

up-and-coming restructuring up with me. The people I met at those

practitioners from around the globe. first dine-arounds remain my closest
contacts in this business—and even
This year, I’ve had the honor of serving better, they have crossed over into
as co-chair, alongside Pat Bellot, of personal friendships. When I see those
the TMA Global NextGen Leadership people at the “big” conferences (DIC and
Committee and helping to plan this the Annual), we share reminiscences of
conference. In this role, I’ve been those early days and our experiences
reflecting quite a bit on a conference at those NextGen conferences. I even
that has meant so much to me over the have fond memories of the COVID-
course of my career. I still remember the year conference where all the sessions
first NGLC I attended in New York when were held remotely and Lauren
I had just joined the TMA New York Berret’s cat, Oliver, stole the show!
City Chapter board. I was blown away
walking into that opening reception and Over the years, I’ve been exposed to
seeing so many young professionals presentations from industry luminaries
who seemed so poised. It should come and have learned how to grow my
as no shock that some of those people network. To this day, I employ some
are now partners, practice leaders, and of the strategies I learned from one of
even firm leaders. In fact, it makes me the keynotes on coaching—and I got
feel old thinking about it. (I’m still a my first experience speaking on and
NextGener by age, for the record.) moderating panels at past NGLCs.

To TMA membership as a whole, But that is the inspiring reality of this

conference. It self-selects for a certain
For those of you joining me in
Toronto, please take every advantage
I personally want you to know that type of young professional and caters of this wonderful event. It is exciting
to our industry’s future leaders. The to see you join the generations of
the future is bright. We have so programming is specifically pitched NextGeners—from the folks who
to these folks—featuring panels on were aging out when I was a baby
many talented, driven individuals hot-button industry topics, soft skill analyst, to me, and now to you. For
development, and other general many of you, this event is the first
dedicated to improving themselves, networking opportunities. (Shoutout time in your career you’ve been asked
to travel from your office to network.
this industry, and this organization. to Reggie Sainvil, our icebreaker guru!)
Most of all, it’s just a really good time. Get out there, meet everybody,
I’ve helped plan other TMA conferences and get those CLE/CPE credits.
over the years, but none take as much
care in the extracurricular activities as And, to TMA membership as a whole,
the NGLC. Our unique dine-arounds, I know we spend a significant amount
where the planning committee of time thinking about succession
makes reservations at restaurants planning. I personally want you to
in the host cities and all attendees know that the future is bright. We have
join a reservation of their choice, so many talented, driven individuals

S
ummer is here and it is time for are best in class and help first-time dedicated to improving themselves,
another NextGen Leadership attendees instantly feel included. this industry, and this organization.
July/Aug
Conference. This year’s event, TMA is only as strong as its members, 2024
held July 25 in Toronto, promises This conference has meant so much and it will remain strong long into
to me. To this day, my strongest bonds the future through the continued Journal of
to be another great conference Corporate
featuring the best and brightest are with the NextGeners who came nurturing of these NextGeners. J Renewal

5
 Reforming Insolvency Frameworks
TO FACILITATE
ECONOMIC RENEWAL
BY CHRISTOPHE ANDRÉ,
A
gainst the background of a nearly timely way, and avoid excessively
two-decade decline in productivity penalizing business failure, which
SENIOR ECONOMIST & growth across Organisation would undermine entrepreneurial
LILAS DEMMOU, for Economic Co-operation & risk-taking. Many countries are
SENIOR ECONOMIST, Development (OECD) countries and planning further reforms, notably in
rising economic uncertainties, the the European Union, where a 2019
ORGANISATION FOR role of sound insolvency frameworks directive on preventive restructuring
ECONOMIC CO-OPERATION in business dynamism and economic frameworks gave a new impetus to
& DEVELOPMENT renewal has attracted the attention insolvency legislation enhancement.
of policymakers. In recent years,
governments have reformed insolvency To track these developments, in 2016,
July/Aug procedures to facilitate a swift and the OECD introduced an indicator
2024
efficient restructuring of viable firms summarizing the most relevant
Journal of encountering temporary financial features of insolvency frameworks for
Corporate distress, allow non-viable firms to resource reallocation and productivity
Renewal
exit the market in an orderly and growth, which was updated in 2022.1
6
 Figure 1. The OECD Insolvency Indicators

Aggregate Insolvency Indicator (Insol-13)

A. Treatment of Failed B. Prevention & Streamlining C. Restructuring Tools D. Other Factors

Entrepreneurs

1. Time to discharge 3. Early warning mechanisms 6. Creditor ability to initiate 11. Degree of court involvement
restructuring
The indicator, relying on assessments
from national experts, now includes 7. Availability and length 12. Distinction between honest
2. Exemptions 4. Pre-insolvency regimes
of stay on assets and fraudulent bankrupts
45 countries, including all OECD
and European Union members, as 5. Special insolvency 8. Possibility and priority 13. Rights of employees
well as India and South Africa. It procedures for SMEs of new financing
covers 13 key features, whose design
9. Possibility to cram down
can carry adverse consequences for on dissenting creditors
productivity growth and business
dynamism by delaying the initiation 10. Treatment of management
during restructuring
and increasing the length of insolvency
proceedings. Related indicators Note: A stay on assets is a measure that prevents actions by creditors, with certain exceptions, to collect debts from a debtor who has declared
are grouped into three key sub- insolvency, with the intention to keep the operations of the firm going. “Cram down” refers to the overriding of the votes of a minority of creditors July/Aug
who vote against the restructuring plan. 2024
components, plus a miscellaneous
item, as shown in Figure 1. Source: Adalet McGowan, Andrews and Millot (2017), “Insolvency regimes, zombie firms and capital reallocation,” OECD Economics Department Working Journal of
Papers, No. 1399, OECD Publishing, Paris. Corporate
Renewal
continued on page 8
7
 Figure 2. Insolvency Frameworks Vary Widely Across Countries
OECD insolvency indicator main sub-components, 2022

2.5

1.5

0.5

0
GBR FRA DNK GRC IRL LTU PRT USA FIN KOR SVK SVN CAN CYP HRV ITA CZE DEU IND COL EST ESP LVA JPN NZL CRI AUT BEL MEX NOR NLD CHL AUS CHE SWE HUN TUR POL ROU ISR MLT ZAF ISL LUX BGR

Treatment of Failed Entrepen eurs Prevention & Streamlining Restructuring Tools

continued from page 7 a second chance. Exemptions of insurmountable and reduce the
personal assets, such as the debtor’s stigma associated with bankruptcy
home, from the bankrupt estate alleviate filing, sending a positive signal to
First, the treatment of failed the burden on failed entrepreneurs. stakeholders, notably clients, thereby
entrepreneurs, especially the cost facilitating restructuring. For example,
they must bear, affects incentives for Second, efficient prevention and for comparable firms, the French
creating businesses. Taking a long streamlining procedures are essential to preventive restructuring procedure
time to discharge debt raises the costs avoid pushing viable firms experiencing introduced in 2006 significantly
and stigma of failure, reducing firm temporary financial distress into increases the probability of firms’
creation and risk-taking, while also lengthy and costly formal insolvency survival, compared to the restructuring
lowering the likelihood that non-viable proceedings. Restructuring success is procedure for insolvent companies.2
firms exit the market in a timely way. largely dependent on early intervention.
On the contrary, insolvency systems, Early warning mechanisms allow for Insolvency frameworks are generally
which allow a fresh start by exempting the detection of vulnerable companies inadequate for micro, small, and
future earnings from obligations to and sorting of viable from non-viable medium enterprises (MSMEs), as they
repay past debt due to bankruptcy, firms. Pre-insolvency regimes help are costly, complex, and primarily
give failed-but-honest entrepreneurs tackle problems before they become designed for corporations. Many

Pre-insolvency regimes help tackle problems before they become insurmountable

and reduce the stigma associated with bankruptcy filing, sending a positive
signal to stakeholders, notably clients, thereby facilitating restructuring.
July/Aug
2024

Journal of
Corporate
Renewal

8
countries, therefore, have introduced
simplified procedures for MSMEs.
Promising recent reforms in this area
include the 2019 U.S. Small Business Christophe André is a senior economist in the
Reorganization Act and Colombia’s structural policy analysis division of the economics
new insolvency framework for MSMEs, department of the Organisation for Economic Co-
which was introduced during the operation and Development. Since joining the OECD
COVID-19 pandemic. The former in 1997, he has worked on many topics, including
gives the court extensive power to macroeconomic analysis, modeling and forecasting,
“cram down” on dissenting creditors, fiscal and monetary policy, as well as health and
which encourages creditors and housing economics. André’s current research focuses
debtors to try to reach voluntary on productivity and its links with business dynamism,
agreements. The latter introduces population ageing, and artificial intelligence.
simplified restructuring and liquidation
procedures, which have considerably
reduced processing times. The use of
artificial intelligence is one innovative Lilas Demmou is a senior economist in the economics
approach to help filing companies with department of the Organisation for Economic Co-
providing the requested information operation and Development. Before joining the
and to alleviate the courts’ work burden. OECD, she was an economist at the French Ministry
of Economy and a post-doctoral scholar at the Paris
Third, different features of insolvency School of Economics, Erasmus University, and the
regimes can facilitate or hinder London School of Economics. Demmou’s main
corporate restructuring. The debtor- areas of interest and publication are innovation and
in-possession model, which allows productivity, international trade, and the labor market.
the debtor to stay in control of the
company during the implementation
of the restructuring plan, encourages
timely filing for restructuring. It has
become the preferred approach in most
OECD countries. Other features may
prevent timely filing and restructuring.
An indefinite stay on assets may
delay restructuring. A timely and
frameworks have generally improved focusing increasingly on facilitating
successful restructuring of weak firms
between 2016 and 2022, with notable the smooth restructuring of viable
that encounter temporary distress
progress in most of Central and Eastern firms and supporting entrepreneurship.
is also less likely when only debtors
Europe and Greece but also in Canada Two-thirds of the countries included
can initiate restructuring or minority
and parts of Northern Europe. Personal in the 2022 OECD insolvency survey
shareholders can block a restructuring
costs to failed entrepreneurs have fallen are implementing or planning further
plan (no possibility of cram down).
in 10 countries, while early warning reforms, especially to facilitate the
These frictions are exacerbated when
systems and pre-insolvency regimes restructuring of MSMEs, enhance
no priority is given to new financing
have been set up in 16 countries preventive debt restructuring
over unsecured creditors in the
and nine countries, respectively. Six mechanisms, and provide a fresh
event of restructuring, because this
countries have introduced simplified start to honest failed entrepreneurs.
reduces incentives for new capital
insolvency frameworks for MSMEs, Promoting corporate renewal is indeed
injections, which are typically required
while obstacles to restructuring have crucial to foster economic prosperity,
to facilitate internal reorganization.
been lowered in 13 countries. competitiveness, and resilience in times
when megatrends like population ageing
Finally, other factors facilitating
Despite these improvements, there and environmental and digital transitions
corporate renewal include possibilities
is still room for progress. Simplified are reshaping our economies. J
for less costly and more flexible out-
procedures for MSMEs are only available
of-court settlements, the ability to
in fewer than half of OECD countries,
dismiss employees upon the initiation
even though many governments are 1
 or more details, see André and Demmou
F
of insolvency proceedings and to (2022), “Enhancing insolvency frameworks
planning reforms in this area. Time
renegotiate collective dismissal to support economic renewal,” OECD
to debt discharge remains long in
agreements with employees, and Economics Department Working Papers,
many places. There is scope to further No. 1738, OECD Publishing, Paris, https://
differentiated treatment of honest
develop out-of-court procedures and doi.org/10.1787/8ef45b50-en.
and fraudulent entrepreneurs
explore prospects for a wide range 2
 omparable firms may go through different
C
in the insolvency process.
of workout methods, with tailored insolvency procedures due to spatial and
levels of court involvement. Also, temporal heterogeneity in commercial courts’
The OECD Insolvency indicator shows decisions. See Epaulard and Zapha (2022),
pre-insolvency procedures should
wide differences across countries in “Bankruptcy costs and the design of preventive
July/Aug
be introduced in the few OECD restructuring procedures,” Journal of Economic
insolvency frameworks, to which all 2024
countries where they are still absent. Behavior & Organization, 196, 229-250.
the three main sub-components of the
3
 he full set of indicators is available at
T Journal of
indicator outlined above contribute Corporate
Insolvency reform has gained https://www.oecd.org/economy/growth/
Renewal
(shown in Figure 2).3 Insolvency oecd-insolvency-indicator.htm.
momentum across OECD countries,
9
INVESTIGATING
INSOLVENCY
TRENDS
IN INDIA
 BY ROCKY RAVINDER GUPTA,
MANAGING PARTNER, UNITEDJURIS

I
ndia’s restructuring landscape specific modifications, prompting
has undergone substantial insolvency tribunals and legislative
transformation in recent bodies to innovate as needed in
years, primarily driven by 2016’s sectors like real estate and airlines.
Insolvency and Bankruptcy Code.
This comprehensive statute has As the legal and economic
revolutionized the country’s environment evolves, several
approach to corporate insolvency emerging trends are shaping the
and restructuring, offering a robust future of the restructuring space
framework for the resolution in India, including cross-border
of distressed assets. This single insolvency, group insolvency, pre-
statute incorporates the corporate packaged insolvency, creditor-
insolvency resolution process (CIRP) linked resolution plans, and separate
and liquidation for companies, insolvency processes for micro, small,
limited liability partnerships, and medium enterprises (MSMEs).
partnership firms, and individuals.
Real Estate Insolvency
Consolidation of all provisions within CIRP for a real estate company
one statute enhances legal clarity in diverges significantly from other
cases of insolvency or bankruptcy sectors due to the unique nature of the
and streamlines the process, reduces industry. Real estate companies often
cost, and promotes efficient recovery. manage multiple projects that are in
Notably, financial service providers various stages of development and
were initially left outside the scope located across different geographical
of “corporate persons” under the areas. This complexity necessitates
code. Presently, the code has been a more flexible and innovative
notified to be applicable only on approach to effectively resolve
legal entities, and the notification insolvency issues within the sector.
for extending the applicability
of the code for partnerships and The judiciary has recognized the
individuals is still awaited. need for a tailored application of
the Insolvency and Bankruptcy
Despite the code’s broad scope, Code 2016 (IBC) when dealing with
certain sectors have presented corporate debtors in the real estate
unique challenges, requiring bespoke sector. Traditional insolvency
adaptations. Companies within
these sectors necessitate sector- continued on page 12

July/Aug
2024

Journal of
Corporate
Renewal

11
 The restructuring space in India is
witnessing significant evolution, driven by
legislative reforms, judicial innovations,
and changing economic dynamics.

continued from page 11 with the IBC to provide an additional groups. Proposals include appointing
layer of protection for homebuyers. a single adjudicating authority to
processes, which may be suitable RERA mandates that funds collected oversee the insolvency proceedings
for companies in manufacturing or for a particular project should be of group entities, thereby ensuring
services, often fall short in addressing used for that project only, thereby consistency and coherence.
the intricacies involved in real estate preventing diversion of funds.
projects. As a result, courts have taken A group insolvency framework can
a more nuanced approach, focusing Cross-Border Insolvency streamline the resolution process,
on the interests of all stakeholders, The globalization of business operations reducing complexity and costs.
particularly the allottees (i.e., buyers necessitates an effective framework Coordinated proceedings can
of real estate) who are significantly for cross-border insolvency, where preserve the operational synergy
affected by the insolvency. assets and liabilities span multiple of group companies, enhancing
jurisdictions. The current Indian overall recovery for creditors.
To address the issues in the real estate framework lacks comprehensive
insolvencies, courts have emphasized provisions to address such scenarios Pre-Packaged Insolvency
safeguarding the interests of allottees, effectively. However, significant steps Pre-packaged insolvency, or pre-pack,
who often invest their life savings in real are being taken to incorporate cross- is a hybrid mechanism combining
estate projects. This protection is crucial border insolvency provisions into the the advantages of informal workouts
because allottees are typically not just IBC, modelled after the UNCITRAL and formal insolvency processes. It
financial creditors but also end-users Model Law on Cross-Border Insolvency.1 involves pre-negotiating a resolution
of the property. Instead of a blanket plan between the debtor and creditors
approach to resolving the insolvency of A structured cross-border insolvency before initiating formal insolvency
the entire company, courts have allowed framework will provide legal clarity proceedings. In April 2021, India
for project-wise resolutions. This means and predictability, aiding in the introduced pre-pack insolvency
different projects can be resolved orderly resolution of multinational for MSMEs under the IBC. This
independently, allowing for unfinished insolvencies. Ensuring that foreign development aims to provide a quicker,
projects to be completed and delivered creditors are treated equitably can less disruptive restructuring option
to homebuyers without being bogged boost their confidence in the Indian for small enterprises. However, it has
down by issues in other projects. insolvency system, potentially not been used as a restructuring tool
increasing foreign investment. the way it was meant to be. Through
Reverse CIRP: One of the most Facilitating cooperation between courts March 2024, nine cases were filed and
significant innovations is the concept of and insolvency practitioners across only five have been successful so far.2
reverse CIRP. Unlike the traditional CIRP jurisdictions can help maximize the
where the resolution process is initiated value of the debtor’s global assets. Creditor-Linked
against the corporate debtor, reverse Resolution Plans
CIRP allows the resolution process to Group Insolvency The Insolvency and Bankruptcy Board
focus on the specific real estate project, IBC currently deals with insolvency of India (IBBI), which is the insolvency
which ensures that funds collected for on an individual entity basis, which regulator in India, constituted an expert
a particular project are utilized solely poses challenges for conglomerates committee on creditor-led resolution
for that project’s completion. This or corporate groups with interlinked approach. In many cases, the delays
approach helps in mitigating the risk operations. The absence of a unified related to the CIRP have a negative
of project abandonment and protects approach can lead to fragmented effect on the insolvency processes.
allottees’ interests by ensuring the resolutions and value destruction. The delays lead to destruction in the
July/Aug
2024 completion and delivery of their homes. value of the assets of the business and
Efforts are underway to develop a reorganization becomes difficult. The
Journal of framework for group insolvency, committee specifically highlighted
Corporate
RERA Integration: The Real Estate
Renewal (Regulation and Development) Act allowing for the coordinated resolution the delay in the admission process,
2016 (RERA) has been integrated of financially distressed corporate which sometimes extends to over
12
a year. The committee also looked
at various other jurisdictions like
United Kingdom offering out of court
methods and processes for special
class of creditors and companies. Rocky Ravinder Gupta is president of the TMA
India Chapter. In addition to this role, he is a lawyer,
The committee submitted its final INSOL Fellow, accredited mediator, and an insolvency
report in May 2023, which included professional. Gupta has significant experience as a
a proposal to convert the existing restructuring and insolvency lawyer, advising banks,
fast-track process to a creditor-led creditors, and debtors on restructuring, insolvency,
and out-of-court initiated insolvency workouts, banking, and distressed debt transactions
resolution process.3 The CLRP is in a range of industries including real estate,
proposed to be made applicable in construction, health care, mining, and manufacturing.
respect of both MSME and non-MSME
corporate debtors, with such asset size
or income-based criteria as may be
prescribed by the central government.

