Worldwide: EuroResource - Deals and Debt - April 2013

Recent Developments


On 29 March 2013, the Republic of Argentina proposed an alternative payment formula to the U.S. Court of Appeals for the Second Circuit that, if accepted, would allow Argentina to resolve litigation with creditors holding defaulted bonds. The proposal was filed in response to a 1 March 2013 order of the court. The order directed Argentina to submit in writing to the court the precise terms of any alternative payment formula and schedule for repaying defaulted bond debt as well as exchange bonds to which it is prepared to commit in lieu of the ratable payment formula ordered by the U.S. district court in its ruling of 21 November 2012. That ruling, which was appealed to the Second Circuit, required Argentina to pay $1.3 billion to holdout bondholders no later than 15 December 2012.  

Argentina proposed to offer holdout bondholders a choice of bonds equal to the debt's value at the time of the country's 2002 default or discount bonds, the same terms offered to bondholders during a 2010 debt restructuring. Holdout bondholders, who are seeking full payment immediately, previously rejected this offer. Moreover, the par-value option would be limited to investors holding less than $50,000 in face value bonds, effectively meaning that the hedge fund plaintiffs involved in the litigation could be compensated under Argentina's proposal only by taking a big cut to their possible recovery. 

On 2 April 2013, the Second Circuit directed holdout bondholders to submit a response to Argentina's latest proposal no later than 22 April. Bondholders rejected the proposal on 19 April, paving the way for the Second Circuit to issue a ruling on the merits of the underlying dispute. 

Global—On 16 April 2013, the U.S. Court of Appeals for the Second Circuit ruled, in a matter of first impression, that a foreign debtor's "center of main interests" ("COMI") for the purpose of determining whether its foreign bankruptcy proceeding should be recognized under chapter 15 of the U.S. Bankruptcy Code must be determined based on the debtor's "activities at or around the time the Chapter 15 petition is filed," rather than on the commencement date of the foreign proceeding. In Morning Mist Holdings Ltd. v. Krys (In re Fairfield Sentry Ltd.), No. 11-4376, 2013 BL 102426 (2d Cir. 16 Apr. 2013), the court also held that the "public policy exception" to relief under chapter 15, which is based on UNCITRAL's Model Law on Cross-Border Insolvency (the "Model Law"), is to be narrowly construed, and that restricted access to documents in a debtor's British Virgin Islands liquidation proceeding "is no basis on which to hold that recognition of the BVI liquidation is manifestly contrary to U.S. public policy." 

However, the Second Circuit cautioned, "given the EU Regulation [Council Regulation (EC) No 1346/2000 of 29 May 2000] and other international interpretations, which focus on the regularity and ascertainability of a debtor's COMI, a court may consider the period between the commencement of the foreign insolvency proceeding and the filing of the Chapter 15 petition to ensure that a debtor has not manipulated its COMI in bad faith." Factors that may be considered in determining COMI, the court explained, "are not limited and may include the debtor's liquidation activities." 

By its ruling, the Second Circuit resolved a split among lower courts in the circuit on the issue and aligned itself with the approach taken by the Fifth Circuit Court of Appeals in In re Ran, 607 F.3d 1017 (5th Cir. 2010). This approach has been criticized as an invitation to bad-faith "COMI manipulation" or forum shopping by corporate debtors seeking to liquidate in countries that have favorable laws but have little or no connection to their pre-filing activities. In fact, an UNCITRAL working group considering various proposed changes to the Model Law adopted a proposal in 2012 to amend the Model Law to clarify, among other things, that the date of commencement of a foreign insolvency proceeding should be used to determine both COMI and the related concept "establishment." 

The UK and France—The English Court (Chancery Division) has again considered the problem created for French companies that are parties to litigation outside France by French Law No 68-678 of 26 July 1968 (the "Law"). The Law prohibits the communication or disclosure (and possibly even the search for) documents or information of an economic, commercial, industrial, financial or technical nature for use as evidence in foreign judicial or administrative proceedings without an order of the French Court. Breach of the Law is a criminal offence exposing the company and individuals to up to six months' imprisonment and/or a fine. In National Grid Electricity v. ABB and Others, [2013] EWHC 822 (Ch), 11 April 2013, the English Court considered whether to order disclosure of documentary evidence for the purpose of establishing damages in litigation commenced by National Grid against various companies for breach of European competition rules. 

