Asia awards: Restructuring

Author: | Published: 9 Mar 2010
L-R: Tom Young, editor of IFLR and Matt Fairclough, Clifford Chance

Deals of the year

WINNER: FerroChina
FerroChina’s problems provided the first major test for China’s new bankruptcy law when it entered formal procedures at the end of 2008. The company, which had debtors onshore and offshore set a precedent for how foreign creditors would be treated in future insolvencies.

In the end, foreign creditors were treated the same as Chinese creditors. But those that invested through offshore structures received nothing. Secured onshore creditors could expect to receive 60% of their debt, while unsecured onshore creditors could expect 20%. Five of FerroChina’s subsidiaries were sold to China Minmetals to recoup the money.

The deal highlighted problems with China’s insolvency law, namely the appointment of a local administrator, difficulties arranging a rescue sale without management cooperation, and the necessity of local government support.

Clifford...