GRR 100 2019

Davis Polk & Wardwell

Professional notice

Acted on the largest-ever restructuring to close in Brazil, and the first under PROMESA to close in Puerto Rico

Global heads of restructuring and insolvency:Donald Bernstein, Marshall Huebner
Partners in restructuring team:17
Restructuring lawyers in Who's Who Legal3
Active cross-border restructuring and insolvency matters:-

History of the practice

Davis Polk & Wardwell traces its origins to 1849, when it went by the name Guthrie Bangs & Van Sinderen, and served as a professional berth for US President Grover Cleveland between his two non-consecutive terms in the White House. The cross-border insolvency practice dates back to the 1970s, where it conducted seminal work in settlement risk in international finance and (at the time, novel) cross-border asset freezes.

The practice has represented major financial institutions ever since its founding, and continues to do so to this day. In the 1970s, it guided traditional Western banks through some of the first sovereign debt restructurings around the globe. Since the 2008 global financial crisis, it has advised on the restructuring and insolvency of several large financial institutions and helped others to comply with new regulations enforced since the crisis.

The firm also worked on some of the first international cases to involve court cooperation across jurisdictions, with partners negotiating cross-border protocols long before the drafting of Chapter 15.

Its role in international insolvency developed dramatically during the 1980s and 1990s, when it became a key player in major developments including the International Bar Association's Cross-border Insolvency Concordat. Donald Bernstein – New York partner and currently co-head of the firm's insolvency practice – served as an official delegate to the insolvency working group of the United Nations Commission on International Trade Law (UNCITRAL) ahead of its production of the Model Law and was a founding director of the International Insolvency Institute (III).


Davis Polk's insolvency team spans three continents. The firm's Manhattan office hosts the most partners, who work with partners in London, São Paulo, Hong Kong and Tokyo. Partner Timothy Graulich, an III member and INSOL fellow, currently leads the firm’s cross-border restructuring efforts.

Who uses it?

In recent years, the firm has advised several global systemically important financial institutions (G-SIFIs) on their "living wills" required under the US Dodd-Frank Act.

The firm also has expertise in retail, motoring and real estate cases. Some important client names include Ford Motor Company; the administrators and liquidators of UK and European Lehman Brothers affiliates; and the UK retail conglomerate Tesco in the bankruptcy of its Californian grocery chain.

Its offices in São Paulo, Hong Kong and Tokyo have led to instructions in several large-scale Latin American and Asia-Pacific restructurings.

Historic track record

In the early 1990s, the restructuring of media tycoon Robert Maxwell’s business empire – one of the first major cases to raise the idea of cross-border cooperation between courts – saw Bernstein represent three bank lenders in protocol negotiations between a US examiner and PwC in the UK, while now-senior counsel Karen Wagner acted for them in a preference avoidance litigation thrown out of the English courts because the US had superior jurisdiction. That litigation ended up in US Second Circuit Court of Appeals with the banks prevailing, and is still cited in cross-border cases today.

At around the same time, Davis Polk represented Irish commercial aircraft leasing company Guinness Peat Aviation in a US$10 billion restructuring, and acted for the US for the restructuring of Telecom Argentina, taking part in litigation that established an important choice of law precedent. The firm also represented an international banking group in one of the first cross-border pre-packaged cases – the 1992 bankruptcy of Memorex-Telex, a US electrical goods manufacturer.

Some years later, the firm managed to get Chapter 15 recognition of computer parts manufacturer Elpida's Japanese plan of reorganisation. This was the firm time a US court recognised a Japanese plan under Chapter 15.

The firm's work with large banks includes acting for the joint administrators and liquidators of Lehman Brothers International Europe (LBIE) and its UK-based affiliates in litigation, followed by a deal between LBIE and LBI, Lehman's US broker. The deal is one of the largest inter-company settlements in history and is considered the largest case to engage the US Securities Investor Protection Act.

Davis Polk followed up on this work by acting for the Federal Reserve Bank of New York and the US Department of the Treasury in connection with the successful US$180 billion restructuring and recapitalisation of American International Group (AIG).

On the sovereign debt side, the firm represented Citigroup as paying agent for Argentine bonds in a high-profile litigation with Argentina over holdout creditors. The litigation concerned the enforceability of pari passu clauses in Argentina's sovereign bond contracts, after a US court told Citibank not to pay other bondholders until the state paid holdouts.

