Clifford Chance
Debt Restructuring in CEE - The Key Issues
27 September 2012
The global financial crisis continues to affect CEE. Although there are some signs of recovery many borrowers in the region remain over-leveraged and restructurings are likely to remain a feature of the financial landscape for the foreseeable future.
The financial crisis has led to a reassessment of risk appetite amongst investors and a reduction in the use of complex structures. The continued uncertainty around the Eurozone is also playing its part, with new money coming at a premium in some sectors. As a consequence, many borrowers and issuers in CEE are still finding it difficult to repay or refinance their existing indebtedness.
Although some restructurings have now been completed on a consensual basis, others remain in progress and the legal regimes for insolvency and restructuring in CEE remain in many respects untested. In some jurisdictions the legal framework changes on a regular basis and new challenges arise.
Restructuring processes continue to break new ground, however. In particular, the last 12 to 18 months have seen a continued increase in the trend amongst European (including CEE) borrowers to use English law schemes of arrangement to restructure their indebtedness, without the consent of all of their creditors. Clifford Chance has been
at the forefront of this development; recent examples include Rodenstock (Germany), Bulgaria Telecommunications/Vivacom, Tele Columbus (Germany) and SEAT (Italy).
Clifford Chance has produced this updated comparative overview of the key issues encountered in CEE countries: the Czech Republic, Slovakia, Poland, Romania, Ukraine and Russia. The overview also considers some restructuring techniques available in other jurisdictions (such as the US and the UK) and addresses the extent to which they could be applied in CEE.
