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Our grateful thanks go to our 2012 Annual Congress Sponsors PowerPoint Presentation
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Our grateful thanks go to our 2012 Annual Congress Sponsors

Our grateful thanks go to our 2012 Annual Congress Sponsors

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Our grateful thanks go to our 2012 Annual Congress Sponsors

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  1. Our grateful thanks go to our 2012 Annual Congress Sponsors

  2. Opening remarks Marc Udink (Udink & De Jong)Secretary-General of INSOL Europe Glen Flannery (Nabarro)Technical Co-Chairman of the Annual Congress

  3. Keynote speaker Catherine Day Secretary-General of the European Commission

  4. Morning Technical Session Kindly sponsored by www.hocheavocats.com

  5. Sovereign debt crisis in Europe Lucas Kortmann (RESOR) Yan Liu (IMF) Simon James (Clifford Chance) Elena Daly (EM Conseil)

  6. Sovereign debt crisis: a true European affair • EU warn Hungary over deficit • Ireland willnotreach 2015 deficit target • Portugal slips into default territory • Fears over Greek default mounting • Italy’seconomicwoesdeepen • Spain on the brink of insolvency • Serbia need two billion euros to surive • Cyprus rejectsbailoutterms • (INSOL Europe Headlines 2012)

  7. Balance of Payments, 2009-16 (Millions of euros, unless otherwise indicated) 2009 2010 2011 2012 2013 2014 2015 2016 Projections Goods and services balance -1,534 -1,698 -2,111 -2,107 -2,131 -2,098 -2,137 -2,200 Trade balance -1,673 -1,735 -2,176 -2,241 -2,333 -2,379 -2,488 -2,623 Exports 177 305 345 393 440 493 553 619 Imports -1,851 2,041 2,521 2,634 2,773 2,872 3,040 3,241 Services 139 37 65 134 202 281 350 422 Receipts 435 515 586 634 688 735 813 900 Payments -295 -478 -521 -500 -486 -454 -463 -478 Income 90 125 122 149 166 171 180 187 Compensation of employees (net) 169 172 178 186 193 201 209 217 Investment income -78 -46 -57 -36 -27 -30 -28 -30 Interest payments on public debt -1 -4 -10 -11 -11 -11 -10 -10 Transfers 770 889 822 918 937 924 961 991 Official transfers 305 361 255 306 279 211 211 211 Other transfers (net) 465 528 567 611 659 713 749 780 Inflows of workers' remittances 506 512 549 581 611 642 676 711 Current account -674 -684 -1,167 -1,040 -1,027 -1,003 -996 -1,022 Capital and financial account 458 453 967 748 736 788 763 814 Capital account 108 27 7 2 2 2 2 2 Of which: WB Trust Fund 89 0 6 0 0 0 0 0 Financial account, incl. CB 350 426 960 746 734 786 761 812 Foreign direct investment, net 271 311 708 364 391 436 466 504 Commercial banks, excl. FDI -102 -101 -68 -13 104 64 96 28 General government -132 5 11 2 -5 -22 -19 -11 Disbursements, incl. IMF 0 22 22 13 8 0 0 0 Repayments -132 -17 -11 -11 -14 -22 -19 -11 Prepayment of debt -132 -6 0 0 0 0 0 0 Other repayments 0 -11 -11 -11 -14 -22 -19 -11 Other sectors, excl. FDI 1/ 366 231 393 406 291 336 269 347 Central Bank -53 -20 -85 -14 -47 -29 -50 -56 Reserve assets -23 -61 130 -28 -22 -19 -23 -27 Government balances (program definition) -17 -55 -72 14 -25 -10 -27 -29 Other reserve assets, incl. SDRs -6 -6 202 -41 3 -9 3 2 Non-reserves assets -30 12 -214 14 -25 -10 -27 -29 Liabilities 2/ 0 29 -1 0 0 0 0 0 Net errors and omissions 3/ 215 231 200 200 200 200 200 200 Financing gap 0 0 0 92 91 15 33 8 Memorandum items: Current account, excl. official transfers -979 -1,045 -1,422 -1,346 -1,306 -1,214 -1,208 -1,233 (in percent of GDP) -25.0 -24.9 -30.4 -26.6 -24.1 -21.3 -20.0 -19.1 Current account, incl. official transfers -674 -684 -1,167 -1,040 -1,027 -1,003 -996 -1,022 (in percent of GDP) -17.2 -16.3 -25.0 -20.5 -18.9 -17.6 -16.5 -15.8 Official transfers (percent of GDP) 8.0 8.6 5.5 6.0 5.1 3.7 3.5 3.3 Debt service to export ratio (percent) 21.7 2.6 2.3 2.2 2.2 2.7 2.2 1.4 Net foreign assets of commercial banks 444 545 613 626 521 457 361 266 Net foreign assets of CB 1,088 1,108 1,193 1,207 1,255 1,283 1,333 1,390 Gross international reserves of CB 625 686 556 584 606 625 649 623 . 1/ Including trading companies, insurance companies, and pension funds. 2/ Includes SDR allocations and IMF account at historical value. 3/ Projections of errors include unidentified private remittances and other capital based on average historical levels.

