Reorg Blog

On May 14, representatives of Mainland China and Hong Kong signed a record of meeting on mutual recognition of and assistance to bankruptcy/insolvency proceedings between the respective courts, creating a new cooperation protocol for cross-border insolvency. In this webinar, Fergus Saurin of Kirkland & Ellis and Lingqi Wang of Fangda Partners will Reorg's managing editor for onshore China, Shasha Dai, to discuss the new developments and implications for insolvency and bankruptcy law practitioners. Learn more and register here.

Analyzing the new Laredo Petroleum senior notes, our Americas Covenants team takes a deep dive into the company’s low leverage ratio and their inability to incur any additional secured debt. The energy company, which focuses on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin, acquired Sabalo Energy on July 1, 2021 and entered into their sixth amendment to their credit agreement on May 7th. Based on these capital structure changes, our Americas Covenants team came to a few conclusions about the Laredo Petroleum senior notes as well as the company’s cash sweep, financial...

Chinese real estate developers Yuzhou, Shimao and Logan have issued private bonds in recent months, and more companies have contemplated doing so. These off-balance-sheet borrowings were often raised through special purpose vehicles and not represented on the issuers’ consolidated financial statements. Some market observers view these bonds as the companies’ efforts to circumvent the government’s “three red lines” policy aimed at reining in developers' leverage ratios. While such borrowings add to the opaqueness of the companies’ liabilities, Fitch Ratings said it believes these bonds represent a relatively small portion of the debt structure and have a limited impact on the companies’ repayment risk. Nonetheless, regulators...

German rigid plastic producer Paccor boosted its depleted liquidity when it raised an add-on in May to fund the acquisition of Miko Pac. The company, however, continued to burn cash in April and its profitability remains under pressure from rising raw material prices across the plastic packaging sector, exposure to food segments hit by the home-working trend and rising demand for sustainable packaging, sources told Reorg. Read more here.

Discussing June 2021 covenants trends, our Americas Covenants by Reorg team analyzed the operation of unsub spinoff baskets with regards to “No Carve-Out” and “Full Carve-Out” versions and how some formulations could present risks for creditors. This covenants trends piece also takes a deep dive into the fact that some unsub spinoff baskets may provide illusory protection to noteholders against the use of investment capacity for dividends through cash spinoffs.  Our experts discuss how the “Full Carve-Out” version from the unsub spinoff basket prevents all cash spinoff dividends protecting noteholders against a “cash spinoff” dividend in which the issuer uses...