Is Peru’s insolvency system ready for foreign creditors?

Author: | Published: 22 Jan 2015

Foreign creditors should prepare to use Peru’s novel insolvency tools in a new way

Over the past decade, Peru's economy has offered international lenders much opportunity. Between a boom in debt capital markets and a wave of project and acquisition financing, institutional investors have been buying up Peruvian debt at a pace that seemed unimaginable just 10 years ago. However, as the country's economy begins to cool, investors are asking difficult questions about the local insolvency system. They are wondering what protection it would provide international lenders if they ever have to test it. What they are discovering is that, like so many other Latin American jurisdictions that have recently modernised their insolvency laws, Peru's regime has scant experience dealing with the type of complex capital structures and sophisticated financial instruments seen in modern cross-border financings. However, depending upon how its economy fares over the next few years, that...