The court decided to order disclosure. The judge considered it virtually inconceivable that, where another European court had assumed jurisdiction over a French company in accordance with the Brussels Regulation in order to determine a claim for damages alleged to result from an established and serious violation of a fundamental provision of EU law, the public authorities of France would, in the exercise of their discretion, institute criminal proceedings against that company for complying with the procedural rules of the Member State where the proceedings had been brought. This was particularly so where the proceedings served an objective of EU policy. Follow this link for a more detailed description of the case. 

Cyprus—On 18 April 2013, the Cypriot House of Representatives approved a number of tax law changes as part of the agreement concluded with the European Stability Mechanism and the International Monetary Fund for up to €10 billion in financial assistance to Cyprus over the next three years. The changes include: (i) an increase in the tax on corporate profits from 10 percent to 12.5 percent, retroactive to 1 January 2013; (ii) an increase in the "special defence contribution" on interest income earned by Cyprus tax residents from 15 percent to 30 percent, subject to certain exceptions, effective upon publication of the legislation in the Government Gazette; (iii) an increase in the special levy imposed on credit institutions operating in Cyprus from .11 percent to .15 percent of total deposits, retroactive to 1 January 2013; (iv) regular increases in the consumption tax rates; and (v) a freeze in promotions for public sector employees. 


Jones Day was named as one of the six "best movers and shakers," the top tier among firms making waves as innovators, in the 2013 "BTI Brand Elite: Client Perceptions of the Best-Branded Law Firms" report issued by The BTI Consulting Group. The report is based upon the recommendations of general counsel at some of the world's largest companies, who recognized six firms that have adopted innovative techniques and targeted them to their clients' wants and needs as those that are shaking up the legal market.

Jones Day is advising the German Federal Agency for Financial Market Stabilization, which manages the German Financial Market Stabilization Fund ("SoFFin"), in connection with the contemplated €2.5 billion rights offering of Commerzbank, the second-largest German bank. In support of the transaction, SoFFin intends to exercise its subscription rights in full and, in proportion to its 25 percent stake in Commerzbank, to contribute silent participations for shares. It is also intended that a consortium of banks under the lead of Deutsche Bank, Citi and HSBC will place Commerzbank shares held by SoFFin with investors at the beginning of the subscription period. SoFFin will thereby participate in the capital increase without investing new capital, and its holdings in Commerzbank are expected to decrease to below 20 percent. 

Jones Day advised Barcelona, Spain-based Softonic International S.L. ("Softonic International"), a Grupo Intercom subsidiary, in connection with the merger of Softonic International with its majority shareholder, Intershare S.L., to create Softonic, a global multiplatform software guide that allows users to explore, download and manage software applications on multiple devices in more than 10 different languages. Through a catalogue of more than 160,000 software titles for desktop and mobile operating systems, Softonic connects more than 140 million monthly users with a diverse portfolio of software and applications distributors. Softonic is a global top-40 internet business and the clear market leader in its segment today. Softonic is valued at €275 million (US$360 million). Global private markets investment manager Partners Group took a 30 percent stake in the merged entity for €82.5 million (US$110 million). Jones Day advised Softonic in connection with the merger and represented both Softonic and its shareholders in connection with the negotiations with Partners Group.

Jones Day is advising Mitsui Chemicals in connection with its €450 million (US$578 million) acquisition of the dental business of Heraeus. The transaction, which is subject to customary closing conditions such as the approvals of the merger authorities, is expected to close by the end of June 2013. Mitsui Chemicals is a Japanese publicly traded chemical company with 13,000 employees worldwide. Heraeus, based in Hanau near Frankfurt am Main, Germany, is a globally active precious metal and technology group that also employs approximately 13,000 employees around the globe.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions