Hogan Lovells’ Post

UPDATE: Evergrande Collapse Since the recent liquidation order from a Hong Kong court, the financial woes of Evergrande only continue to worsen. According to earlier analysis by Deloitte, the recent liquidation order has reduced the average (projected) return from 22.5% (in the event of the restructuring) to 3.4% (in liquidation) for creditors. The court was hopeful a restructuring plan could eventually be reached. This comes as a strong reminder of the commercial viability of restructuring plans and their effectiveness in optimising returns to creditors. The consequence of this collapse continues to have wide reaching impacts for the Chinese economy. www.jonespartners.net.au #evergrande #jonespartners #insolvency

💡Evergrande Liquidation: My Nikkei Asia Analysis 🔎 1️⃣ As Evergrande's liquidation saga continues, my analysis featured in Nikkei Asia in Jan remains strikingly relevant. 2️⃣ Let's revisit a key point: “The winding up of Evergrande enters uncharted waters," I observed. "A liquidator may gain control of some offshore assets, but the onshore implications are unclear. This will be a complex, multiyear process with many open questions.” 3️⃣ This perspective aligns with my earlier insights shared with The Wall Street Journal and Bloomberg News regarding Evergrande's unprecedented impact on the market. To explore the Evergrande collapse in more detail, check out my previous LinkedIn post: https://lnkd.in/gBeiTki8 https://lnkd.in/gxyRZxSw #Evergrande #RealEstateCrisis #ChinaEconomy

FT [excerpt]: When Eddie Middleton and Tiffany Wong worked on the #liquidation of Lehman Brothers’ vast Asian operations, it must have seemed like the largest and most complicated task they would ever take on. Fifteen years later, #China #Evergrande, the world’s most indebted property developer, has collapsed — and they are handling the wreckage. The pair, from US firm Alvarez & Marsal, have already started making preparations for a possible lawsuit against #PwC, Evergrande’s former auditor, after a judge appointed them as liquidators of Evergrande’s Hong Kong-listed holding company. Still they face a completely different challenge to the one they had when sharing out the spoils of the #WallStreet bank. On the Lehman case, they moved fast to sell its assets, bringing in cash to give to creditors. But most of Evergrande’s assets are in mainland China. Laying claim to them would be fraught with legal and political complexity, and the chances of significant recoveries for offshore #creditors from the mainland look slim. It is a crucial case for A&M, the US consultancy founded in the early 1980s whose calling card in the world of corporate #restructuring is that it liquidated Lehman’s US #business. At the time, Middleton and Wong worked at KPMG and were in charge of liquidating the Wall Street bank’s Asian operations, a task that required them to wrangle with counterparts at A&M and PwC, which oversaw Lehman’s European business. A&M hired the pair in the past five years as part of a push to significantly build up its China restructuring and insolvency business. Having had little presence in the market a decade ago, it has now beaten Big Four rivals to win the Evergrande task. Success would mean that, when it comes to winning restructuring business from Hong Kong, “A&M will be totally unassailable for years,” a former colleague of the pair said. ...Recovering funds for the global investors holding more than $20bn in Evergrande’s offshore bonds, as well as other creditors, could hardly be further from the experience of repaying those exposed to Lehman’s collapse. ... Middleton and Wong can try to persuade Evergrande’s mainland entities to strike a deal with offshore creditors. But if they want the liquidation order to be recognised on the mainland, they would need to win a ruling from a court there. While a 2021 arrangement allows Hong Kong liquidators to apply for approval to pilot courts in Shanghai, Shenzhen and Xiamen, there are few examples yet of successful applications. Even if the pair won such a mainland ruling, there may be no #money left to repay the creditors they represent, which are junior in standing to those onshore, where most of Evergrande’s $300bn in liabilities are owed. #News #business

The number of complex cross-border restructurings continues to rise as global economies become more integrated, resulting in an uptick in filings under chapter 15 of the U.S. Bankruptcy Code to obtain recognition of foreign restructuring proceedings, plan confirmation orders, and additional relief applicable to assets located in the United States. Read Jones Day's White Paper, which both highlights the advantages of pairing a foreign restructuring proceeding with chapter 15 recognition and examines recent trends emphasizing that access to chapter 15 relief is far from a rubber stamp. https://ow.ly/2Q3750STUsV #bankruptcy #restructuring #insolvency