Conclusion
The restructuring space in India is These developments aim to create and models for other emerging
witnessing significant evolution, a more efficient, transparent, and markets, further solidifying India’s
driven by legislative reforms, judicial equitable insolvency resolution position as a leader in insolvency
innovations, and changing economic system. By addressing the unique and restructuring reforms. J
dynamics. Cross-border insolvency challenges faced by various sectors and
provisions, group insolvency stakeholders, these trends promise to
frameworks, pre-pack mechanisms, enhance the effectiveness of the IBC, 1
https://ibbi.gov.in/uploads/resources/
creditor-linked resolution plans, and contributing to the overall stability Report_on_Cross%20Border_Insolvency.pdf.
real estate insolvency innovations are and growth of the Indian economy.
2
https://ibbi.gov.in/uploads/publication/21
aa7620a9e809f7a20b432eec89888b.pdf.
key trends that are shaping the future As these practices continue to mature,
of corporate restructuring in India. they will provide valuable insights
3
https://ibbi.gov.in/uploads/resources/
ede9252b24c28166ea95602ca3c214b1.pdf.

Fueling Turnaround, Acquisition,

and Expansion Solutions
We help companies overcome financial obstacles through innovative Asset-Based
Lending solutions, focusing on small- and mid-market companies in transition with credit
requirements from $2,000,000 to $18,000,000.

Call Us Today To Learn More

Aaron Brand – San Diego – 949-503-0364 Michael Doyle – San Antonio – 210-850-3224
Mike Colloton – Milwaukee – 262-792-7180 Luke Joyner – Charlotte – 980-729-5792

Pete Lowney – Madison – 608 -232 - 5987 firstbusiness.bank/abl

President - Asset-Based Lending
July/Aug
2024

First Business Bank offers Asset-Based Lending solutions through its wholly owned subsidiary, First Business Specialty Finance, LLC. Member FDIC Journal of
Corporate
Renewal

13
 SERBIA:

BANKRUPTCY &
REORGANIZATION
IN A
DEVELOPING NATION

July/Aug
2024

Journal of
Corporate
Renewal

14
 BY IVANA MATIC, OWNER, IM CONSULTING BELGRADE

T
he Republic of Serbia had professionals—made it possible for
adopted legal regulations on Serbia to be ranked a relatively strong
companies with EU legislation 41st in the field of resolving business
in its previous reform in 2004. All insolvency in the World Bank’s 2020
EU directives regarding issues of report, even though it is a developing
business activity already adopted country (see Fig. 1). At the same time,
by the EU Council were included Serbia’s high rank should be seen
in Serbian company law. By relative to other countries in the
improving the legal system around region of Southeast Europe that are
corporate reorganization, the already in the European Union. Many
country is taking steps to improve of these countries have better financial
the landscape for businesses. indicators and more stable markets.

The Serbian legislation in the field of The special specificity of Serbian

bankruptcy, which also includes the legislation in the field of bankruptcy
reorganization procedures regulated and restructuring is represented by
in Serbia by the Bankruptcy Law, pre-pack reorganization. Pre-packs,
was rated excellent by the World which were introduced in Serbian
Bank in its 2020 report, giving Serbia law through a 2009 bankruptcy
a rating of 96.9 in the strength of law, are also regulated by relevant
insolvency framework index. bylaws. The primary objective of
pre-pack reorganization proceedings
A good legislative framework—together aligns with that of a regular
with experts, dealing with bankruptcy
and reorganizations, both in courts and
state bodies, as well as independent continued on page 16

Figure 1: 2020 World Bank Insolvency Rankings of Serbia & Nearby Countries

0 100

67.O: Serbia (Overall Rank: 41)

57.8: Bulgaria (Rank: 61)
56.5: Croatia (Rank: 63)
55.7: Regional Average in Southeastern Europe
55.0: Hungary (Rank: 66)
53.1: Greece (Rank: 72)
 The Serbian bankruptcy law foresees some
rehabilitation measures, but perhaps most
importantly, it does not limit the expert to write
down what measures they can apply, leaving the
experts free to propose any form of rehabilitation
that will allow the company to continue operations.

continued from page 15

There are three motivating reasons At this point, the grouping of remedial
for choosing a pre-prepared measures should be carried out to
reorganization—to settle creditors’
reorganization plan—the agreement show how they affect the status of
claims in an optimal way through
of creditors, avoiding the complete the company. The first group of
implementing proposed measures
cessation of activity, and the reorganization measures are those
outlined in the reorganization plan.
preservation of the business. that lead to a change in the company’s
status, including the closure of plants
A notable distinction between pre-pack
The PPRP is prepared by an expert or changes in activity, changes in
and regular reorganization procedures
hired by the company, after status, changes in legal form, the
is the timing of the reorganization
negotiations with creditors. The expert transfer of part or all of the property
plan submission. The pre-pack
prepares remedial measures and, to one or more existing or newly
reorganization plan, known as unapred
when the company has a majority of established entities, and creditors
pripremljen plan reorganizacije (PPRP), is
agreed creditors, submits the plan to becoming owners of capital and
prepared and submitted simultaneously
the court. The court then schedules a impacting the company’s work.
with the proposal to initiate bankruptcy
procedures. The regular reorganization hearing, with the plan being adopted
if a simple majority of creditors The second group of measures
plan, meanwhile, is submitted after the
agrees with the proposed measures. leads to the possibility the company
initiation of insolvency procedures.
can manage its assets, which is a
In the process of drawing up a plan, basic condition for its continued
Key elements of the pre-pack
the expert must look at the entire operation. These measures include
reorganization procedure remain
company—its operations, activities, and all actions that represent the disposal
largely unchanged since its
the state of the market—to recognize the of property, such as the settlement of
introduction in 2009. These include:
reasons why it found itself in difficulties claims, cashing of property with or
and could not continue doing business. without mortgage or transfer of such
• Only the insolvent debtor is
property in the name of settlement
authorized to submit the PPRP.
After this step, a good specialist will of claims, discharge of debt, transfer
propose remedial measures by which of unencumbered property in
• A court hearing will convene
the company will be able to continue the name of settlement of claims,
for creditors to vote on
operating. These steps must be well execution, modification or waiver
adopting the PPRP.
thought out—they must be planned of lien rights, pledge of encumbered
out realistically, so their application or unencumbered property, and
• The measures to be implemented
will not damage the creditors and the the cancellation of issued securities
in the reorganization process
company will continue to operate. or issuance of new securities.
are not limited to the ones listed
in the Law on Bankruptcy—
The Serbian bankruptcy law foresees The third group of measures refer
those serve only as examples.
some rehabilitation measures, but to actions that are performed
The measures that are adopted,
perhaps most importantly, it does not independently in the reorganization
however, must clearly be outlined.
limit the expert to write down what process—that is, as an integral part of
measures they can apply, leaving one of the measures from the first two
PPRP essentially means an invitation to
the experts free to propose any form groups. Some of these are characteristic
negotiate a plan of reorganization with
of rehabilitation that will allow the of the bankruptcy procedure and
creditors and seek acceptance of that
company to continue operations. appear as legal consequences of that
plan before filing for bankruptcy. Pre-
July/Aug This provision is positive, considering procedure, namely the termination
2024 pack PPRP is a hybrid of two methods of
it’s impossible to enumerate every or amendment of the contract, the
reorganization, because it combines the
Journal of possible remedy in the law, because a dismissal of employees or the hiring
low costs of an out-of-court settlement
Corporate company is a living organism of sorts
Renewal with the advantages of a formal
and can contract a variety of diseases. continued on page 18
reorganization through a court decision.
16
 Your expansions.
Your Cadence.
At Cadence, your goals come first.
There comes a time when you’re ready to move
boldly—to invest in yourself and your business by using
what you have to fund where you want to go. At
Cadence, we help power those dreams with simple,
affordable business financing that leverages your assets.

#yourcadence

Learn more about how

we can help you reach your goals.

CadenceBank.com/ABL
© 2024 Cadence Bank. All Rights Reserved. Member FDIC. Equal Opportunity Lender. NMLS# 410279
 continued from page 16

of other persons, the conclusion of

credit and loan agreements, disputing
and refuting claims that are not Ivana Matic is the owner of IM Consulting
legally valid, predicting repayment Belgrade, a Serbia-based firm that specializes in
in installments, and changing business restructuring, real estate valuation, and
maturity dates, interest rates, or economic expertise she founded 14 years ago. She
other conditions of a loan, credit, or has extensive experience in the turnaround space,
other claim or security instrument. financial management and consulting, and corporate
management. Matic is the president of the TMA
The procedure for adopting the Serbia Chapter, a position she has held since 2016.
PPRP is carried out by voting by
the creditors. Creditors are divided
into classes according to the type
of their claims, with creditors of
each class voting separately. The
document is adopted if it is approved
in all classes by a simple majority.

Although the law with the PPRP has

been in force for almost 15 years, the According to Serbian laws, if the In addition to companies that have
PPRP is still not sufficiently recognized company does not have the means problems with bad management,
as a company rescue model. Most to pay its obligations to creditors there is also a threat of bankruptcy in
often, the management of the company and the state in the enforcement companies that have gone through
in Serbia is not educated enough to procedure, which attempts to collect the privatization process. In Serbia,
see when initial serious problems in court and through extrajudicial this process started about 20 years ago,
appear. These issues should not be proceedings, the company’s accounts with only a small number of companies
ignored and require deep analysis to are blocked, meaning they cannot successfully completing privatization.
understand why such problems arose make any payments from existing
and whether they require action in business accounts. Such companies All these companies are ready for
order for the company to survive. do not automatically shut down, bankruptcy or reorganization, but in
and many such entities exist for addition to an expert who will recognize
Often, company owners think that years even though they have been when the moment is right to start
they are omnipotent and know prevented from legally operating. PPRP procedure, they often need an
everything, but the reality is often According to official data, 27,165 such external investor who would enable the
something completely different. companies currently exist in Serbia. implementation of the restructuring. J

Examining the Benefits & Challenges of Pre-Pack Reorganization

Advantages of PPRP Drawbacks & Challenges of PPRP

Enhanced Negotiation Position Sustainability Concerns

When a debtor begins negotiations with creditors before entering A crucial challenge involves guaranteeing
bankruptcy proceedings, they are in a better position for negotiations since the ongoing viability of the debtor’s
they have not lost control over their business to a bankruptcy administrator business after the plan’s execution, thereby
and they have more time for detailed planning of a reorganization strategy. necessitating a meticulous evaluation of
the feasibility of the proposed measures.
Cost-Effective Approach
Pre-pack reorganization tends to be more economically efficient Risks of Creditor Involvement
than standard reorganizations, primarily due to the shorter Potential concerns arise from the
duration of reorganization proceedings. The cost difference influence of creditors in the making of the
between regular reorganizations and pre-packs becomes pre-pack plan and the potential for skewed
particularly evident when there are many debtors. creditor decisions as a result of overvoting.

