BIICL presentation May 2007 WWII · Slide 17 Presentation BIICL May 2007 1. Summons to pay to...
Transcript of BIICL presentation May 2007 WWII · Slide 17 Presentation BIICL May 2007 1. Summons to pay to...
O M N I B R I D G E W A Y
Omni Bridgeway Emerging Market Debt Recovery
Wieger Wielinga – Managing director Omni Bridgeway Debt Trading BV
Presentation BIICL May 2007Slide 2
Debt collection and Asset tracing
A small debt makes a man your debtor - a large one makes a man your enemy Irish Proverb
Presentation BIICL May 2007Slide 3
Omni Bridgeway
Omni Bridgeway provides recovery solutions for distressed emerging market debts since 1986:– Emerging Market Debt Recovery
• Sovereign and semi-sovereign debtors or large corporate debtors. • Focus on defaulted trade and commercial debt• Legal recovery or Debt Trading and investment• Business Model: No success no fee Mandate or Purchase
– International Dispute Management and Support• Litigation funding • Enforcement of international arbitration proceedings in investment
disputes (ICC, ICSID, other)• No Success no Fee
– Expert Services and Consultancy on stand alone basis
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Omni Bridgeway
• Typical Omni Bridgeway clients:
– Multinationals and Banks
– Lloyds, exclusive mandates for political risk insurance claim portfolios
– Exporters, commodity traders, maritime companies
– Insurance / Re-insurance companies
– Export Credit Agencies
– Asset Traders and Investors
• Business model: different options for creditors
– Mandate basis (no cure no pay)
– Outright purchase for own book
– Combination
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Debt Recovery
Debt recovery/collection:
• “Softball” Consensual Debt Collection: through amicable means
• “Hardball” – non consensual debt collection: through legal means
• “Passing the ball” to investor: sale of the debt
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Consensual Debt Recovery (“Softball”)
• Diplomacy
• Restructuring and rescheduling
• Swaps
– Debt for debt swaps
– Debt for equity
– Debt for aid
• Advantage:
– Commercial relationship spared
• Disadvantage:
– Often lower return
– Assumes “willing” debtor
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Non-consensual debt recovery: “Hardball”
“A kind word with a gun is always more effective then just a kind word”
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Non-consensual debt recovery: “Hardball”
• Legal enforcement against the debtor’s assets
– Pre- or post- judgment/ award?
– Analysis of legal enforcement possibilities
– Asset tracing in favourable jurisdictions
– Effectuate attachments
– Force opposition to negotiation table
• Asset tracing KEY
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Asset tracing: KEY
• Fact finding mission:
– What:
• Recurring monetary flows or one-offs
• “Hard assets”
• assets held by debtor itself
• assets of debtor under third party: Garnishment
• Garnishment of assets held by “fourth party”
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Asset tracing: KEY
– Where: in favourable jurisdiction
• Legal considerations
– what legal system applies?
– pre-judgment attachment allowed?
– prevailing immunity doctrine
– Prevailing identification/piercing corp. veil doctrine
• Strategic considerations:
– Geographic location
– Risk and potential magnitude of adverse cost orders
– Practical challenges of certain jurisdictions
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Asset tracing
– How:
• Project planning
• Integrated aproach: teamwork of legal and
investigative researchers;
• Desktop homework using:
– Proprietary asset tracing databases;
– External databases and sources
– On the ground local investigation through
extensive network of investigators
• Gut feeling/experience
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Recovery case study
Timely asset tracing effort and local knowledge is KEY
Country : NigeriaCreditor : West European oil traderDebtor : Nigerian oil distribution companyAmount : US$30 millionGuarantor : NoneJudgement : US final Award
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Debtor’s corporate HQ...
Getting an award is not the same as getting paid.....
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Some lessons learned
– Asset tracing / investigative intelligence starts asap and
doesn’t stop at effecting attachment itself;
– Timing can be crucial
– Each case is different
– What is right timing and what are right assets depends
on specific case dynamics;
– Shock effect or quiet model?
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Recovery Case: Danish multinational
Country : DenmarkDebtor : Danish multinationalAmount : 6 millionStatus : Arbitration award obtained
Circumstances: • Very “unwilling” debtor• Danish jurisdiction unfavourable for attachments and award recognition • Debtor started reorganizing assets after client’s previous lawyer made
strategic error in France by prematurely exposing recovery effort.
Solution:• Global asset tracing effort identified key assets in Germany • successfully attached and defended in court • Subsequently settled out of court with minimal discount
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Creditor : UK chemicals multinational
Debtor : Ukraine
Guarantor : National Bank of Ukraine
Insurer : None
Instruments : Letters of Credit
Principal Amount : USD 11,847,946 (excl. overdue interest)
Recovery case: National Bank of Ukraine
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1. Summons to pay to National Bank of Ukraine. No full payment followed
2. Concerted attachments were effectuated in France, Germany, Luxembourg and The Netherlands.
3. Assets attached > amount owed
4. Main legal proceedings initiated.
5. National Bank of Ukraine forced to the negotiating table to reach an amicable settlement.
6. A settlement agreement was signed between the creditor and the National Bank of Ukraine for the amount of USD 13 million (i.e. full principal amount plus overdue interest).
Recovery case: National Bank of Ukraine
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Recovery Case: Zimbabwe
Country : Zimbabwe
Lender : West European Bank
Borrower : Ministry of Health and Ministry of Finance
Principal : EUR 25 million, maturity 1993-2000
Award : No
Solution: Asset tracing and subsequent attachments in various western jurisdictions
Negotiation started soon after attachments were made.
Recovery within one year :
• approx. EUR 10 million +
• for the remainder: restructuring agreement with improved conditions
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Recovery Solution 3: Sale of the claim to third party investor
• Increasing interest from investors with appetite for atypical assets• Market knowledge and access required
• Investors• Motives
• Many types of investors with different motives: – Specialized Investment funds – Exporters with local interests that seek extra leverage– Buy-Back by vehicle controlled by the original Debtor
• Pricing. Relevant factors:• Age of debt• Size of the debt• Quality of documentation• Statute of limitation• Security
Remember: Sale = immediate liquidity but on average lowest return
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Case study Sale
• Country : Mexico• Exporter : Asian Multinational• Debtor : Insolvent Mexican Steel company• Principal : USD 8 million• Collateral : Steel grinding equipment• Status Debtor : In Suspension of Payments• Acknowledged : USD 8 million incl PDI
Recovery through sale to Hedge Fund investor: USD 6 (approx. 75% of principal)
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Where does Omni Bridgeway fit in a lawyers practice
• Network for “softball” approach;
• Arbitration / litigation funding Attractive for creditors that prefer to mitigate risk of (further) financial exposure of litigation and/or creditors with limited financial resources to fund best possible recovery process;
• Asset tracing services (no cure no pay);
• Management of multi-jurisdictional attachment/enforcement effort;
• Debt Trading;
• Debt Pricing;
O M N I B R I D G E W A Y
Omni Bridgeway Emerging MarketsEmerging Market Debt Solution Provider
Wieger Wielinga – Managing director Omni Bridgeway Debt Trading BV