The number of complex cross-border restructurings continues to rise as global economies become more integrated, resulting in an uptick in filings under chapter 15 of the U.S. Bankruptcy Code to obtain recognition of foreign restructuring proceedings, plan confirmation orders, and additional relief applicable to assets located in the United States. Read Jones Day's White Paper, which both highlights the advantages of pairing a foreign restructuring proceeding with chapter 15 recognition and examines recent trends emphasizing that access to chapter 15 relief is far from a rubber stamp. https://ow.ly/2o9O50SZwCt #bankruptcy #restructuring #insolvency

Evergrande ordered to liquidate HK Justice Linda Chan decided to liquidate the world's most indebted developer, with more than $300 billion of total liabilities, after noting Evergrande had been unable to offer a concrete restructuring plan more than two years after defaulting on a bond repayment and after several court hearings. Beijing might have alternate plans The decision sets the stage for what is expected to be a drawn-out and complicated process with potential political considerations as investors watch whether the Chinese courts will recognise Hong Kong's ruling, given the many authorities involved. Offshore investors will be focused on how Chinese authorities treat foreign creditors when a company fails. https://lnkd.in/eQbZX3qB

The number of complex cross-border restructurings continues to rise as global economies become more integrated, resulting in an uptick in filings under chapter 15 of the U.S. Bankruptcy Code to obtain recognition of foreign restructuring proceedings, plan confirmation orders, and additional relief applicable to assets located in the United States. Read Jones Day's White Paper, which both highlights the advantages of pairing a foreign restructuring proceeding with chapter 15 recognition and examines recent trends emphasizing that access to chapter 15 relief is far from a rubber stamp. https://ow.ly/Yk1M50STbpx #bankruptcy #restructuring #insolvency

The number of complex cross-border restructurings continues to rise as global economies become more integrated, resulting in an uptick in filings under chapter 15 of the U.S. Bankruptcy Code to obtain recognition of foreign restructuring proceedings, plan confirmation orders, and additional relief applicable to assets located in the United States. Read Jones Day's White Paper, which both highlights the advantages of pairing a foreign restructuring proceeding with chapter 15 recognition and examines recent trends emphasizing that access to chapter 15 relief is far from a rubber stamp. https://ow.ly/cK5l50SZz45 #bankruptcy #restructuring #insolvency

Public M&A Report 02/2024: The German public takeover market in the first half of 2024 We consider the market trend to be positive. In particular, the number of #transactions has risen compared to the same period of last year. After adjusting for a special effect from the previous year, there is also an upward trend in the offer value. The first half of 2024 is characterised by many #large-cap transactions with values in the low to mid single-digit billion range, though no mega takeovers in the double-digit billion range were observed. In contrast, the mid-cap market was quiet with only two transactions. Further, we noticed that fairness opinions to assess the appropriateness of consideration were not obtained in connection with a relatively large number of reasoned statements. Our focus article in this issue of the report explores “The role of banks in public takeovers under the German Securities Acquisition and Takeover Act”. The importance of these institutions in the structuring, financing, settlement and valuation of public offers for both bidders and target companies cannot be overstated. We outline their most important functions within the legal context of the German Securities Acquisition and Takeover Act. Read more in our latest Public M&A Report, edited by @Volker Land and @Stephan Schulz: https://lnkd.in/dKeGSqRz #PublicTakeovers #m&a #PrivateEquity

Public M&A Report 02/2024: The German public takeover market in the first half of 2024 We consider the market trend to be positive. In particular, the number of #transactions has risen compared to the same period of last year. After adjusting for a special effect from the previous year, there is also an upward trend in the offer value. The first half of 2024 is characterised by many #large-cap transactions with values in the low to mid single-digit billion range, though no mega takeovers in the double-digit billion range were observed. In contrast, the mid-cap market was quiet with only two transactions. Further, we noticed that fairness opinions to assess the appropriateness of consideration were not obtained in connection with a relatively large number of reasoned statements. Our focus article in this issue of the report explores “The role of banks in public takeovers under the German Securities Acquisition and Takeover Act”. The importance of these institutions in the structuring, financing, settlement and valuation of public offers for both bidders and target companies cannot be overstated. We outline their most important functions within the legal context of the German Securities Acquisition and Takeover Act. Read more in our latest Public M&A Report, edited by @Volker Land and @Stephan Schulz: https://lnkd.in/ecpujqSr #PublicTakeovers #m&a #PrivateEquity