Creditor Consensus Unequal Data Accessibility

The potential for reaching a consensus with creditors is heightened Unequal access to data has the potential
during the preparation phase of the pre-pack plan since creditors to hinder the fairness of the process and
July/Aug exhibit greater openness to negotiations. In challenging economic may allow for creditor manipulation.
2024 times, the PPRP provides creditors with a more secure way to
Journal of
collect claims from debtors at the brink of bankruptcy.
Corporate
Renewal

18
Experience
is table stakes.
What matters is how we use it. Work with our
responsive, proactive loan agency team for creative
solutions to even the most complex challenges.

Learn more at srsacquiom.com

A TIME OF TRANSITION
IN THE U.K.
RESTRUCTURING SPACE

BY LINDSAY HINGSTON, PARTNER

& MICHAEL ATKINSON, ASSOCIATE, FRESHFIELDS

T
he macroeconomic picture Brought into law in 2020, the
remains difficult in the U.K., with restructuring plan has become
2023 producing more corporate a prevalent tool. As of May
insolvencies in the U.K. than any 2024, 26 companies have had
year since 1993. Likely contributing restructuring plans sanctioned in
factors include the withdrawal of the U.K., with several more currently
COVID-19 support measures, higher going through the courts.
borrowing and operational costs, and
a tightening in consumer spending. Although the restructuring plan draws
on the body of case law around schemes
Although inflation has peaked and of arrangement, it has inevitably given
interest rates are expected to start rise to novel issues—most notably in
falling this year, a return to the connection with cross-class cram down,
zero-interest rate environment is which was not previously a feature
not expected. Currently, corporate of the U.K.’s restructuring regime.
insolvencies are more concentrated
at the end of the market featuring The Court of Appeal’s judgment in
small and medium-sized enterprises. Adler has provided clear judicial
A very large maturity wall, however, guidance on how, once the legal
is approaching for large corporate threshold conditions for the exercise
entities in 2026—a product of the of cross-class cram down are met,
boom in transactional activity in 2021. the court will exercise its discretion
A rising tide of restructuring activity when faced with a restructuring plan
can be expected as over-levered capital involving cross-class cram down.
structures struggle to refinance in the
new macroeconomic environment. continued on page 22
July/Aug
2024

Journal of
Corporate
Renewal

21
 Although the U.K.'s 2020 restructuring plan draws on the
body of case law around schemes of arrangement, it has
inevitably given rise to novel issues—most notably in
connection with cross-class cram down, which was not
previously a feature of the U.K.’s restructuring regime.

continued from page 20 challenges in both McDermott and trend in contested restructuring
Aggregate. In McDermott, the court was plans can be expected to continue.
If there is no cross-class cram down, prepared to sanction the plan on the
the court will perform the same basis that a parallel Dutch WHOA would Growth in Multi-Process
assessment as when considering a impact the terms of a settlement that Restructurings
scheme. It will check that each class’s the group and the challenging creditors Previously, the U.K. scheme of
vote approving the plan was a rational had agreed. In Aggregate, the court arrangement was often the go-to tool
one, but the court will be slow to declined to sanction the company’s to unlock a cross-border restructuring
differ from the results of the vote. proposed plan. However, the court in Europe. However, the introduction
allowed a revised plan to be put forward of the restructuring plan coincided
When a plan does involve the cram on a highly accelerated timetable and with similar legal reforms across the
down of one or more dissenting ultimately sanctioned that plan. EU. Each member state now has its
classes, the court will instead look at own version of the restructuring
the “horizontal comparator,” which The prospect of a fully argued challenge plan. More tools mean more choice—
involves comparing two things: has an implication for timetables. In and the European market is seeing
McDermott, the court was not satisfied more restructurings implemented

1 How the different classes would

be treated relative to one another
with the limited notice that the parties
had been given of the convening
in the debtor’s home jurisdiction.

in the relevant alternative (being the hearing. It granted permission to The prevalence of restructuring
most likely outcome to occur absent convene creditor meetings but tools is also driving a trend in
the plan). permitted parties to raise issues at the multi-process restructurings,
sanction hearing that would normally where processes in more than one

2 The classes’ relative treatment

under the plan.
be settled at the convening stage.
In Aggregate, the court expressed
jurisdiction are required to implement
a restructuring. Two recent examples
disapproval for companies bringing are Cimolai, where an Italian
If there is a discrepancy between plans on short notice and asking the concordato process was implemented
1 and 2, the court will assess whether court to hold over issues to the sanction together with a U.K. restructuring
that departure is for good reason hearing because creditors have not plan, and McDermott, in which a
and justified on a proper basis. For had sufficient opportunity to consider U.K. restructuring plan was made
example, the court indicated that the plan. In Adler, the Court of Appeal conditional upon a Dutch WHOA.
creditors providing an additional emphasized that, while the court will
benefit under the plan may well always try to accommodate genuinely This is often driven by recognition
be entitled to an enhanced share urgent requests, if the urgency is concerns. For example, in the U.K.,
of the plan’s resulting benefits. caused by foreseeable circumstances the rule in Gibbs is often an issue,
(e.g., upcoming maturities), the court under which English law obligations
Though the restructuring plan is will take whatever time it requires for a cannot be discharged by foreign law
bedding down, it is also proving full process and a reasoned decision. proceedings (without the relevant
contentious in practice. As of May creditor’s consent or submission).
2024, four restructuring plans have Some of these challenges can be There has been some debate about
been refused sanction and one attributed to the bedding down of the whether this rule should stand in the
was withdrawn. Also, a series of new process, as new legal points are context of the U.K. Insolvency Service’s
restructuring plans, though ultimately tested and established. Following the consultation on implementing the
sanctioned, have faced sophisticated Court of Appeal decision in Adler, the UNCITRAL Model Law on Recognition
challenges in the English courts. legal position is clearer. The availability and Enforcement of Insolvency-
of cross-class cram down incentivizes Related Judgments. For the time being,
July/Aug
One prominent example is Adler, in cooperation in a restructuring where however, there does not appear to be
2024
which the Court of Appeal overturned hold-out classes can potentially be any appetite for change, and, given
Journal of a restructuring plan that the High crammed down. Given how much the prevalence of English law finance
Corporate
Renewal Court had sanctioned at first instance. is at stake for parties where cross- documents, it is likely that the trend in
Creditors also brought fully argued class cram down is engaged, the multi-process restructurings involving
22
an English restructuring tool combined
with a European one will continue.

Out-of-Court Options
Remain Key
Lindsay Hingston is a partner in Freshfields’
Restructuring plans are a powerful
restructuring and insolvency team based in
tool, capable of delivering a full
London. She advises across the full spectrum of
balance sheet restructuring, including
stakeholders and processes on both domestic and
a debt-for-equity swap. However,
cross-border restructuring matters. Her experience
they have their downsides, including
includes acting for financial creditors, borrowers,
cost, complexity, and process risk.
insolvency officeholders, pension trustees and
others on matters in restructuring and insolvency.
There is, therefore, still a place for
security enforcements and pre-
pack transactions, which can often
deliver a similar outcome and
may be the better implementation
route in certain situations.
Michael Atkinson is an associate in Freshfields’
restructuring and insolvency team based in
There is also increased focus on liability
London. He has spent six months on secondment
management options, which may be
at Freshfields’ Amsterdam office, advising on
capable of delivering balance sheet
banking and securitization transactions.
improvements using the existing
flexibility in debt documents, without
the need for an in-court process.
Such transactions are a mainstay of
the U.S. market and are becoming
significantly more commonplace
in the U.K. and Europe. J

2024 TMA NORTHEAST

REGIONAL CONFERENCE

AUGUST 28 – 29
SARATOGA CASINO HOTEL | SARATOGA SPRINGS, NEW YORK

HOSTED BY TMA CONNECTICUT, LONG ISLAND, NEW JERSEY, NEW YORK CITY, NORTHEAST, AND UPSTATE NEW YORK CHAPTERS.
VISIT TURNAROUND.ORG/EVENTS TO REGISTER AND LEARN MORE.
 A L I A N
U S T R
A DIT BI D S
R E
C e & Tre n d s
P r a c t i c
C
redit bidding allows the creditor In a receivership, they can (in effect)
of a company to bid for and give a right of last offer to a secured
acquire the assets of (or shares party over other bids which would fall
in) that company in a restructuring, short of fully repaying the secured debt
BY MARK GILLGREN, enforcement or insolvency process (as a secured creditor can increase their
by using the value of the debt owed to credit bid at the last minute and/or
PARTNER, JAMES HEWER, them as all or part of the consideration decline to release its securities in favor
SPECIAL COUNSEL for that transaction (generally by of a competing bid). Credit bids also
& ADRIANO PONCINI, agreeing to set-off or compromise allow secondary market debt investors
the debt in exchange for those assets to use debt purchased below par to
SENIOR ASSOCIATE, or shares). They can mitigate the finance their acquisition of a target (as
CLIFFORD CHANCE need for a creditor to finance all part of a broader loan-to-own strategy).
or a part of their acquisition with Many turnaround professionals will
new money and they can be used be familiar with the concept of credit
to effectively deleverage a business bidding, or similar mechanisms, in
by exchanging debt for equity. jurisdictions outside of Australia.
 3 1
Recently, some of the largest, most APA Group’s acquisition of Inflation remains high in
complex Australian corporate Basslink in October 2022. Australia, but it is expected to fall
restructurings have involved credit bids to a target rate of 2–3% by the second
and debt-for-equity swaps including: Current Outlook in Australia half of 2025.
The economic outlook in Australia