Recent events

At the top end of our research period, the firm advised Volkswagen on its worldwide multibillion-dollar exposure to Takata, a Japanese automotive parts company that was forced to tell car manufactures to recall vehicles over potentially defective airbag inflators it had produced. After pleading guilty to wire fraud and agreeing to pay US$850 million to car manufacturers, Takata entered civil rehabilitation in Japan and commenced Chapter 11 proceedings in Delaware for its US and Mexican arms. A February 2018 global settlement paved the way for approval of its Chapter 11 plan and the sale of the viable parts of Takata's business to a competitor.

It also worked on the bankruptcy of American toy retailer Toys "R" Us – another mammoth global case – advising the administrative agent and book runner on a $2.3 billion debtor-in-possession facility for the retailer, as well as the former minority partner in a joint venture that owns Toys “R” Us’ Asia businesses, Fung Retailing. When the majority partner JV, TRU Asia, tried to sell its stake to Toys “R” Us noteholders, Fung initially pursued it in courts and arbitration. They eventually settled in December 2018 so that Toys “R” Us could exit Chapter 11 weeks later, with Fung acquiring more equity in the Asia JV to make it the largest shareholder.

In Puerto Rico’s massive public debt restructuring, Davis Polk acted for an ad hoc group of bondholders in the Government Development Bank (GDB)’s US$6.4 billion restructuring under Title VI of the bespoke Puerto Rico Oversight Management and Economic Stability Act (PROMESA). The negotiated plan received federal court approval in November 2018 and was the first PROMESA case to close of several pending. Separately, the firm represented Bonistas del Patio, a non-profit group representing local bondholders estimated to hold around US$15 billion in public debt instruments, in a court-mandated mediation under PROMESA’s Title III. In August 2018, the mediation parties reached a plan support agreement to restructure US$17 billion in rescue bonds issued by the Puerto Rico Sales Tax Financing Corporation (COFINA). The plan received court approval in February 2019.

Before US courts, the firm also oversaw the successful Chapter 15 recognition of Curaçao insurer ENNIA’s restructuring under emergency regulations, in the face of objections from a shareholder. In December 2018, a New York bankruptcy court told the shareholder it was not its role to second-guess the Curaçao courts’ decision to extend the emergency regulations to ENNIA’s unlicensed affiliates. It was the first time a Curaçao insolvency process has been recognised in the US.

Partners Bernstein, Graulich and Elliot Moskowitz in New York continue to advise lender HSBC in the international saga unfolding over Chinese industrial fishing group China Fishery’s valuable Peruvian anchovy business. HSBC initially commenced insolvency proceedings against China Fishery in the Cayman Islands and Hong Kong in 2015, but withdrew them after a successful challenge against the Hong Kong liquidators – agreeing instead to a deed of undertaking that the group would sell its Peruvian business by July 2016. However, China Fishery filed a Chapter 11 case shortly after entering the deed. HSBC is now defending a US$245 million adversary damages action by the Chapter 11 trustee for the Peruvian business, where it stands accused of “unbridled overreach” in enforcing its interests. The Chapter 11 trustee recently sought recognition and assistance in Hong Kong, but was denied because the court said the Chapter 11 action had been filed to avoid the deed.

In Brazil, Davis Polk advised Solus Alternative Asset Management, a major creditor and backstop party of the country's largest telecoms company Oi, in its hard-fought US$20 billion judicial reorganisation proceedings – the largest ever private sector restructuring in Latin America. After years of acrimonious fighting between creditors and shareholders of the company at all levels of Brazilian and international courts and in arbitration, Oi finally consummated its restructuring plan in January 2019 with a US$1 billion capital increase backstopped by Solus. The plan has also been recognised and enforced in the US, the Netherlands and Portugal.

Having overseen the US$4.5 billion restructuring of Odebrecht-owned oil group OOG – in the largest extrajudicial restructuring in Brazil – and in the group’s Chapter 15 recognition, the firm is now advising bondholders of another Odebrecht group entity, construction arm OEC, as it looks to restructure out of court too.

Finally, Davis Polk has been working for the indenture trustee for notes issued by a Cayman Islands company, Schahin II, to fund the building of a Marshall Islands-flagged drill ship, the Sertão, which got into trouble as a result of being chartered to Brazil’s Petrobras when it was implicated in the “car wash” fraud investigation. Noteholders arrested the ship in the UK, and the indenture trustee filed the first ever Cayman scheme of arrangement implementing a US$15 million debtor-in-possession financing backed by noteholders to carry out essential maintenance on the vessel. The scheme was granted full force and effect in the US in November 2018.Bernstein has co-chaired GRR Live New York for two years running, in 2017 and 2018.

