South China Morning Post Quotes Akin Lawyers re: Chapter 15 Bankruptcy Filings

Akin complex disputes partner Daniel Cohen and financial restructuring counsel Jeremy Haywood have been quoted by South China Morning Post for their insights into a chapter 15 bankruptcy filing in connection with a China real estate insolvency situation.

Discussing the motivations behind implementing this protection, Daniel told SCMP, “Hong Kong-listed Chinese companies may opt for chapter 15 protection to pre-empt or prevent enforcement action in the US by hostile creditors, while pursuing restructuring outside the US jurisdiction.”

“There could be situations where a debtor decides not to seek chapter 15 protection, such as where a scheme of arrangement has a very high level of creditor support. This may also boil down to practical cost-and-benefit reasons,” he added.

The piece also questions if chapter 15 can be used to protect the personal assets of major shareholders.

Jeremy noted, “This is not something we would expect, because the scope of a foreign reorganisation or insolvency proceeding does not typically extend to shareholders and their personal assets, unless they had been wrongfully acquired from the debtor.”

Even if a shareholder’s personal assets were the subject of such proceedings, “any protection (or compromise) of those assets would be a function of that proceeding and the associated restructuring plan or scheme of arrangement,” he said.