For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.
Recent Developments
The UK—On 14 April 2014, the English High Court of Justice, Chancery Division, sanctioned schemes of arrangement for leading European parking manager the Apcoa Group ("Apcoa") in a case that further illustrates the willingness of the English Court to accept jurisdiction over foreign companies. With the maturity date of its Facilities Agreement approaching and without the means to repay the outstanding obligations in full, Apcoa needed to extend the termination date of the Facilities Agreement. Accordingly, the governing law and jurisdiction clause in the Facilities Agreement (originally subject to German law and the exclusive jurisdiction of the courts of Frankfurt/Main) were changed to English law and the English courts by a majority vote of Apcoa's lenders. Apcoa then proposed English law schemes of arrangement to cram down those creditors that were blocking the maturity extension (there were nine scheme companies and therefore nine separate schemes of arrangement).
The English court determined that by virtue of: (i) the change of the governing law and jurisdiction clause to English law and the English courts; and (ii) the fact that the schemes of arrangement would likely be recognised in the countries in which the scheme companies are incorporated, there was sufficient connection with England, and the schemes were likely to achieve their purpose. Accordingly, the English Court sanctioned the schemes.
This is an important decision because it extends the reach of schemes of arrangement. Apcoa's only connection with England was as a result of a calculated amendment to the Facilities Agreement by a majority lender vote. Given the wide variety of possible restructuring outcomes and the capacity to cram down dissenting creditors, the case is evidence that schemes of arrangement are being used increasingly by foreign companies to effect a financial restructuring that would not otherwise be available to them in their home jurisdictions.
Global—On 21 April 2014, the US Supreme Court heard arguments in connection with Argentina's appeal of a 2012 ruling of the US Court of Appeals for the Second Circuit (EM Ltd. v. Republic of Argentina, 695 F.3d 201 (2d Cir. 2012)), affirming a lower court's order directing two banks, in connection with Argentina's long-running dispute with bondholders who did not participate in Argentina's 2002 and 2005 debt restructurings, to disclose comprehensive information concerning assets Argentina owns outside the US. The court appeared to be inclined to narrow the scope of the lower court orders in favor of the bondholders by excluding diplomatic, military and national security property owned by Argentina. However, the justices indicated that they might rule to uphold the orders as they apply to commercial property outside of the US. The court has yet to rule on Argentina's 18 February 2014 petition seeking review of lower court rulings that, among other things, construed pari passu, or equal footing, clauses of a bond indenture to prohibit Argentina from making payments to participating bondholders before it pays US$1.3 billion to distressed debt investors who refused to exchange their defaulted bonds.
Noteworthy
Jones Day advised BNP Paribas, Deutsche Bank AG, London Branch, and HSBC Bank plc, as representatives of the several underwriters, in connection with the public offering by PepsiCo, Inc., a world leader in convenient snacks, foods, and beverages, of €1 billion in Senior Notes. The offering will consist of €500 million in 1.750% Senior Notes due 2021 and €500 million of 2.625% Senior Notes due 2026. The Notes are expected to be listed on the NYSE.
Jones Day advised Greystar Real Estate Partners in connection with the £174 million (US$291 million) acquisition of a portfolio of student properties in London from Oasis Capital. The three developments within the portfolio (Woodland Court, Wedgwood Court and Great Suffolk Street) total 1,129 student beds.
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