Client references

Rafael Rojo, head of non-profit group Bonistas del Patio, says his team first met Davis Polk in the restructuring of the Government Development Bank of Puerto Rico. “Davis Polk was representing a consortium of hedge funds and we had a local counsel. Notwithstanding, we worked as a team and accomplished a very satisfactory debt restructuring,” Rojo says.

It was this experience that persuaded Bonistas to hire Davis Polk for the COFINA restructuring. This “was also carried out with great results,” Rojo notes. “The constructive nature of Davis Polk’s performance and ability to understand the different positions of stakeholders allowed them a unique approach to all involved parties in seeking consensual solutions,” he says. “This collaborative attitude was highly distinguishable to the many parties involved in this process.”

Rojo says partners Brian Resnick and Bernstein both stood out: “Brian is extremely analytical and has a high level of understanding at macro and micro level without losing focus of the bottom line. Don has wide understanding as well, his seniority and soft spoken touch along with his track record adds a lot of credibility to their views when trying to get a point across.”

Frauke Eßer, legal counsel for crises, insolvencies and antitrust at Volkswagen Group Purchasing, says Takata was “the most important restructuring within the automotive supplier industry for the last 20 years”.

“This case was of major importance for Volkswagen, as we had to safeguard our supply change, had to guarantee the replacements of parts and had to safeguard our claims within a worldwide restructuring, including North and South America, Asia, Europe and Africa,” Eßer says. “We have never experienced a better law firm on the restructuring side. Their knowledge on economics and law provides substantive criteria to distinguish them from their competitors.” The firm was able to give advice on a worldwide basis, had very good knowledge of the case and dominated the customer group, providing creative ideas to help meet their aims, she adds. What’s more, they were always available.

Eßer highlights in particular partner Darren Klein in New York, who she says is “not only a magnificent lawyer, but he has also studied economics at university and worked as an economic consultant for four years.” She describes him as “extremely smart, creative and an influencer” and says he helped Volkswagen succeed in nearly all of its negotiations. Graulich also gets the thumbs up from VW: “Timothy is a real expert for cross-border cases and is very experienced in Japan and other jurisdictions,” Eßer says.

Davis Polk & Wardwell LLP (including its associated entities) is a global law firm with world-class practices across the board. Industry-leading companies and global financial institutions know they can rely Davis Polk for their most challenging legal and business matters. Our global, forward-looking focus is supported by 10 worldwide offices. More than 900 lawyers collaborate seamlessly across practice groups and geographies to provide clients with exceptional service, sophisticated advice and creative, practical solutions.


Davis Polk is recognised worldwide for its substantial experience in restructuring. We represent companies, financial institutions, hedge funds, investors, acquirers, trustees, administrators and receivers in connection with the largest and most complex:

  • insolvencies and restructurings;
  • rescue and debtor in possession financings;
  • exchange offer and debt/equity conversions; and
  • distressed mergers and acquisitions.

Cross-border experience

  • Davis Polk has developed a presence in each of the leading global business centres – allowing us to provide local knowledge and experience in complex international and cross-border insolvency matters.
  • Our skill in restructuring transactions and our knowledge of legal market practices across the world are such that global companies have regularly hired Davis Polk to advise on cross-border transactions with no US connection.
  • We have been involved in public and private-sector debt restructurings and insolvencies in numerous countries, including Brazil, France, Japan, Germany, Argentina, the United Kingdom, Ireland, Honduras, Mexico, Poland, Turkey, Venezuela, Australia, New Zealand and various countries in South East Asia.

Dodd-Frank advisory

We have been the leading US-based global law firm working, both domestically and internationally, with regulators to solve the “too big to fail” problem and with their financial institutions’ clients on “living wills” required under the Dodd-Frank Act. Our lawyers have also testified before Congress in recent years on the bankruptcies of financial firms.

International thought leadership

  • Roles held by members of the practice include:
  • editorial board member, Global Restructuring Review;
  • co-chair of the insolvency section of the International Bar Association’s insolvency legislation and policy subcommittee;
  • member of the Latin American regional forum of the International Bar Association;
  • members of INSOL International, a former co-chair of the G36 committee and an INSOL fellow;
  • founding director, former president and members of the International Insolvency Institute;
  • member of the Official US delegation to the insolvency working group of the United Nations Commission on International Trade Law (UNCITRAL); and
  • managing editor and contributing author of The International Insolvency Review.

