86 LAWYERMONTHLYMARCH 2023 The needs of our client required addressing a myriad of highly technical issues. In this exercise, key considerations include reconciling conflicts between laws of the jurisdictions involved, accurately estimating the process and timing for implementation, navigating government agencies, documenting agreements that protect your client and anticipating and mitigating risks of all sorts. Beyond these basic concerns, did you encounter any noteworthy challenges during the course of the restructuring? If so, how did you overcome them? The biggest challenge was producing a reorganisation plan that reconciled two very different legal systems in matters of shareholder rights and public policy limitations, and that afforded creditors their fair share of payment. Under US federal bankruptcy law, creditors are entitled to full payment before any shareholder recovers anything. This rule is called the ’absolute priority rule’ and because it belongs to a federal statute, it trumps the corporate law of a state. Since shareholder rights are a matter of state law in the US, these are overridden by the absolute priority rule. Thus, in a US reorganisation, voting quorums and pre-emptive rights of shareholders are not an obstacle for the implementation of a plan of reorganisation. However, implementing in Chile a reorganisation plan that involved overriding Chilean shareholder rights was uncharted territory. While strong legal arguments may have ultimately led to successful enforcement of the plan in Chile, there were material risks of delays based on a potential expansive interpretation of public policy controls by lower-tier courts on implementation of foreign cross-border insolvency measures and reorganization plans. On this issue, our firm played a key role in assessing the strength of the ad hoc group of claimants’ position if they pursued a reorganisation plan on their The vast experience of our cross-border litigation team in the recognition and enforcement of foreign judgments, insolvency-related measures and arbitral awards proved critical in assessing the strength of each party’s position during the plan’s negotiation phase. In addition, our international mindset and excellent specialty practices like anti-trust, administrative law and tax helped the ad hoc group of claimants to understand and negotiate agreements effectively with the various parties involved. This was something we could only do thanks to our firm’s boutique approach to clients, which significantly reduces the potential for conflict of interest. What are the key considerations to take into account while advising ad hoc claimants during a large restructuring such as this? The key objective was recovery for our client, the ad hoc group of claimholders. In achieving this, financial and commercial considerations tend to drive negotiations, but any proposal must first be structured in a legally feasible and practical way, and then once accepted, the agreement must be documented and implemented impeccably. Please tell us more about the role your team played during the restructuring process. Our team oversaw all Chilean legal issues and provided strategic advice for the ad hoc group of claimants. Eventually, the ad hoc group of claimants became the largest holder of LATAM claims in the Chapter XI procedure, to the extent it had the ability to singlehandedly approve or reject any reorganisation plan proposed by LATAM. From very early on, we engaged Arturo Poblete and his team from Coeymans, Edwards, Poblete & Dittborn to assist with the corporate law and securities law aspects of the advice, while we took the lead on the cross-border insolvency issues. Our team also assisted with antitrust, insolvency and civil procedural law and tax law analysis, especially during the design and implementation of the plan. Why was Bofill Escobar Silva Abogados a good fit for advising the claimants? What specialised skills and experiences did your team bring to the role? The needs of our client required addressing a myriad of highly technical issues. We advised in the use of barely tested cross-border insolvency rules, the paths for enforcement of a foreign reorganisation plan, the structuring of new financing for the debtor during the Chapter XI proceedings, the backstopping of the debtor’s exit financing, the negotiation of support for the debtor’s reorganisation plan, among other major tasks that required involving experts from all our firm’s practices, who all rose to the occasion. This speaks very highly of the diversity and quality of our professionals, and their strong international background, which is at the heart of our firm’s well-known expertise in complex cross-border cases.
RkJQdWJsaXNoZXIy Mjk3Mzkz