By Ragnar Johannesen

While the CIS nations have recently provided a multitude of sizeable restructuring cases, the region’s dominant force, Russia, has stood up reasonably well to lengthy economic decline, economic sanctions and the collapse of oil and gas prices. There are now signs however, that its complex troubles are pushing certain companies towards a restructuring or insolvency position.

Russian, Ukrainian and CIS restructurings can be especially challenging, not least because of the complex corporate and capital structures that these companies often employ, using  multiple offshore vehicles (usually in jurisdictions like Cyprus, the Netherlands and the BVI). Information gathering can therefore be incredibly difficult and there may be major issues around corporate governance and the reliability or usefulness of the accounts provided.

CIS companies often have capital structures that have multiple and indistinguishable layers. The balance sheet usually  includes a combination of a multitude of bilateral loans, alongside a syndicated facility as well as bonds, but there will be very little inter-linkage between them (i.e. ordinarily no intercreditor agreement). 

By Herve Diogo Amengual, Frank Grell, Helena Potts and Andrea Novarese

In light of the UK’s cram down and director-friendly processes, in particular its scheme of arrangement model, major European economies such as France, Germany and Italy have worked hard to develop regimes that give greater emphasis to pre-insolvency alternatives. These new regimes create cram down mechanisms and encourage debtor-in-possession (DIP) financings, ultimately aiming to make restructuring plans more accessible, more efficient, and crucially more reliable; essentially more in tune with the Anglo-American approach to insolvency and restructuring.