European Union: EuroResource—Deals & Debt - March 2017

Last Updated: March 29 2017
Article by Corinne Ball

For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.

Recent Developments

The European Union—18 January 2017 was the effective date of  EU Regulation No 655/2014 of 15 May 2014 ("Regulation"), which establishes a European Account Preservation Order procedure. The main purpose of the Regulation is to establish a uniform, harmonised procedure that makes it easier for creditors to obtain protective measures within the European Union. The Regulation enables a creditor to obtain a "preservation order" designed to ensure that the creditor can enforce its claims against a debtor or its assets in a cross-border EU context. A more detailed discussion of the Regulation is available here. The Regulation does not apply in the United Kingdom or Denmark, which did not adopt it.

Germany—In December 2016, the German legislature amended the German Insolvency Code ("Insolvency Code") to clarify the status of netting arrangements in financial transactions. That status was cast into doubt by a 9 June 2016 ruling by the German Federal Court of Justice (docket no. IX ZR 314/14) invalidating closeout netting provisions used throughout the financial industry if they deviate from the requirements set forth in section 104 of the Insolvency Code, which are mandatory pursuant to section 119 of the Insolvency Code. The core of the reform is new paragraph 4 of section 104. This provides that counterparties may contractually agree on netting provisions that deviate from the statutory provisions governing termination and settlement of regulated contracts as long as the deviations are compatible with the essential principles of section 104, thereby in principle upholding existing standard industry netting arrangements. On the day the 9 June court ruling was rendered, the German Federal Financial Supervisory Authority ("BaFin") issued a general decree to the effect that closeout netting arrangements of the type that were dealt with in the court ruling would be consummated as agreed upon among the parties concerned. This administrative decree was effective only until 31 December 2016. The statutory amendments to section 104 of the Insolvency Code apply from 29 December 2016 onward. Thus, due to the rapid response by the BaFin and the German legislature, the impact of the Federal Court of Justice's decision is limited.

In February 2017, the German legislature enacted changes to the provisions of the Insolvency Code governing the avoidance of pre-insolvency transfers to encourage the execution of settlement agreements at a time when a debtor is distressed but has not yet filed for insolvency. Among other things, the reform amends the fraudulent transfer provisions in the Insolvency Code by reducing the longest possible avoidance look-back period of 10 years (so-called clawback of transfers made by a debtor with intentional harm as to the satisfaction of liabilities vis-à-vis its creditors in general) to four years, providing that such four-year period applies in those instances where the transfer resulted in a fulfillment of the transferee's claim or such claim being secured. It also changes the rules governing the circumstances under which a transferee will be deemed to have knowledge of the debtor-transferor's insolvency, especially in cases where the transferee has agreed to modified payment terms on a loan or extension of credit or with respect to the delivery of goods and services made before an agreement as to the modified payment terms was reached. In addition, the reform amends the Insolvency Code to require that, if a contemporaneous exchange for new value is challenged as a fraudulent transfer, the transferee must have had knowledge at the time of the transfer of the debtor's "dishonesty" as well as the debtor's insolvency and its intention to cause harm to creditors.

Italy—New regulations for corporate taxpayers, enacted as part of Italy's budget law for 2017, are intended to make the country more attractive to foreign investors, while also supporting domestic investments and broadly promoting economic growth. A more detailed description of the budget law's tax provisions, which include changes in tax rates, new rules for interest deduction by financial institutions and terms regarding the depreciation of tangible and intangible assets, is available here.

France—On 8 November 2016, the French National Assembly adopted the "Sapin II Law", landmark legislation that ushers in a new era of anti-corruption enforcement in France. Named by reference to the "Sapin I Law", which was enacted in 1993, the Sapin II Law aligns French anti-corruption law with aspects of US and UK corruption enforcement. After withstanding a legal challenge in the country's Constitutional Court, the Sapin II Law was officially enacted on 9 December 2016. A more detailed description of the most notable provisions of the Sapin II Law is available here.


Jones Day represented BNP Paribas and Crédit Agricole Corporate Investment Bank in connection with the €1.5 billion (US$1.59 billion) (market capitalization) initial public offering of Tikehau Capital, an asset management and investment group that manages approximately €10 billion on behalf of global institutional and private investors. The IPO was structured as an exchange offer and subsequent squeeze-out initiated by Tikehau Capital on the shares and net share settled bonds convertible into new shares and/or exchangeable for existing shares of Salvepar, Tikehau Capital's listed subsidiary.

Jones Day is representing Société Général S.A. in connection with the sale of Société Générale Splitska Banka ("SGSB"), its fully owned subsidiary in Croatia, to OTP Bank. The combination of SGSB, Croatia's fifth-largest bank, and OTP bank operations in Croatia will enable the creation of a more significant-sized banking player in the country with a greater potential for development.

Jones Day advised Euronext N.V. in connection with its binding all-cash offer of €510 million (US$542 million) to LCH.Clearnet Group Limited and London Stock Exchange Group plc to acquire LCH.Clearnet SA ("Clearnet"). Paris-based Clearnet is a leading European Market Infrastructure Regulation (EMIR)-authorised central counterparty serving Euronext's markets, pan-European electronic trading platforms and OTC markets, with branches in Amsterdam and Brussels, as well as a representative office in Porto.

Jones Day is representing Reynolds American Inc. ("RAI") in connection with the acquisition by London-based British American Tobacco, p.l.c. ("BAT") of the 57.8 percent of the outstanding shares of RAI not owned by BAT and its affiliates in a transaction valued at US$49 billion. Following the transaction, BAT will become the world's largest listed tobacco company by net revenue and operating profit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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