New Legislative Developments for Non-Banking Financial Institutions

Matei Florea

12 November 2009

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The Recent Past – A Time for Change

• The recent past has been rather turbulent for leasing companies and their clients, with changes abounding in legislation, practice and market conditions.

• Some of the legislative changes include:

– re-enactment of the requirement for court approval of enforcement proceedings

– changes to insolvency laws

– clarification of the provisioning regime applicable to IFNs

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The Response of Leasing Companies

• Leasing companies have ramped up efforts to adapt to the changing environment by:

– setting up specialised in-house client monitoring departments

– strengthening their debt collection teams and procedures

– lobbying for regulator involvement (e.g. regarding the booking of provisions)

– helping their clients restructure existing leasing facilities

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Debt Restructuring – The Key Questions

• Is there something to be saved?

• Is it not too late?

• Is there good faith?

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Pre-insolvency restructuring

• Key vocabulary:

– steering committee

– standstill agreement

– due diligence

– restructuring agreement

– claw-back provisions

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Other Options

• When pre-insolvency debt restructuring is not an option:

– make a plan

– declare an event of default

– start enforcement actions

– initiate insolvency proceedings

– consider criminal law charges and any other means of pressure

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Restructuring within insolvency

• automatic stay – exemptions

• available proceedings

• directors’ position

• reorganisation plan

• creditor cram down – defenses

• sale of (non-core) assets

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Multi-jurisdictional insolvency

• Council Regulation (EC) no. 1346/2000 on insolvency proceedings

– main proceedings based on concept of “centre of main interests” (COMI)

– territorial or secondary proceedings

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No cookie cutter solution

• There is no one size fits all solution

• Each situation will have to be dealt with individually

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Thank you! Questions?