1 The acquisition of the Accolade

Wines Group by its senior syndicate
remains uncertain (but Australian
businesses may continue to face 2 The labor market remains strong
is easing more slowly than
of lenders (led by Bain Capital) in April headwinds and, consequently, expected, with unemployment up to
2024 through a consensual arrangement more business restructuring 3.8% in March 2024 from its 50-year low
with the Group’s outgoing sponsor. opportunities and insolvency of 3.5% in late 2022.
activity will follow).
July/Aug

2 The acquisition of Camp Australia

by Allegro Funds and others In summary, the main themes 3 Weaker GDP growth is forecast
until 2025-2026.
2024

through debt acquisitions, followed by a from the recent Reserve Bank of Journal of
Corporate
consensual arrangement with the Australia’s Statement of Monetary Renewal
Group’s outgoing sponsor. continued on page 26
Policy from May 2024 are that:
25
 Figure 1: Examining the Credit Bidding Process in Australia

Credit Bidding
Restructuring Formal Insolvency

By Consent Creditors’ Scheme of Arrangement Receivership Voluntary Administration

• Administrator acts for all

• Most common mechanism for creditors (not just
• F lexible and suitable for lender enforcement in Australia. lender/appointor).
complex groups.
• Lower cost. • Greater control over process • Less deal certainty/opportunities
• High threshold (75% by value;
• More feasible with fewer in favor of lender/appointor. for third parties to intervene.
50% by number of each class
lenders/stakeholders. of creditor affected). • Requires security over • Potentially value destructive.
• Maximizes value as “whole or substantially whole”
• Can bind third parties. • Does not bind secured
no formal insolvency of the target's assets (or parties (unless they
appointment is required. • Higher degree of certainty enforcement before a voluntary choose to participate).
following court approval administration commences).
• Threat of creditors’ scheme of of the scheme. • If through deed of company
arrangement might be sufficient • Potentially value destructive. arrangement, and large number
to deal with holdout positions. • Typically takes 2-3 months but can • Corporations Act s 420A of shareholders, Corporations
be expensive and involve multiple obligations (to realize assets for Act s 444GA obligations
court hearings/attendances. best price reasonably obtainable). (requirement to demonstrate
no prejudice to shareholders).

continued from page 25 significant activity last seen in about Along with the points noted in the
2020 when the 14 of the 15 original USD above diagram, there are a few

4 One more cash rate increase $370 million financiers of the Bluewaters additional points to note here:
has not been ruled out by the Power Station sold their debts for 70%
RBA for 2024. of their face value to special situation Consensual Arrangements/
investors1 and in late 2021/early 2022 Implementation Deeds. As noted
The Commonwealth Department involving Camp Australia).2 Debtwire above, credit bidding/debt for
of Industry, Science, and Resources recently reported increased activity in equity swaps are not confined to
predicts that resource and energy the region (but not in Australia, rather, court-supervised and/or formal
export earnings will fall by 10% in predominantly in India).3 Increasing enforcement processes—they can
FY2024, from AUD $466 billion in debt leverages, amend and extend also be implemented as part of a
FY2023 to $417 billion, and by another activity and secondary debt trading will consensual arrangement between
10% or so in FY2025, to $369 billion. be a bellwether for credit bidding and a target’s shareholders and its
loan-to-own transactions in Australia. financial creditors (which may in turn
The Australian Securities & Investment contemplate a broader restructure of
Commission’s insolvency statistics In the Toolbox: Credit Bidding the target and its business including
released in May 2024 show that: In an Australian context, credit bids standstills, divestments of non-
can be deployed outside of a formal core assets, strategic M&A, and/or
• Comparing January–April 2023 to insolvency process by secured (and, the implementation of a creditors’
January–April 2024, insolvency less commonly, unsecured) creditors scheme of arrangement/voluntary
appointments are up by 47.98%. through either a fully consensual administration across all or part of
arrangement with a sponsor/parent or the target group). Depending on
• Comparing FY2023 with FY2024 other business owner, or a creditor’s the circumstances, even the threat
(to date), healthcare and social scheme of arrangement. Credit bids of a scheme of arrangement or
assistance, mining, professional/ are also available in formal insolvency formal insolvency process can be
scientific/technical services, retail processes including in receiverships enough to drive parties towards
trade, and transport/logistics and voluntary administrations a consensual arrangement.
have seen the most significant (either through the administrator’s
July/Aug Creditor Schemes vs. Receiverships
uptick in appointments. power of sale or through a deed
2024
of company arrangement). vs. Administrations. In the absence
Journal of The last seven years have been marked
Corporate
Renewal by lower distressed-loan trading in Figure 1 shows a diagram setting
the Asia-Pacific region (with the most out these four mechanisms. continued on page 28
26
UNDERSTANDING VALUE
The Vital Piece in
Turnaround and Restructuring

The Certified Valuation Analyst®—Your Pathway to

Determine, Defend, and Maximize Company Value

The Authority in Matters of Value®

Find an expert through NACVA’s Online Directory or contact

us at www.NACVA.com/CVA or (800) 677-2009 for
essential business valuation training, resources, and data.
 Credit bids can be deployed through each of the main restructuring
and insolvency mechanisms under Australian law.
While not a new concept in Australia and abroad,
they will become increasingly relevant in coming years.

continued from page 26 of a competing bid). Given the scope of giving effect to the plan in that process
a receiver’s duties under Corporations in the U.S. were not able to give effect
of a fully consensual arrangement, Act s 420A which generally, effectively to that transfer under Australian law.
credit bidding can be implemented require the receiver to run a proper sale
through a creditors’ scheme of process, it is difficult to effect a pre- How Are Credit Bids
arrangement or through a formal pack-style credit bid via a receivership, Implemented?
insolvency process (e.g., receiverships/ and a successful credit bid via a As its members will know, TMA
voluntary administration). There are receivership would typically take a emphasizes that early engagement
advantages and disadvantages in minimum of three months. and pre-planning with turnaround
implementing each of these processes: professionals lead to better outcomes

3 Voluntary Administrators: for all stakeholders. The pre-planning

1 Schemes of Arrangement:
Schemes are a flexible, court-
Voluntary administrations are also
led by an external administrator (but in
in the lead up to a credit bid or
creditor enforcement action is no
supervised (but company/board-led) this case, one that acts for the benefit of different (unsurprisingly so for more
mechanism that can bind creditors all creditors of the insolvent company/ complex or high-value situations).
(including secured creditors) and third group). A key feature of voluntary
parties (e.g., guarantee claimants) and administration is its statutory moratorium There are a few considerations
they do not require the target to be on enforcements by secured creditors to note here:
insolvent, however a relatively high (that do not have security over the whole
threshold applies when voting up a or substantially the whole of the Reviewing the Security Package
scheme—75% by value/50% by number company/group’s property) and Against the Strategy. When dusting off
of each class of creditor voting (c.f. 50% unsecured creditors. Proposals can be put the security package ahead of a potential
by value/50% by number of all creditors to the voluntary administrator to buy the credit bid or enforcement, small gaps
voting for a deed of company company/group’s assets at any time in the coverage of the security are not
arrangement in a voluntary (or to enter into a deed of company uncommon. But even small or technical
administration process). As an example, arrangement, requiring creditor approval non-compliance with Australia’s
in 2021, the Boart Longyear Limited at a meeting). Credit bids can be deployed personal property securities regime
creditors’ scheme of arrangement in both circumstances (but see below in can lead to big problems for secured
involved a debt-for-equity swap of "Assessing Competing Bids"). creditors and value leakage. Further, if
c. USD $830 million for 98.5% of Boart’s credit bidding through a receivership is
shares and USD $115 million in new For multi-national groups, foreign the goal, not every security package will
money (and was later awarded the 2022 restructuring and/or insolvency allow for the appointment of receivers.
TMA Restructuring Deal of the Year).4 processes might be used in lieu of, or In Australia, security over "the whole or
in parallel with, Australian processes. substantially the whole" of a grantor’s

2 Receivership: Receiverships are

led by an external administrator,
But as matters stand, effecting a
credit bid or debt-for-equity swap in
assets is required to avoid the operation
of the statutory moratorium on
who acts for the benefit of their relation to an Australian company enforcements against the grantor or their
appointing secured creditor. Assuming cannot be implemented via foreign property that applies where a voluntary
that a properly marketed sale process processes alone in the absence of administrator has first been appointed.5
has been undertaken (consistent with recognition of such process being
the receiver’s duties under Corporations available (which may not be the case Additionally, receivership is
Act 2001 [Cth] [Corporations Act] s depending on the circumstances). generally not the optimal process
420A), a receiver can accept credit bids for implementing a credit bid where
from their appointing secured creditor. For example, in the recent Chapter 11 the security package does not
As noted above, a real advantage of this reorganization of GenesisCare include security over shares in the
process for secured parties (including its Australian TopCo and debtor company as it will not allow
implementing a credit bid strategy is subsidiaries) the debt-for-equity swap at for a transfer of the shares in that
that they will (in effect) have a right of the level of the group’s Australian TopCo company to the relevant bidding
last offer over other bids where the value was effected consensually between its creditors (and an asset sale will often
of the other bids would fall short of fully outgoing and incoming sponsors (with result in leakage to other creditors
July/Aug
2024 repaying the secured debt (as the remaining shares held by minority depending on the company’s assets).
secured creditor can increase their shareholders being the subject of Some of this review work might be
Journal of
Corporate
credit bid at the last minute and/or a compulsory share buyback). The undertaken in parallel with negotiation
Renewal decline to release its securities in favor Chapter 11 process itself and the orders of standstills and investigative
28
 Mark Gillgren is a partner with James Hewer is special counsel with Adriano Poncini is a senior associate
Clifford Chance, leading its banking Clifford Chance, with substantial in Clifford Chance’s Restructuring &
and finance team and co-leads experience in a wide range of Insolvency team. He regularly acts
the firm’s Australian restructuring contentious and non-contentious for sponsors, directors/companies,
and insolvency practice. He has special situations, restructuring and and insolvency practitioners on
extensive experience leading insolvency matters across Australia, non-contentious and contentious
complex international finance the Asia Pacific, and Europe. Hewer restructuring, distressed and special
transactions, debt restructurings, advises banks, financiers, funds, situations, formal insolvency, and
and insolvency matters across and alternative capital providers recovery/enforcement matters.
Australia, the Asia Pacific, and Europe. across a variety of bilateral and Poncini also has extensive litigation
Gillfren has specialist expertise in syndicated lending exposures to and dispute resolution experience
distressed and special situations, distressed businesses. He acts for having acted in general commercial,
loan portfolio trading, convertible insolvency practitioners in relation insolvency, and regulatory matters
and structured debt, asset-based to receiverships, liquidations, in Australian State Supreme Courts
loans, holdco and mezzanine voluntary administrations, and and the Federal Court of Australia.
finance structures for acquisitions deeds of company arrangements,
and projects, enforcement and advising corporate entities and
recovery action, and turnaround, directors in relation to restructurings
restructurings, and insolvencies. and reorganizations.