  8. Balance of Payments, 2009-16 (Millions of euros, unless otherwise indicated) 2009 2010 2011 2012 2013 2014 2015 2016 Projections Goods and services balance -1,534 -1,698 -2,111 -2,107 -2,131 -2,098 -2,137 -2,200 Trade balance -1,673 -1,735 -2,176 -2,241 -2,333 -2,379 -2,488 -2,623 Exports 177 305 345 393 440 493 553 619 Imports -1,851 2,041 2,521 2,634 2,773 2,872 3,040 3,241 Services 139 37 65 134 202 281 350 422 Receipts 435 515 586 634 688 735 813 900 Payments -295 -478 -521 -500 -486 -454 -463 -478 Income 90 125 122 149 166 171 180 187 Compensation of employees (net) 169 172 178 186 193 201 209 217 Investment income -78 -46 -57 -36 -27 -30 -28 -30 Interest payments on public debt -1 -4 -10 -11 -11 -11 -10 -10 Transfers 770 889 822 918 937 924 961 991 Official transfers 305 361 255 306 279 211 211 211 Other transfers (net) 465 528 567 611 659 713 749 780 Inflows of workers' remittances 506 512 549 581 611 642 676 711 Current account -674 -684 -1,167 -1,040 -1,027 -1,003 -996 -1,022 Capital and financial account 458 453 967 748 736 788 763 814 Capital account 108 27 7 2 2 2 2 2 Of which: WB Trust Fund 89 0 6 0 0 0 0 0 Financial account, incl. CB 350 426 960 746 734 786 761 812 Foreign direct investment, net 271 311 708 364 391 436 466 504 Commercial banks, excl. FDI -102 -101 -68 -13 104 64 96 28 General government -132 5 11 2 -5 -22 -19 -11 Disbursements, incl. IMF 0 22 22 13 8 0 0 0 Repayments -132 -17 -11 -11 -14 -22 -19 -11 Prepayment of debt -132 -6 0 0 0 0 0 0 Other repayments 0 -11 -11 -11 -14 -22 -19 -11 Other sectors, excl. FDI 1/ 366 231 393 406 291 336 269 347 Central Bank -53 -20 -85 -14 -47 -29 -50 -56 Reserve assets -23 -61 130 -28 -22 -19 -23 -27 Government balances (program definition) -17 -55 -72 14 -25 -10 -27 -29 Other reserve assets, incl. SDRs -6 -6 202 -41 3 -9 3 2 Non-reserves assets -30 12 -214 14 -25 -10 -27 -29 Liabilities 2/ 0 29 -1 0 0 0 0 0 Net errors and omissions 3/ 215 231 200 200 200 200 200 200 Financing gap 0 0 0 92 91 15 33 8 Memorandum items: Current account, excl. official transfers -979 -1,045 -1,422 -1,346 -1,306 -1,214 -1,208 -1,233 (in percent of GDP) -25.0 -24.9 -30.4 -26.6 -24.1 -21.3 -20.0 -19.1 Current account, incl. official transfers -674 -684 -1,167 -1,040 -1,027 -1,003 -996 -1,022 (in percent of GDP) -17.2 -16.3 -25.0 -20.5 -18.9 -17.6 -16.5 -15.8 Official transfers (percent of GDP) 8.0 8.6 5.5 6.0 5.1 3.7 3.5 3.3 Debt service to export ratio (percent) 21.7 2.6 2.3 2.2 2.2 2.7 2.2 1.4 Net foreign assets of commercial banks 444 545 613 626 521 457 361 266 Net foreign assets of CB 1,088 1,108 1,193 1,207 1,255 1,283 1,333 1,390 Gross international reserves of CB 625 686 556 584 606 625 649 623 . 1/ Including trading companies, insurance companies, and pension funds. 2/ Includes SDR allocations and IMF account at historical value. 3/ Projections of errors include unidentified private remittances and other capital based on average historical levels.

