Global Restructuring Review - Cross-border restructuring and insolvency legal news, features and events

GRR Awards 2019 - cooperation

Kyriaki Karadelis

15 May 2019

GRR Awards 2019 - cooperation

Casa Batllo, one of the most famous houses in Barcelona (Credit:

Nominees in three categories have already been revealed for the GRR Awards 2019. Up next is the shortlist for “Cross-border cooperation in a specific restructuring or insolvency matter”.

The stunning El Palace Hotel in Barcelona will play host to the GRR Awards 2019 on 15 June – the night before the opening reception for the International Insolvency Institute’s 19th Annual Conference.

Starting from 7pm, the evening will begin with a networking reception followed by dinner, before trophies are presented in 11 categories celebrating the people, places and matters that advanced the practice of cross-border restructuring and insolvency over the past year.

In addition to those 11 categories, we will also be revealing the top 30 firms in the GRR 100 2019 – our annual guide to approved cross-border insolvency and restructuring law firms – which will be presented to the wider public on the morning of Monday 17 June.

During March and April, we asked readers to submit nominations for several of the awards categories.

We have already revealed the  shortlist for “Noteworthy Spanish restructuring matter”, “Most important cross-border recognition decision”, and “Innovation in cross-border insolvency”.

Below we now present the nominees in the “Cross-border cooperation in a specific restructuring or insolvency matter” category.

Shortlists for the remaining categories will be published in GRR over the next few days, after which we will also unveil the recipient of our annual Lifetime achievement award.

For full details about the GRR Awards 2019, as well as photos from last year and to book a place, please visit our event website.

All profits from the GRR Awards go to the Swawou Layout Community Primary School for Girls in Sierra Leone, which was established in 2008 by GRR’s parent company, Law Business Research, to offer free primary education to girls from disadvantaged homes in Kenema town, eastern Sierra Leone.

Cross-border cooperation in a specific restructuring or insolvency matter – nominees

Aegean Marine – This global ship fuel supplier, headquartered in Greece and operating in 20 countries, completed a Chapter 11 restructuring in just five months, after a nearly US$300 million hole in its accounts looked likely to push it into liquidation in mid-2018. Taken over by US activist investors in May 2018, Aegean Marine originally tried to restructure out-of-court through cost-cutting and a deal with its major shareholder and stalking horse bidder, Swiss commodities trader Mercuria Energy Group. Mercuria became Aegean’s sole lender, buying out the rest of its credit facility providers in August of that year. But the company’s ad hoc group of unsecured convertible noteholders couldn’t get on board with Mercuria’s restructuring offer. The same group later objected to Aegean’s debtor-in-possession financing plans in the Chapter 11 filing, saying a proposed US$532 million injection from Mercuria was a “loan to own scheme” that should be investigated for “inappropriate and dominant” control. Those objections were blown away, however, with a deal agreed “on the courthouse steps” in December, just before a contested DIP finance hearing. The restructuring then faced a challenge in the form of an alternative restructuring proposal from US asset manager Oaktree and commodity trader Hartee Partners, which initially garnered the support of more than 50% of unsecured noteholders. However, Mercuria then came back with a better offer: allowing creditors 100% of the proceeds of litigation against the group’s former leadership, which stands accused of misappropriating its assets. Mercuria also agreed to give the unsecured group US$40 million cash recovery with no break-up fee. Aegean announced in March 2019 that the Manhattan bankruptcy court had confirmed its plan of reorganisation subject to minor modifications. It emerged as Minerva Bunkering, a fully-owned subsidiary of Mercuria Energy Group, the following month, with a balance sheet delivered by almost US$900 million. Those who submitted this case note that the company’s litigation claims against its former managers proved to be “valuable currency” in facilitating a consensual outcome.

Oi reorganisation – Brazilian telecoms company Oi finally completed its US$20 billion judicial reorganisation in January – the largest private sector restructuring in Latin American history – having put to bed years of legal battles between the company, its creditors and shareholders before multiple tribunals, in numerous jurisdictions. Nearly 100% of creditor classes agreed to Oi’s restructuring deal in a delayed creditor vote that took place in a former Olympic venue in December 2017, but that was just the beginning. At first, its Brazilian proceedings were not recognised in the Netherlands, where two of Oi’s note-issuing debtors were registered. In fact, the Dutch courts adjudged the companies bankrupt as a result of applications from hedge fund creditors. Those same hedge funds also (unsuccessfully) challenged Oi’s global restructuring in a New York court, trying to partially reverse Chapter 15 recognition of the Brazilian proceedings and have the Dutch proceedings recognised instead. But the New York court denied the application, finding creditor Aurelius was trying to “weaponise” the process. Later, the same US bankruptcy court enforced the Brazilian plan, rejecting challenges from shareholders Bratel and Pharol that it interfered with their rights in Brazilian law. The shareholders made those same arguments in Brazil in litigation and arbitration, and also tried to stop Oi having its restructuring recognised in Portugal – initially with success. When Brazil’s Superior Court decided that the arbitrator had jurisdiction over the shareholders dispute, Oi, Bratel and Pharol finally settled their differences, paving the way for Oi to implement the plan with a US$1.25 billion capital increase. This very short summary of a long-running case is a testimony to the use of different forms of leverage that can be used to persuade the other side to reach a consensual solution.

