EuroResource--Deals and Debt

Recent Developments

Luxembourg--The European Court of Justice ("ECJ") issued a landmark decision on centre of main interests ("COMI"). On 20 October 2011, the ECJ held that the presumption in the European Insolvency Regulation that a debtor company's COMI is located at the place of its registered office cannot be rebutted if the registered office is also the place where the company's management and supervisory bodies are located and where the administrative decisions are made. However, the presumption is rebutted if a comprehensive assessment of all relevant factors establishes, in a way ascertainable by third parties, that the company's actual centre of management and supervision is located in another Member State. The presence of company assets and agreements for the use of such assets in a Member State
other than the one where the registered office is located needs to be taken into consideration when assessing the relevant factors. The location of a debtor company's COMI is significant because the COMI determines which courts have jurisdiction to open main insolvency proceedings and the law that generally governs such proceedings.

Luxembourg/Germany--The European Court of Justice ruled that the purchase of a nonperforming loan portfolio does not trigger value-added tax ("VAT") if the purchase price paid reflects the economic value of the loans. Before the ECJ's ruling of 27 October 2011, tax authorities in Germany were of the view that the difference between the nominal value of the loans and the purchase price included a consideration for collection services performed by the buyer and that these services were subject to VAT.

France--In the Belvédère saga, the Cour de Cassation (French Supreme Court) recently clarified the powers of the trustee of notes governed by US law and issued by a French debtor subject to French insolvency proceedings. Under French bankruptcy law, a creditor must file a proof of claim with the creditors' representative shortly after the debtor commences insolvency proceedings. French issuers regularly access the financial markets by issuing instruments governed by foreign law, including fixed- or floating-rate notes. Because such notes are not "obligations" governed by French corporate law, prior to this decision it was unclear whether the representative of the noteholders could file a proof of claim on behalf of all noteholders or whether each individual noteholder had to file its own proof of claim. The Cour de Cassation held that the trustee had the power to file the proof of claim on behalf of all noteholders. By making it unnecessary to file multiple proofs of claim based on the same debt in future insolvency proceedings, this decision will greatly simplify the bankruptcy claims process.

Correction--New Italian Withholding Tax System. The 20 October 2011 issue of EuroResource incorrectly implied that the 1.375 percent withholding rate for certain EU-resident companies is provided for in the Parent-Subsidiary Directive exemption. Notwithstanding the new Italian withholding tax regime that will apply as of 1 January 2012, (a) the Parent-Subsidiary Directive, (b) the 1.375 percent withholding rate for certain EU-resident companies or (c) the lower treaty rate (if any) will continue to apply if certain conditions are met.


Jones Day advised long-standing client WL Ross & Co. LLC in connection with UK-based financial services company Virgin Money's agreement to buy Northern Rock plc from the UK government. WL Ross & Co. is the lead partner in a consortium including UK venture capital conglomerate Virgin Group that is providing the equity funding for the acquisition of the bank. The UK government will receive £747 million in cash on the closing of the sale, plus an anticipated cash sum of approximately £50 million within six months of completion. An additional £150 million will be paid in the form of a capital instrument, and an additional cash consideration in the amount of £50 million to £80 million will be paid upon a future profitable initial public offering or sale in the next five years, meaning that UK taxpayers have the potential to receive more than £1 billion in aggregate.

Jones Day is advising Alcatel-Lucent in connection with the $1.5 billion sale of its Genesys business to the Permira private equity funds. The transaction is one of the largest European buyouts of the year and Permira's largest deal in more than two years. Technology Crossover Ventures and certain co-investors in the Permira funds will also participate in the transaction. Genesys, which reported 2010 sales of approximately $500 million, is a world leader in customer service software and contact centre solutions for enterprises. The transaction involves the transfer of pproximately 1,800 employees worldwide, the management team and the existing business structure to ensure seamless continuity with customers and other stakeholders. Genesys and the enterprise business unit of Alcatel-Lucent will continue to enjoy a strong commercial relationship, with a joint development agreement and the two businesses retaining access to each other's product portfolios.

Jones Day advised Shell Gas B.V., Total S.A. and Mitsui & Co. in connection with the sale of their jointly owned LNG terminal in Altamira, Mexico. The terminal was sold to a joint venture managed by Royal Vopak NV, the world's largest independent storage service provider, and Enagás S.A., the technical manager of the gas system and the common carrier for the high-pressure gas network in Spain. The transaction, which closed on 13 September 2011 in Amsterdam, was particularly significant, since this LNG terminal is Enagás's first outside Spain. Operational since 2006, the terminal acilitates overseas LNG imports and, through a joint venture between Shell Gas and Total, a supply of gas into Mexico.