EuroResource--Deals and Debt

Recent Developments

UK--Vickers Report and Structured Finance Ruling Vickers Report--Last week the Vickers Report was released in the midst of a turbulent week for many banks in Europe. The report recommended a depositor preference in bank insolvency situations and seems to further the position already taken in Ireland by advocating "bail in" powers, both primary and secondary. "Bail in" powers are designed to enable authorities to impose losses on "bail-in bonds" – i.e., long-term unsecured debt (as well as other unsecured liabilities in certain circumstances) available to absorb losses as a resolution for a bank distress situation. The primary bail-in power is described as a power "to impose losses in resolution on a set of pre-determined liabilities that are the most readily lossabsorbing." This includes the ability to write down liabilities to recapitalize a bank (or part thereof) in resolution. The class of (noncapital) liabilities that is said to bear loss most readily is long-term unsecured debt. Second, the authorities should have a "secondary bail-in power" that would allow them to impose losses on all unsecured liabilities beyond primary loss-absorbing capacity (again, including the ability to write down liabilities to recapitalize a bank) in resolution, if such primary bail-in loss-absorbing capacity does not prove sufficient. Similar proposals are under consideration in the EU and bear watching as to whether the Vickers approach will be overtaken by a broader EU approach.

Structured Finance Ruling--On 9 September 2011, the English High Court handed down its judgment on the proper interpretation of the sequential payment triggers in the Fleet Street Finance 3 securitization involving CMBS notes in excess of EUR 1.1 billion. Differing interpretations of the sequential payment wordings and whether one or more of the triggers had been breached resulted in certain repayment proceeds being partially withheld by the Trustee. Following an expedited hearing, the English Court ruled that, on the particular wording used, one of the underlying loans was not deemed to be a Material Senior Default by reason of an agreed extension to its Final Maturity Date. Jones Day acted for the Party A, the Representative Defendant of the Class A1 Noteholders.

Spain--Congress Approves Amendment to 2003 Insolvency Act. Increasing protection for refinancing agreements, the Amendment includes their sanctioning by the courts if such agreements are supported by creditors holding 75 percent of the financing debt and are not disproportionately prejudicial to nonparticipating creditors. Another significant change is the introduction of a simplified insolvency procedure for smaller debtors proposing to sell all the assets and debts of the company or if a debtor submits, in a liquidating plan, a binding proposal to sell an operating unit. The Amendment further includes new rules applying to insolvency administrators.

Germany--Insolvency Law Reform Will Significantly Strengthen Creditors' Rights in Insolvency Proceedings. The reform bill includes the introduction of a right for creditors to propose the insolvency administrator to be appointed by the court, a fundamental change in German insolvency law. In larger insolvencies, the court will be required to establish a creditors' committee at an early stage. urthermore,
the bill aims at making it more predictable for the debtor that the court will order self-administration upon the insolvency filing, with the debtor's management remaining in charge of the business under the supervision of the court and an insolvency trustee appointed by the court. The debtor will then have a time window of up to three months to prepare a pre-packaged restructuring plan. The new law is expected to be adopted by the German legislature in November 2011 and to come into force in early 2012.


JUVE, the leading publisher of information for the German legal community, has nominated Jones Day for its 2011 "German Private Equity and Venture Capital Law Firm of the Year" award. The award is
based on a survey of more than 20,000 clients, partners, associates, and judges, who evaluate firms throughout Germany on professional competence, strategic alignment, service orientation, and development potential. Jones Day is one of five firms shortlisted for the Private Equity and Venture Capital award. The winner will be announced at a ceremony on October 27.

Jones Day acted as German counsel to Dana Corporation in the sale of its equity interests in two joint ventures to Getrag GmbH & Cie KG. The two joint ventures, both with Getrag subsidiaries, are Getrag Corporation, which produces rear axle units and timing gears for light vehicles, and Getrag All Wheel Drive, which produces all-wheel-drive systems and miscellaneous chassis components for light vehicles.

Jones Day represented OM Group, Inc. in connection with the acquisition of Vacuumschmelze Group ("VAC") for a total enterprise value of approximately US$1 billion (EUR 700 million) from One Equity
Partners, the private equity platform of JPMorgan Chase. Jones Day represented OM Group in both the acquisition and the obtaining of acquisition financing from a consortium led by Bank of America. Headquartered in Germany, VAC is a global market leader in advanced materials and specialty magnetics, with production facilities throughout Europe and Asia.

Jones Day represented Igor Yakovlev, the founder of the Eldorado Group, in the sale of his 50 percent minus one share stake in the Eldorado Group to its joint venture partner, PPF Group, a Czech financial group. Eldorado is Russia's largest consumer electronics retailer. Jones Day had previously acted for the Eldorado Group in 2009 in connection with PPF Group's acquisition of a controlling stake in Eldorado in a US$300 million debt-for-equity swap.

European Distress Team Members

Corinne Ball

Volker Kammel
Christian Staps

Kay Morley
Michael Pabst
Sion Richards
Andrew Rotenberg
Michael Rutstein
Adam Scarrott
Luke Johnson

Victor Casarrubios
Luis Muñoz
Richard Puttré
Fernando Lillo

Marco Lombardi
Francesco Squerzoni

Sandra Kamper
Ansgar Rempp
Olaf Benning

New York
Paul Leake
Veerle Roovers

Laurent Assaya

San Francisco
Tobias Keller