Recent recognition

  • 2019: Band 1 for insolvency and restructuring (Chambers, The Legal 500, IFLR1000)
  • 2019: Leading cross-border restructuring and insolvency practice (Global Restructuring Review)
  • 2019: Restructuring Deal of the Year award (Latin Lawyer, The American Lawyer/Oi)
  • 2018: First in total restructuring advisory mandates (Debtwire)
  • 2018: Bankruptcy Practice Group of the Year award (Law360)
  • 2018: Restructuring Team of the Year award (IFLR)
  • 2018: Restructuring Deal of the Year award (IFLR/Odebrecht)

Recent notable assignments:

  • Oi SA: advising Solus Alternative Asset Management, a major creditor and backstop party in the $20 billion restructuring of Brazilian telecommunications provider Oi SA Oi’s Recuperação Judicial (a proceeding under Brazil’s bankruptcy law) in the largest court-supervised restructuring ever to take place in Latin America. In addition to the proceedings in Brazil, Oi is also subject to chapter 15 cases in the United States and ancillary proceedings in other foreign jurisdictions. This transaction has received more than six global awards.
  • Takata: advising Volkswagen AG in connection with the global restructuring of Takata Corporation and its subsidiaries. In February 2017, Takata Corporation pleaded guilty to wire fraud in connection with the Takata group's manufacture of airbag inflators containing non-desiccated phase-stabilised ammonium nitrate, and agreed to pay $850 million in restitution to original equipment manufacturers (OEMs), including Volkswagen. This was one of the first restructurings of mass tort claims on a global basis through coordinated use of multiple restructuring regimes, asset sales and channelling trusts.
  • ENNIA Caribe Holding: advising the Central Bank of Curaçao and St Maarten and the Foreign Representative of ENNIA Caribe Holding NV and certain of its subsidiaries in obtaining recognition under Chapter 15 of the United States Bankruptcy Code of ENNIA’s restructuring proceedings in Curaçao. The Bankruptcy Court’s decision represents the first time that a Curaçao insolvency proceeding has been recognised under Chapter 15 of the United States Bankruptcy Code.
  • Schahin: advising the indenture trustee, at the instruction of majority lenders, in connection with the exercise of remedies against the Schahin Group and a $15 million debtor-in-possession rescue financing facility for Schahin II Finance Company (SPV) Limited. The transaction is particularly notable as it represents one of the first instances of a Cayman scheme being used for rescue financing.
  • Puerto Rico: advising the Ad Hoc Group, whose members held approximately $1 billion of bonds issued by GDB, in the unprecedented restructuring of approximately $6.4 billion of GDB bonds, deposits and other liabilities, including claims held by governmental and non-governmental creditors. The restructuring was effectuated pursuant to Title VI of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) and Commonwealth legislation enacted to facilitate the GDB restructuring.
  • Bonistas del Patio: advising Bonistas del Patio, an organisation established to represent and safeguard the interests of Puerto Rico resident bondholders, in connection with the Puerto Rico debt mediation and restructuring negotiations. Bonistas del Patio estimates that the local bondholders that it represents hold approximately $15 billion of various debt instruments issued by Puerto Rico, including general obligation bonds issued by the Commonwealth of Puerto Rico and bonds issued by the Puerto Rico Sales Tax Financing Corporation (COFINA).
  • China Fisheries: advising a major lender in the ongoing Chapter 11 bankruptcy cases of China Fishery Group Limited and certain of its affiliates, including defending a lawsuit pending before the bankruptcy court, in which plaintiffs allege at least $245 million in damages arising under purported violations of Peruvian, Hong Kong and US law.
  • Fung Retailing: advising Fung Retailing Limited in connection with (i) Fung’s investment in Toys (Labuan) Holding Ltd (the Asia JV); (ii) the Chapter 11 cases of Toys “R” Us and its direct and indirect debtor subsidiaries (together, the debtors) in the United States Bankruptcy Court for the Eastern District of Virginia, which were jointly administered and captioned In re Toys “R” Us Inc, et al, Case No. 17-34665 (KLP); and (iii) the potential acquisition of the debtors’ business operations in the Asia Pacific region.  
  • Odebrecht Oil & Gas: advising Odebrecht Óleo e Gás SA and certain of its subsidiaries in connection with an agreement with a group of creditors to restructure approximately $5 billion of financial debt.

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