accounting workstreams common in In short, all other things being equal Conclusion
complex restructuring engagements. (including deal certainty or financial Credit bids can be deployed through
capability) and assuming that a each of the main restructuring and
Reviewing the Situation. Long-tail properly marketed sale process has insolvency mechanisms under
liabilities (e.g., decommissioning and been undertaken, when assessing bids, Australian law (and as always, careful
remediation costs) or threatened claims compromising a dollar of secured debt pre-planning is required to ensure
(by class action claimants, former will be as valuable as a dollar of new that the right mechanism is used for
management, and/or regulators) can money to the extent that the secured the job). While they are by no means a
be problematic for creditors aiming to creditor would be entitled to first-priority new concept in Australia and abroad,
credit bid for control of a company and/ distribution of that consideration credit bids will become increasingly
or its assets. The dual appointment of under their security. A correspondingly relevant in coming years. J
receivers and voluntary administrators lesser value will be ascribed to credit
(possible for secured creditors with bids for unsecured debts or where the
security over "the whole or substantially consideration would have been shared 1
 ebtwire, Asia-Pacific Distressed
D
the whole" of a grantor’s assets) can see among creditors other than the credit Loan Trades Report for 3Q20.
control turned over to secured creditors bidder. As always, the critical factor in 2
Debtwire, Asia-Pacific Distressed
while compromising pre-appointment, any restructuring will be determining Loan Trades Report for 3Q20.

unsecured, or speculative claims where value breaks in the capital stack.

3
 ebtwire, Asia-Pacific Distressed
D
Loan Trades Report for 1Q24.
against the target company. When
that is not feasible, toggling to an asset Other Factors. Tax and regulatory
4
 lifford Chance, “Clifford Chance Advises
C
on Board Longyear’s US $830 million debt,”
sale might be required (although that issues (such as Foreign Investment https://www.cliffordchance.com/news/
can result in leakage to other creditors Review Board approval or Australian news/2021/10/clifford-chance-advises-on-
depending on the company’s assets). Securities Exchange relief from boart-longyear-s-us-830-million-debt-html.
listing rule requirements) can make 5
 ecurity over 68% of a grantor’s total assets on
S
July/Aug
Competing Bids. Broadly speaking, in or break a proposed transaction— a balance sheet basis will be insufficient). See
2024
Australian formal insolvency processes, special situations and distressed Re Australian Property Custodian Holdings
Ltd (Administrators Appointed) (Receivers Journal of
receivers and voluntary administrators restructures being no different. & Managers Appointed) [2010] VSC 492. Corporate
must seek the best price reasonably Early engagement with corporate Renewal
obtainable for company property. and regulatory specialists is key.
29
 A Promising Refinement to
RESTRUCTURING
& INSOLVENCY
IN THE UAE

July/Aug
2024

Journal of
Corporate
Renewal

30
BY NATHAN STUBING, MANAGING DIRECTOR &
KIT WENG, DIRECTOR, FTI CONSULTING

T
he legislative framework of the the age of the prevailing legislation,
United Arab Emirates comprises Federal Decree Law No. 9 of 2016
onshore—or mainland UAE, (the Old Law), which was replaced
which follows federal, civil law—and by Federal Decree Law No. 51 of 2023
offshore financial free zones, primarily (the New Law) governs mainland
the Abu Dhabi Global Market (ADGM) restructurings, while Insolvency Law
and Dubai International Financial DIFC Law No. 1 of 2019 and ADGM
Centre (DIFC), both of which follow Insolvency Regulations 2022 govern
common law. In total, however, there DIFC and ADGM restructurings,
are over 40 operating free zones, respectively. For a sense of the scale
each with its own regulations. of each legislation’s coverage, the
UAE has more than 660,000 active
The UAE is a comparatively new companies, with over 11,000 evenly
restructuring market compared split between the ADGM and DIFC.
to countries such as Australia, the
United Kingdom, and the United Historically, given the lack of strict
States, with relatively new laws that insolvency mechanisms, companies
remain to be fully tested both in
volume of matters and sophistication
of restructurings. For indication of continued on page 32

July/Aug
2024

Journal of
Corporate
Renewal

31
 With the support of the bankruptcy department,
the establishment of the bankruptcy court is
expected to enhance the efficiency of restructuring
and insolvency proceedings in the UAE, similar to
the role of the bankruptcy court in the U.S.

continued from page 31 for-longer inflation, increased Bankruptcy Court

interest rates, and the Russia-Ukraine Some reluctance to engage with the
in the UAE have tended toward a more war, it also reflects the increase onshore bankruptcy processes appears
consensual restructuring approach in the market’s confidence in the to have been due to unfamiliarity with
and favored out of court options. Such restructuring and insolvency tools the onshore courts and apprehension
transactions have required that critical available to companies in the UAE. around orders and directions
creditors are willing to engage with likely to flow from the courts.
the debtor company directly because, Further, the 2020 re-domiciling of the
in part, they believe an out-of-court previously UAE mainland-based NMC As a means of addressing these
consensual restructuring solution to Healthcare entities into the ADGM for concerns, the New Law introduces
be more cost and time efficient. It also the purposes of utilizing its insolvency a dedicated Bankruptcy Court and a
will likely offer better recoveries on their regime and its subsequent successful Bankruptcy Department to adjudicate
debt than a formal court-driven process, restructuring is a relevant example of on restructuring and insolvency matters.
while avoiding the unknowns of the growing awareness and confidence With the support of the bankruptcy
relatively new and untested legislation. in the insolvency legislation. department, the establishment of
the court is expected to enhance the
UAE business culture, even when Despite the inroads made by the efficiency of restructuring and insolvency
the Old Law came into effect in offshore mechanisms, uptake of proceedings in the UAE, similar to the
2016, favored providing businesses the onshore mechanisms has been role of the bankruptcy court in the U.S.
with additional time to enact a slow. Recognizing the ongoing
turnaround. Given this culture— reluctance to fully engage with Under the New Law, the bankruptcy
coupled with new, untested legislation the onshore bankruptcy processes court’s decision is final and
and general unfamiliarity with and the need for improvements to immediately enforceable, as opposed
insolvency processes—the underlying that legislation, the UAE recently to the Old Law, where delays were
mandate and priority for creditors enacted the New Law, eagerly common due to the initiation of
have been to address issues via anticipated by market participants, conflicting proceedings in other
mutual consent between debtors which took effect May 1, 2024. courts. Further, the enforcement of
and creditors. Although awareness the court’s decisions can only be
of formal bankruptcy processes is Although the Old Law represented halted under specific circumstances.
increasing, that underlying culture a welcome change in the UAE’s One example would be if the court
and its associated impact on decision insolvency processes, the New Law opts to stay the execution or where
making remain prevalent. offers further refinement. The New a stay of execution is requested by
Law significantly expands the scope the debtor, creditor, trustee, or any
Notwithstanding, following the of the UAE’s bankruptcy protections interested party, recognized by the
introduction of the Old Law and more through three key mechanisms— court. Additionally, the court may
noticeably post-COVID-19, interest has preventive settlement, financial order a stay of execution during the
increased in the various protections restructuring, and bankruptcy. review of a petition challenging its
offered by the insolvency legislation decision or while an active appeal is
July/Aug
2024 from both creditors and debtors. The New Law also broadens its scope being heard by the Court of Appeal.
to include companies subject to
Journal of While the increase can be attributed commercial companies law, licensed
Corporate
All legal proceedings pending under
Renewal to various macroeconomic drivers, civil companies of a professional the Old Law and not adjudicated by
such as supply chain issues, higher- nature, and individual traders. May 1, 2024, were transferred to the
32
bankruptcy court. This is intended
to ensure a seamless transition and
continuity of legal proceedings
under the new framework. Nathan Stubing is a managing director in FTI
Consulting’s Corporate Finance and Restructuring
Financial Restructuring & practice, based in Dubai. He is a registered
Bankruptcy Unit insolvency practitioner in the Dubai International
The New Law also introduces the Financial Centre and Abu Dhabi Global Market as
establishment of the Financial well as a registered liquidator in Australia. He was
Restructuring and Bankruptcy Unit, previously based in FTI Consulting’s Australian
replacing the Financial Restructuring practice and has also practiced in the Cayman
Committee under the Old Law, to Islands. He specializes in contentious insolvency
manage administrative aspects of and disputes, asset tracing, and recovery.
restructuring and insolvency matters,
contribute opinions on specific
applications of the New Law, support the
court, and maintain a unified register Kit Weng is a director in FTI Consulting's
of court judgements and insolvency Corporate Finance and Restructuring practice
applications, similar to the U.S. and U.K. with nine years of experience in restructuring
It remains to be seen how this unit and and insolvency matters in the U.K. and, more
its functions will work in practice. recently, the UAE. He has cross-sector experience,
with a focus on consumer retail, real estate, and
Preventive Settlement construction. Expertise includes administrations,
The New Law also replaces the Old Law’s trading receiverships, liquidations, and both
preventive composition mechanism creditor and debtor advisory. Weng is a qualified
with the preventive settlement, a debtor- chartered accountant registered with the ICAEW.
led court-supervised process that allows
a debtor to continue management of
its business to repay its debt based on a
settlement proposal approved by at least
two-thirds in value of ordinary creditors.
Secured creditors are not entitled to vote
on the proposal, on the condition that
the proposal does not alter their rights. Additionally, contrasting with the seeks to hold directors or managers
preventive settlement, the restructuring accountable for any financially
Importantly, the moratorium on plan allows for the appointment of risky decision made up to two years
creditor claims has been reduced from a trustee by the court to oversee the prior to a company's insolvency.
10 months to three. Further, the court management of the debtor’s business
may authorize the debtor to obtain new and to implement the restructuring Cross-Border Insolvency
financing, whereby the creditor has plan. The court has authority to ratify The UAE has not adopted the
priority over any existing ordinary debt the restructuring plan even if initially UNCITRAL Model Law on Cross-
owed by the debtor. New financing may rejected by creditors, on the basis that Border Insolvency in the introduction
be secured by debtor’s assets, however, creditors are not worse off as a result of of the New Law, unlike the ADGM and
security over encumbered assets must a restructuring plan, compared to the DIFC. As a consequence, it continues
rank behind the existing creditor expected outcome under a liquidation. to be necessary to obtain separate
or ranked pari passu if the approval recognition of UAE bankruptcy
of existing creditors is obtained. Claw Back & Director Liability proceedings in foreign jurisdictions.
A perceived shortcoming of the Old The UAE, however, has continued to
Lastly, under the new preventive Law has been a clear definition around align its restructuring and insolvency
settlement, the appointment of an external director liability and the requirement regimes with global standards, meaning
trustee is no longer automatic and can for directors to file for a bankruptcy certain procedures would be capable of
only be made with leave from the court. process where certain criteria exist. being recognized in jurisdictions that
have adopted UNCITRAL Model Law.
Restructuring Although not going as far as other
The New Law also allows debtors to jurisdictions’ frameworks around The introduction of the New Law
initiate restructuring proceedings responsibilities upon directors to aims to enhance the efficiency
where a debtor can propose a file, the New Law retains negligent of restructuring and insolvency
restructuring plan for approval by its and fraudulent behavior definitions proceedings in the UAE. While many
creditors. Similar to the preventive and increases the penalties for aspects have yet to be tested, the
settlement, a moratorium on creditor these offences. Further, the look- changes introduced by the New
claims immediately takes effect on back period has been reduced to six Law are a promising refinement of
commencement of the restructuring months, extendable to two years for the onshore UAE restructuring and July/Aug
proceedings. However, there is no strict related party transactions. Lastly, the insolvency regime. Although eagerly 2024
time limit as the moratorium is effective potential for liability now extends to awaited by practitioners, time will Journal of
until a restructuring plan is ratified by managers, in line with U.K., and similar tell to what extent the New Law Corporate
court or proceeding is terminated. regulations on shadow directors. This is utilized and to what effect. J Renewal