  9. 2012 2013 2014 2015 2016 Unadjusted Act. Proj. policies Total primary revenue and grants 1,152 1,261 1,238 1,387 1,505 1,533 1,656 1,814 Total primary revenue 1,115 1,253 1,231 1,312 1,430 1,533 1,656 1,814 Taxes 894 1,057 1,034 1,147 1,252 1,345 1,458 1,603 Direct taxes 126 151 153 170 190 207 230 259 Indirect taxes 796 939 913 1,013 1,101 1,178 1,271 1,391 Tax refunds -28 -33 -32 -36 -39 -41 -43 -47 Nontax revenues 221 196 197 165 177 188 198 210 Of which : dividends 85 45 45 0 0 0 0 0 Grants 38 8 8 75 76 0 0 0 Budget support 30 0 0 71 71 0 0 0 Trust fund for the 2010 debt service to the World Bank 4 5 5 0 0 0 0 0 Project grants 3 3 3 3 4 0 0 0 Primary expenditure 1,265 1,487 1,500 1,559 1,658 1,595 1,725 1,871 Current expenditure 762 879 891 935 994 1,054 1,130 1,214 Wages and salaries 311 386 396 403 429 450 478 514 Goods and services 182 195 195 205 214 234 261 285 Subsidies and transfers 268 296 298 324 348 367 387 412 Pension and social assistance 166 188 180 224 251 276 298 319 Other transfers and subsidies 1/ 102 109 118 100 97 91 89 93 Reserve 0 3 3 4 4 4 4 4 Capital expenditure and net lending 503 608 609 624 664 541 595 656

  10. Sovereign debt crisis in Europe Lucas Kortmann (RESOR) Yan Liu (IMF) Simon James (Clifford Chance) Elena Daly (EM Conseil)

  11. Are you an INSOL Europe follower? Follow us on Twitter @INSOLEurope

  12. Delegate coffee break Kindly sponsored by www.nautadutilh.com

  13. Delegate lunch Kindly sponsored by www.mcstayluby.ie

  14. Afternoon Technical Session Kindly sponsored by www.opf-partners.com

  15. Are you an INSOL Europe follower? Follow us on Twitter @INSOLEurope

  16. INSOL Europe EIR Case Register www.insolvencycases.eu Chris LaughtonMercer & Hole

  17. Revision of the European Insolvency Regulation and the INSOL Europe proposal Robert van Galen (NautaDutilh) Daniel F. Fritz (HERMANN RWS) Marc Andre (Etude Marc Andre) Frank O'Reilly (WhitneyMoore) David Marks QC (3/4 Southsquare) Juan Ferre (PLUTA abogados GmbH)

  18. European legislation – the future  • Process-Consultation/Discussion/Drafting/Parliamentary debate by elected representatives • Community rules for a larger and better society • How and What is being achieved

  19. Fairer, more equal and more cost effective distribution in the event of insolvency • Predictability results in betters chance of recovery and preservation of employment and maintaining tax receipts • Revision and Addition: • Revision in light of shared experience/ COMI and the one year look back period

  20. Addition of the UNCITRAL Model Law/Evolution of Global principles/specifics of comity/ Group companies and the European Rescue Plan • Secondary proceedings – where not possible because no longer an establishment whether local legislation should be reviewed to ensure it can in principle deal with certain consequences for directors of fraudulent/reckless trading • Unanimous provisions [Article 3.1(i)] – whether specified majority eg 80% in value preferable?

  21. Should Article 55.3 (b) be deleted – for reasons of flexibility and given the protection in Article 55.3(a) ? • Article 77 – should a new sub-paragraph (a) be inserted as follows to encourage such : • (a) agreeing if it thinks fit to do so to recognise and enforce compositions and arrangements concerning the debtor and its creditors and judgments handed down by foreign courts including those which concern the course and closure of insolvency proceedings.

  22. Article 13 – Detrimental acts

  23. Article 4 – Law applicable • The law of the State of the opening of proceedings normally determines the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to the general body of creditors.

