Introducing R&I over Wi-Fi, Harneys’ newest podcast series. Taking a deep dive into the various strategies and tactics you can take when faced with a restructuring, while keeping you up to date on emerging and critical issues surrounding restructuring and insolvency.
Episode 1: Parallel Schemes of Arrangement
In our first episode, partners Chai Ridgers and Ian Mann discuss the use of parallel schemes of arrangement in cross-border restructurings, particularly the cross-border restructuring of an offshore company listed in Hong Kong. Take a listen below.
- A cross-border restructuring of an offshore company needs to ensure that the compromise which is effective in one jurisdiction also has practical effect in all other jurisdictions in which the company holds assets.
- The steps required to give practical effect to any particular restructuring are necessarily fact sensitive and will depend on the precise nature of the compromises implemented by the restructuring process.
- The starting point in any debt restructuring is the “Gibbs Rule” which provides that where a debt is governed by the law of a particular jurisdiction, it cannot be compromised by a foreign insolvency proceeding unless the creditor submitted to that foreign proceeding.
- The commercial imperative is to ensure that a disgruntled creditor cannot undermine the negotiation or implementation of a restructuring in the jurisdiction where the scheme company is incorporated.
- Robust protections are available in the Cayman Islands, the British Virgin Islands, and Bermuda to ensure the smooth running and the cross-border effectiveness of onshore debt restructurings.
Be sure to check out our Restructuring page for dedicated specialist expertise needed to navigate the complexities which can arise for a distressed company in a cross-border environment.
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