33
 The Rise of the CRO
& Rescue Financing in Asia
BY MATT BECKER, TURNAROUND & RESTRUCTURING LEADER, DELOITTE SEA
& VERA LIM, DIRECTOR, DELOITTE SINGAPORE

T
he role of a chief restructuring
officer (CRO) is well established
in the North American and
European markets. More recently,
the appointment of a CRO has also
become an essential part of the
restructuring toolkit in Asia.

In the dynamic world of business, • The power to set budgets, and operational restructuring across
companies often face periods approve expenses and the company and its subsidiaries.
of financial distress, operational manage bank accounts.
inefficiencies, or strategic The benefits of appointing a CRO,
misalignment. During such times, • The ability to hire, fire, and/or particularly in a debtor-in-possession-
the expertise of a professional CRO alter the terms of employment style proceed, are clear. Often, the
can be invaluable. A CRO is an of all directors and employees. CRO can provide a fresh perspective
independent restructuring professional and identify alternative routes to
appointed to lead complex balance • Work with stakeholders to stabilizing the situation, while existing
sheet restructuring and operational develop and negotiate a credible management remains in place to
turnaround programs. CROs take scheme of arrangement. provide technical expertise and focus
on interim management roles and on day-to-day business operations.
have a unique blend of skills and • Regularly meet with and report
capabilities. They know how to stabilize to management, shareholders, Interestingly, the two restructuring
a business in crisis, manage cash creditors, and the court. cases mentioned here also involved
and working capital, restructure debt, the implementation of super priority
raise capital (in special situations), The CRO led the restructuring rescue financing arrangements (more
and deliver operational and earnings successfully through a scheme of commonly known as debtor-in-
improvement—all while managing arrangement (receiving more than possession financing, or DIP financing,
diverse stakeholder groups. 90% creditor approval) that included a in the U.S. and Europe). Again, this
super priority rescue financing package trend is indicative of a maturing
A CRO is usually appointed funded by creditors. This Singapore restructuring market in Asia that’s ready
contractually, outside of a formal restructuring reflects a generally to embrace pragmatic approaches to
restructuring process. However, in a accepted view in the North America the resolution of corporate distress.
first in Asia, in 2022, the Singapore and Europe that a CRO appointment
High Court ordered the appointment can introduce new momentum and Rescue financing provisions also
of a CRO to steer a troubled confidence in the restructuring. form part of the legislative reforms
commodities trader, Antanium that came into effect in Singapore
Resources, forward in a Scheme of Even prior to Antanium, restructuring in May 2017. They have since been
Arrangement. The court granted the professionals in Asia had observed an employed by debtor companies and
CRO extensive powers, including: increase in demand for CRO services their restructuring advisors alike to
across Asia. In a separate notable case, supplement the suite of restructuring
• The CRO's appointment in 2020, a CRO was appointed over a tools available in the Singapore context.
as a director. Singapore Stock Exchange-listed design
and construction company that had A key premise of rescue financing is
July/Aug • Access to all company that financially distressed companies
applied to the Singapore High Court
2024
personnel and information. for moratorium protection against its are likely to require financing to allow
Journal of creditors under a debtor-in-possession the company to continue its business
Corporate
Renewal
• Full responsibility for and power in restructuring process. The CRO helped and operations while it attempts to
respect of the company’s assets. implement a significant financial achieve survival as a going concern
34
or, in the lesser alternative, allow a
better return for its creditors in the
event business survival is not possible.
Meanwhile, the concept of super Matt Becker is the Deloitte Southeast Asia (SEA)
priority has been borrowed from the U.S. turnaround and restructuring leader. He advises
Bankruptcy Code and serves to provide businesses, financiers, and governments on some of
assurance to the rescue lender that in their most complex challenges. Becker regularly leads
the event the debtor’s restructuring is operational turnaround, financial restructuring, special
unsuccessful, the financing provided situations capital raising, and M&A projects. He is a
by the rescue lender shall be paid qualified chartered accountant, lawyer, and licensed
out of the debtor’s unsecured assets IP. He also serves as president of the TMA SEA Chapter
in priority over all other unsecured and is a member of the TMA Global Board of Trustees.
claims and priority expenses.

In a novel application of this tool and

in an extension of the super priority Vera Lim is a director in the turnaround and
trend, funding under litigation funding restructuring practice at Deloitte Singapore. She has
agreements in several cases have now over a decade of experience in corporate restructuring
also been accorded super priority status. and insolvency matters, including liquidation,
schemes of arrangement, independent business
In conclusion, increasingly in Asia, reviews, and chief restructuring officer services. Lim
there is recognition that super priority is a CFA charterholder, a member of the Insolvency
financing and the appointment of a Practitioners Association of Singapore, and a
CRO can help to facilitate successful member of the International Women's Insolvency &
restructuring outcomes and these Restructuring Confederation Singapore Network.
tools are becoming increasingly
embraced by the profession and by
companies facing stress or distress. J

2024 TMA
YEAR-ROUND PARTNERS
INSPIRATION

Asset Smarter
ELEVATION

IMAGINATION

July/Aug
2024

Journal of
Corporate
Renewal

35
 HAPPENINGS

International
Connecticut
Gary Lembo, Paladin
Frank Alfano,
Gbenga Sholotan Robin Evans, Marblegate Asset Management
Katten Muchin Rosenman LLP
Arizona Eric Goldman, Utica Equipment Finance
Garret Fitzgerald, Uprising Solutions
Lindsi Weber Shreekar Viswanatha,
Enzo Hsu, Northwestern University University of Connecticut
Atlanta Brian Hubick, SC&H Capital
Dallas/Ft. Worth
Shayan Taheri, Georgia State University Emily Keil, McDermott Will & Emery LLP
Sahan Abayaranthna,
Carolinas Sam Kempton Highland Capital Management LP

Charlie Bacon, SouthStar Capital Randall Klein, Tom Bibby, Deloitte

Goldberg Kohn Bell Black
Bianca Briola, Alvarez & Marsal Rosenbloom & Moritz Ltd Detroit