  24. Article 13 exception where person who benefitted provides proof that such detrimental act is subject to the law of another Member State which does not allow any means of challenging that act in the relevant case.

  25. Existing requirement of proof in the relevant case. • Existing exception applies where act is subject to the law of another Member State. • Undesireable that act can be made avoidance proof by choice of applicable law.

  26. Proposed Revision • Article 4.2(m) Law of the State of the opening of proceedings shall not apply if the law of the Member State where the COMI of the debtor was situated at the time of the legal act does not allow any means of challenging that legal act in the relevant case.

  27. The proposed formula restricts choice of law (but not choice of debtor). • Contracts might record where in (EU) COMI of debtor was situated at time of avoidance proof act • Note: Law of such place could change.

  28. Harmonized rules on detrimental acts. • Need for harmonised European law on liability for fraudulent/reckless trading. • Uncitral Working Group – Directors obligaions in the period approaching insolvency.

  29. Secondary proceedings • Where not possible because no long an establishment whether local legislation should be reviewed to ensure it can in principle deal with certain consequences for directors of fraudulent/reckless trading.

  30. Distressed Business Acquisitions – an EU Comparison David Baxter (A&L Goodbody) Alastair Beveridge(Zolfo Cooper) Alberto Núñez-Lagos (Uría Menéndez) Leo Plank (Kirkland & Ellis International LLP) Bruno Cova (Paul Hastings)

  31. Ireland David Baxter (A&L Goodbody)

  32. Overview of Irish restructuring regime • Common law jurisdiction; similar company code to the UK; relatively debtor friendly jurisdiction • Current restructuring activity & inter-creditor dynamics • Vendor mix: NAMA; domestic banks; foreign owned banks • Large financial restructurings - typically consensual & conducted outside of an insolvency process but recently some high profile restructurings availed of formal procedures

  33. Achieving a Consensual Restructuring • Typical road-map: • financial covenant under pressure/standstill put in place • creation of creditor steering committee • use of a CRO • assess liquidity/new money requirements • tax/structuring review • revise capital structure & debt terms • change of ownership? • implement

  34. Achieving a Consensual Restructuring • Contingency planning more extensive when cross-jurisdictional • Landscape & risks for directors operating in the zone; duties to creditors • Challenges on implementation e.g. hold-out creditors • Flexibility around capital structures

  35. Using a pre-arranged process to achieve an investor’s objectives • Relatively rare in Ireland; some recent high profile examples • eircom’s c. €4bn pre-arranged financial restructuring endorsed by High Court in May 2012 • All of Ireland’s insolvency procedures can be used to execute a pre-arranged deal • Establishing valuations is key to protecting against challenges • Managing PR issues

  36. Protecting new investors’ capital in the event of an unplanned insolvency • When buying debt, ensure that priority & control not compromised • Owner of senior debt – enforcement options; managing examinership risk • Managing interloper risk • DIP financing priority: not as extensive (in our examinership process) as US Chapter 11

  37. Spain Alberto Núñez-Lagos (Uría Menéndez)

  38. Achieving a Consensual Restructuring • Main restructurings have been consensual: - Eroski - Reyal Urbis - Cemex - Celsa • Panrico • Reasons / Drivers: • More efficient in terms of cost and time. -Possible due to small number of creditors and sophisticated creditors (mainly banks, no bondholders, no suppliers). • Insolvency not necessary to take tough operational restructuring measures. E.g.: labour restructuring. • Failure of restructuring: only when the situation is hopeless. E.g.: MartinsaFadesa. • Future trends: scheme of arrangements both local and in the U.K.

  39. A pre-pack to save the business in the insolvency • Introduced by the amendment of Spanish Insolvency Law (2012). • Filing for insolvency by the debtor with an agreed binding offer from a purchaser. • Sale of the business or assets to the purchaser as per the binding offer. • Insolvency process continues with cash for the discussion of: • Claims and their ranking. • Distribution of the cash. • Claw-back actions. • Directors’ responsibility.

  40. Protecting new investors’ capital in the event of an unplanned insolvency • Total certainty for the purchaser of a secured claim in the event of an unexpected insolvency. • Not even DIP financing changes the ranking of secured creditors. • Loss of voting rights (in the composition agreement) of the claim in an insolvency, unless post-insolvency regulated purchasers.