New York, 31 August 2020 – Global regulation agency Hogan Lovells represented the Republic of Ecuador in one of many first-ever checks of “collective action clauses” in capital markets transactions, serving to the nation full one of many largest worldwide restructurings. The nation, a long-time consumer of the agency, has confronted the crippling results of the coronavirus outbreak and traditionally low oil costs.
The agency put collectively a group comprised of legal professionals from its Capital Markets, IERP, BRI, LAE, and Government Relations practices from a number of areas together with New York, Miami, Houston, London, Mexico City, and Washington, D.C. to collaborate on the landmark restructuring of its US$17.four billion of worldwide bonds.
The transaction intertwined exchanging 10 current worldwide bonds maturing between 2022 and 2030 for 3 new bonds due in 2030, 2035 and 2040. Under the phrases of the brand new bonds, interest funds will resume firstly of subsequent yr, whereas the earliest principal comes due in January 2026, a major discount in Ecuador’s debt burden.
The Hogan Lovells group labored on many distinctive features of the transaction, together with structuring one of many first purposes of collective motion clauses in sovereign bond restructurings. Collective motion clauses have been primarily used within the debt markets to permit a supermajority of bondholders to comply with a debt restructuring that’s legally binding on all holders of the bond, together with those that vote towards the restructuring. Along with using this mechanism, this deal was one of many largest worldwide restructurings because of the coronavirus. The restructuring additionally confronted many challenges, not the least of which was an motion for a short lived restraining order and preliminary injunction filed by two creditor funds within the Southern District Court of New York what place the agency’s LAE group, on brief discover, received a victory when the decide denied the request from the bench. Hogan Lovells additionally was actively intertwined within the restructuring of Ecuador’s bilateral debt and derivatives, together with the reprofiling of its debt with China and made certain the restructuring complied with a stringent set of insurance policies and tips from the International Monetary Fund.
The Hogan Lovells Capital Markets group was led by associate Evan Koster, with the help of counsel David Tyler, senior associates Adam Lapidus and Philip Schuster and affiliate Juan Moreno, all from the New York workplace. The IERP group was led by Houston associate Bruno Ciuffetelli with the help of Chief Legal Officer and Miami associate Jose Valdivia, and Miami associate Gaston Fernandez; associate Philip Robb and counsel Nick Tidnam from London; International Energy advisor Pedro Martinez from the Miami workplace; senior affiliate Dana Turjman from the Miami workplace; and senior affiliate Victor Barrientos from the Mexico City workplace. The BRI group was led by U.S. BRI co-head Ron Silverman with the help of counsel Philip Ehrlich, each from the New York workplace. The LAE group was led by New York associate Dennis Tracey with the help of New York companions, Michael Hefter and Seth Cohen; London associate Kieron O’Callaghan and London counsels Hannah Piper and Jerome Finnis; and New York associates Austin Gassen, Julia Grabowska, and Jonathan Wieder. Lastly, the Government Relations and Public Affairs was led by associate Ivan Zapien in Washington, D.C.