the relevant board members and/ or the litigation risk. New money funding options are varied and range from debt-to-equity swaps, extension of maturity, warrants or hybrid or preferred equity instruments issues, collateralisation of existing notes and/ or new loan facilities. What are the typical Luxembourg key points that are relevant in a bond restructuring process? Typical key Luxembourg legal points that are often encountered in bond restructurings include the following: - Fair treatment of creditors and how this Luxembourg law principle impacts the restructuring negotiations. - The recognition of the UK Scheme or Restructuring Plan and US Chapter 11 proceedings. The UK and the US insolvency proceedings have their challenges in terms of recognition In Luxembourg (in the case of the UK since, with Brexit, UK court judgments are no longer automatically recognised in Luxembourg) and it is often a question of whether or not we actually need recognition at all or if, in light of the effects of the procedure and the envisaged implementation steps, such recognition is not formally required. - Single point of enforcement. Numerous bond restructurings (as with any other type of debt restructuring involving a Lux security package) use the ’double Luxco‘ and enforcement of a Luxembourg share pledge as a ’clean‘ way to transfer control from the bond issuer group to the bondholders. The challenge there is often getting the required majority and instructions and whether this enforcement could conflict with foreign proceedings or, on the contrary, be part of their implementation. 44 LAWYER MONTHLY APRIL 2023 - Bond issuer board liability. Depending on the culture of the board and the profile of the bond holders, you may have nominees or executive board members on the board of a bond issuer or guarantor and the negotiations of a restructuring deal with them on board may prove to be challenging or need a lot of support to clarify the risk and potential liability at stake. With bonds listed on the NY stock exchange, there comes the added difficulty of US bondholders typically trying to pin fiduciary duties on a Luxembourg board that they would not have under Luxembourg law, which can lead to many discussions and negotiations, especially when bondholders are trying to guide the board of the issuer in a certain direction not necessarily in line with Luxembourg governance principles. - Inside information. During restructuring negotiations, creditors will have access to non-public commercial information, some of which might qualify as inside information under the Market Abuse Regulation (MAR) in the context of bonds listed in the European Economic Area. Possession of inside information will restrict bondholders from trading their bonds. Breaching these restrictions may result in heavy sanctions and the topic is therefore very sensitive. What skills does the Loyens & Loeff team bring to such an operation? One key skill is the ability to navigate
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