Toys “R” Us – Toys “R” Us’s bankruptcy required cross-border cooperation in 38 countries, with several formal insolvency processes, international recognitions and distressed assets sales around the globe. Despite competing creditors’ interests and the fact restructuring efforts did not achieve a going concern outcome for Toys “R” Us in the US, UK and Australia, the group did sell on its businesses in Asia, Central Europe, Iberia and Canada – and ultimately emerged from Chapter 11 in January 2019.  Those inside the transactions note that the company got court approval to begin the sale process for its international operations via a transition services entity, because its decision to wind down in the US could have had a domino effect on other parts of the group. Initially, it faced trouble when Fung Retailing, the minority shareholder of its Asian joint venture, tried to exercise a right of first refusal in arbitration proceedings. But eventually the toy retailer struck a deal with Fung, allowing the noteholders whose debt was collateralised against its international businesses to take control of Toys “R” Us’s interests in the Asia JV and work with Fung as partners. The case also saw a settlement brokered between the company’s secured lenders and unpaid administrative claimants, providing for partial payment of administrative claims in the US and granting full releases to secured creditors and other stakeholders. This avoided long-running additional litigation and allowed the debtors to confirm a Chapter 11 plan for what was an administratively insolvent estate. A separate global settlement between the debtors, the unsecured creditors’ committee and holders of potential claims and causes of action between the company’s domestic and international entities also sped up the process. In Canada, Toys “R” Us was sold to Fairfax Financial Holdings outside of a plan of arrangement voted on by creditors, which allowed the transaction to be completed exceptionally fast. In France, the company was purchased out of judicial reorganisation proceedings by French toy company Jellej Jouets. Out-of-court sales were also completed in Portugal, Spain, German, Austria and Switzerland.

Danaos Corporation – Closing in August 2018, this US$2.2 billion restructuring of liabilities owed by New York-listed, Greece-headquartered containership owner Danaos took place out of court via consensual agreement with unanimous lender support. It took in the full works of restructuring tools: new money, take out and refinancing facilities, a restructuring support agreement, a debt-for-equity swap, debt trading and shared security, resetting financial covenants, modified interest rates and other intercreditor arrangements. At the end, existing shareholders got to keep 50% of the company. Danaos’s largest shareholder even made financial and operational commitments as part of the deal, which was reached despite lenders having different security interests and different levels of impairment all benefitting from “most favoured nation” provisions in their contacts with the company. The out-of-court negotiations were backstopped by a plan B pre-negotiated Chapter 11 and UK pre-pack administration and schemes of arrangement, which mirrored the out-of-court negotiations in using a novel holding company structure. But formal proceedings were ultimately avoided and the company continued to operate without disruption to crewmembers, charter counter-parties or trade creditors.

Isolux Corsán Group’s Brazilian restructuring – In 2017, the Brazilian arm of Spanish-headquartered construction company Isolux entered judicial reorganisation proceedings. Those proceedings started off shakily, with several creditors’ meetings being suspended. But 80% of the Brazilian businesses’ creditors finally approved a recovery plan in late December 2018, restructuring US$146 million in debt held by five of Brazilian group companies. The Brazilian rescue is a positive step for a group that has faced challenges for some years. In 2016, the company agreed a €2 billion deal with creditors and sought court protection in Spain and the Netherlands to successfully implement it, obtaining Chapter 15 relief in respect of both proceedings. But following further financial woes, seven Spanish group companies eventually had to enter formal bankruptcy processes. In March, a Madrid court approved a scheme of arrangement for four of the insolvent Isolux companies, in an unusual decision outlining circumstances when Spanish homologation processes are open to companies already in insolvency proceedings. A US subsidiary of Isolux is also in Chapter 11 in Texas.

FullBeauty Brands Inc – In February, the US celebrated its first Chapter 11 pre-pack restructuring pushed through a bankruptcy court in less than 24 hours. Plus-size clothing retailer FullBeauty Brands’s petite Chapter 11 didn’t even require a shortened notice of confirmation hearing like other, previous fast-paced pre-packs, such as the restructuring of school bus manufacturer Blue Bird Body. Indeed, the case adhered to all the “regular and appropriate” notice periods outside the court process, receiving full support from all creditors, none of whom objected or abstained. To get to the point where all creditors were on board, the company’s counsel said they began negotiations the previous August. The only party to object to the pre-pack, in fact, was the US trustee’s office: but this was anticipated and tackled by reaching out to the US trustee as soon as notice of the plan had been served. Despite employees of the office being furloughed by the US government shutdown that happened at the start of the year, they agreed to get on the phone and resolve all issues bar three before the case went to court. Those issues were eventually dismissed in a number of hours by Judge Robert Drain in the Manhattan bankruptcy court, after the government shutdown had ended. Why so fast? The group feared it might lose some of its Chinese vendors – who wouldn’t have necessarily understood the US bankruptcy process – had it not gone in and out of bankruptcy at speed.