DTEK shifts high-yield restructuring options

Author: Tom Young | Published: 20 May 2015

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 scheme.

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.

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