Central Texas Lauren Kunkel, Areté Capital Partners Christian DeBlois,

Ritchie Bros Auctioneers
Arun Varanasi Riley McCarthy, Advantage Capital
Alec Girdler, O’Keefe
Steven Michalicek,
Chesapeake
Greentree Partners LLC Marc Hames, Friedman Real Estate
July/Aug Shawn Leventhal, Huron
Gerald O’Dwyer, Blackmore Partners Kim Rattet, Osipov Bigelman
2024
Brady Richardson, SC&H Capital
Evan Pritsker, Tulane University
Journal of Florida
Corporate Chicago/Midwest Jeffrey Seiden, Fifth Third Bank
Renewal Dave Almstead,
William Clark, The Keystone Group Clark Turek, SC&H Capital American Management Services Inc
36
Jennifer Coram, Eduardo Castro Philadelphia/Wilmington
Amerifactors Financial Group LLC
Stacy Dasaro, Goodwin Procter LLP Rahul Dandora,
Computer Components Corp
Houston Iris Dew, Columbia Business School
Daniel Hanagan,
Bob Kincaid, Sean Duthie, M3 Partners LP
LBC Credit Partners Inc
Advantage Business Capital Inc
Sean Eimer,
Matthew Winalski, Berkshire Bank
Sound Point Capital Managament LP
Indiana
Marshall Eisler, FTI Consulting Pittsburgh
Jayden Bell, University of Notre Dame
Amanda Fan Sean Hooker, S&T Bank
Robert Hawkens,
American Management Services Inc Stephen Funnell, Carl Marks Advisors
Rocky Mountain
Brandon Teater, Indiana University Veronica Graff, Levfin Insights
Patrick Akers
Jon Henes, C Street Advisory Group
Long Island Johanna Daley
Daniel Isaac, Tryfan Leaders LLC
Christian Novissimo Reed Upson, G2 Capital Advisors
Min Seok Kim,
Louisiana Columbia Business School Southern California
Jonathan Singh Shefit Koboci, Debevoise & Plimpton LLP Peter Aziz, UMB Capital Finance
Brent Wyatt, Kean Miller, LLP Pranshu Kumar, Tyler De Groot,
Columbia Business School University of California, Los Angeles
Minnesota
Alex Puma Eric Krauter, CBRE
William Haase, Certus Financial
Lindsay Richards Justin Lau, Ankura
Chad Oates, Steeplechase Advisors LLC
Dan Rubin Samuel Maizel, Dentons US LLP
Murthy Yenamandra,
Marc Samaha, M3 Partners Henry Pontak, Ernst & Young LLP
Lighthouse Management Group Inc
Essa Thiry, Change Capital LLC Southern Ohio/Northern Kentucky
Montreal
Henry Thomas, Michael Fleischer,
Charlotte Dion, Thompson Coburn Hahn & Hessen LLP Oxford Restructuring Advisors
Norton Rose Fulbright Canada LLP
Sanket Thosani
David Essiambre, PSB Boisjoli Toronto
Danielle Ullo,
Thompson Coburn Hahn & Hessen LLP Kayla Bandukwala, KPMG Advisory
New Jersey
Aastha Wadhwa, Alvarez & Marsal Nathalie El-Zakhem, KSV Advisory Inc
John Poppe
Jeffrey Zawadzki Carson Healey, Gowling WLG
Agostino Zammiello, Fox Rothschild LLP
Steven Kelly, Blaney McMurty LLP
New York City Northeast
Josh Marks,
Aleksandra Abramova, CJ Cassidy, ReStore Capital Alvarez & Marsal Canada ULC
Thompson Coburn Hahn & Hessen LLP Brian Garrity, Ruberto Israel & Weiner PC Christian Vit,
Corey Abrams, Frank Hamblett, Nixon Peabody LLP Alvarez & Marsal North Americal LLC
Columbia Business School
Coach King Upstate New York
Gervase Adams,
PricewaterhouseCoopers LLP Kyle Smith, Joseph Allen,
Dentons Bingham Greenebaum LLP United States Trustee Program
Justin Alexander, July/Aug
White Oak Commercial Finance LLC William Walsh, Rockland Trust Company Ryan Lowe, 2024
Baruch College, Zicklin
Carmine Bruno, SierraConstellation Northern California Journal of
School of Business J Corporate
Partners LLC Renewal
Guillaume Luber, INSEAD
37
 Connections
north america

West Michigan
AUGUST 20: TMA NOW Sponsored Networking
& Coffee, 12:30-1:45 p.m., The Bradbury Café in
Grand Rapids, Michigan.
AUGUST 22: NextGen Sponsored Dine-Around,
4-5 p.m., at the Holiday Bar in Grand Rapids,
Michigan.

Minnesota
SEPTEMBER 10: New Member Get-to-Know
TMA Breakfast, 8:30-9:30 a.m., at the Hope
Breakfast Bar in St. Louis Park, Minnesota.

Chicago/Midwest
SEPTEMBER 19: 3rd Annual Capital Marketplace,
5-8 p.m., at RPM Events in Chicago.

Rocky Mountain
SEPTEMBER 18: 2024 TMA Rocky Mountain Golf
Tournament, 1-7:30 p.m., Arrowhead Golf Course,
Littleton, Colorado.

Indiana
SEPTEMBER 24: 2024 Golf Outing, 11:30 a.m.-
6:30 p.m., at the Fort Golf Resort in Indianapolis.

Southern Ohio/Northern Kentucky

AUGUST 28: Tee-Off with ACG + TMA,
11 a.m.-5:30 p.m., at Stonelick Hills in Batavia, Ohio.

Louisiana
AUGUST 21: Take a Swing at TMA,
July/Aug 5-8 p.m., at Loft 18 in Metairie, Louisiana.
2024

Journal of
Corporate
Renewal
For the most up-to-date information on TMA and chapter
events, visit the Events page at turnaround.org.
38
 HAPPENINGS

Detroit
AUGUST 7: TMA Detroit NOW Garden Party,
4-6 p.m., at the Grosse Pointe Yacht Club in Grosse
Pointe Shores, Michigan.
SEPTEMBER 12: TMA Detroit 30th Anniversary,
5-9 p.m., at the Monarch Club in Detroit.

TMA Northeast Regional Symposium

AUGUST 28-29: TMA Northeast Regional
Symposium, at the Saratoga Casino Hotel in
Saratoga Springs, New York.

Connecticut
SEPTEMBER 17: CTTMA Strategies for Troubled
Portfolios, 5:30-8 p.m., at the Trumball Marriott
Shelton in Trumball, Connecticut.

The TMA Annual

OCTOBER 15-18: The 2024 TMA Global Annual,
at the Loews Philadelphia in Philadelphia.

Pittsburgh
AUGUST 22: TMA Pittsburgh Pirates Game, 6-9 p.m.,
at PNC Park in Pittsburgh.
SEPTEMBER 9: TMA Pittsburgh Golf Outing,
10:30 a.m.-7 p.m., at the Fox Chapel Golf Club in
Pittsburgh.

Chesapeake
AUGUST 22: Networking at the Yards, 6:15-11 p.m.
at Oriole Park at Camden Yards in Baltimore.

Carolinas
AUGUST 21: SFNet/TMA Raleigh Summer Social,
5:30-8 p.m., at the Williard Rooftop Lounge in
Raleigh, North Carolina.

TMA Southeast Regional

AUGUST 7-9: TMA Southeast Regional, at the
JW Marriott in Savannah, Georgia.

Atlanta
AUGUST 15: TMA Atlanta/SF Net Florida
Summer Social, 5-8 p.m., at Bold Monk AUGUST 20: Taco & Tequila Social, 5:30-7:30 p.m.,
Brewing Co. in Atlanta. July/Aug
at Cocina 214 in Winter Park, Florida. 2024
SEPTEMBER 24: Swing & Socialize: TMA Topgolf
Journal of
Takeover, 5-7 p.m., at the Topgolf in Jacksonville, Corporate
Florida. Renewal

39
 Connections
international

4
2

2
The TMA Annual Germany
OCTOBER 15-18: The 2024 TMA Global NOVEMBER 14: TMA Germany
Annual, at the Loews Philadelphia in Annual Conference, 9 a.m.-6 p.m., at
4
Philadelphia. Koenigstein in the Taunus, Germany.
United Kingdom
SEPTEMBER 25: TMA NOW 5th
1 3 Anniversary, 6-10:30 p.m., sailing from
Australia Switzerland Tower Bridge Quay in London.
SEPT. 10-11: TMA Australia National SEPTEMBER 11: AGM 2024 and NOVEMBER 14: The TMA UK Annual
Conference, at the Crown Sydney National Convention, 1:30-8:30 p.m., at Conference, 8:30 a.m.-5:30 p.m., at the
in Sydney. Marriott Hotel in Zurich, Switzerland. Royal College of Physicians in London.

July/Aug
2024

Journal of
Corporate
Renewal
For the most up-to-date information on TMA and chapter
events, visit the Events page at turnaround.org.
40
OCTOBER 15 – 18, 2024
Loews Philadelphia | Philadelphia, PA

Unlock Opportunities at the TMA

Annual Conference in Philadelphia!
Join us at the TMA Annual Conference, where connections
create possibilities and history meets innovation.
Forge Connections: Whether you’re seeking partnerships,
investments, or simply inspiration, the TMA Annual
Conference is your gateway to endless possibilities. With
TMA’s robust chapter presence in Philadelphia and attendees
from all over the globe, the TMA Annual provides ample
opportunity for you to invest in and expand your network.
Explore a City of Rich Heritage: Immerse
yourself in the storied streets of Philadelphia, where
every corner whispers tales of America’s past.
Discover Opportunities: Gain insights through the
best thought leaders in the industry. The TMA Annual
also offers opportunities for continuing education.

FOR MORE INFORMATION OR TO REGISTER, VISIT

ANNUAL.TURNAROUND.ORG
 HOW
HILCO
MADE
TIME
FLY
When it was time for World of Watches to monetize aged and excess inventory, Hilco Wholesale
Solutions helped by purchasing more than 100,000 units up-front. Find out how our custom capital
solutions, purchase and sale strategies can help your aged and excess goods fly off the shelf at
optimal prices, without risk or channel disruption. Contact Gary Epstein at 847.418.2712 or
[email protected].

VALUATION + MONETIZATION + ADVISORY + CAPITAL SOLUTIONS