A Ukrainian company’s successful
restructuring of its high-yield bonds could further boost UK
schemes of arrangement as a viable alternative to the US
Chapter 11 process.
Energy business DTEK initially failed to meet the voting
threshold for an exchange offer on its notes (originally New
York law-governed), with a UK scheme as a fall back offer.
But following a dispute with dissenting bondholders who
opposed the use of the scheme, an English Court recognised
jurisdiction on the basis of DTEK’s
notes’ governing law and jurisdiction clause,
which had been changed to English law to get jurisdiction for a
The case could have a profound
effect. "This alternative route in to a UK scheme may be very
useful for issuers in the future as it will save considerable
time and costs, at the very least," said John Houghton, partner at Latham & Watkins
who advised the debtor.