Insights

EuroResource--Deals and Debt

Recent Developments

U.S./Germany/Greece—Greece-based international marine-transport provider Omega Navigation Enterprises, Inc. ("Omega") scored a landmark victory on 20 December 2011 in its bankruptcy battle against Hamburg, Germany-based lender HSH Nordbank ("HSH"), setting an extraordinary precedent for other foreign shipping companies seeking refuge from unpaid banks by seeking protection under chapter 11 of the U.S. Bankruptcy Code. Judge Karen Brown of the U.S. Bankruptcy Court for the Southern District of Texas denied a request by HSH to dismiss Omega's chapter 11 case or convert the case to a chapter 7 liquidation. She also ordered HSH to show why it and its law firm should not face sanctions for "reckless disregard for truth and an intentional strategy to impede and delay" the case. The court has given Omega until 31 May 2012 to propose a plan of reorganization.

Spain—New Prime Minister Mariano Rajoy vowed in his investiture speech on 21 December 2011 to combat the Spanish financial crisis by forcing divestiture by Spanish banks of liquid repossessed real estate assets on their balance sheets. The banks would be able to keep properties which cannot be sold on their balance sheets, but the Bank of Spain would increase the mandatory reserves the banks would have to establish for such properties. The above-mentioned measures would entail, in practice: (a) the financing entities' acknowledgment that such properties have less value and (b) their consumption of their own resources and establishing reserves, which reduce capital levels if the entities do not have sufficient resources. Therefore, the banks would be stimulated to sell the repossessed real estate assets rapidly. Additional measures are under review to find a solution for illiquid distressed assets. The new government initially disregarded the possibility of creating a "bad bank" along the lines of the German system (which was approved by the EU), to which less liquid distressed real estate assets could be transferred; however, the creation of a vehicle for these assets is currently being studied by the new Minister of Economy, Luis de Guindos. The new Prime Minister also called for a more prudent valuation of less liquid real estate assets, such as land and unfinished developments. Both initiatives are likely to precipitate a wave of mergers and acquisitions in the Spanish banking sector. Prime Minister Rajoy has assured
that the restructuring will be done rapidly, in the first semester of 2012.

UK—The London High Court has ruled that Hellas Telecommunications II S.C.A, a Luxembourg finance company forming part of the Hellas Group ("Hellas"), should not be dissolved following the end of its administration, but that a liquidator should be appointed to investigate the affairs of Hellas. The judgment indicates that, in circumstances where creditors are of the view that a company should move from administration into liquidation, so as to enable further investigations to continue, the courts will be reluctant to refuse such a request, notwithstanding the reasonable, but contrary, opinion expressed by the incumbent insolvency office holder. Jones Day acted for an informal committee of subordinated note holders, which successfully argued against dissolution.

Newsworthy

Jones Day is advising SAP AG in its acquisition of SuccessFactors, the market-leading provider of cloudbased human capital management solutions, for US$3.4 billion. Jones Day is providing M&A, antitrust, intellectual property, employee benefits, government regulation, and labor and employment advice regarding this transaction. Jones Day names two new Business Restructuring & Reorganization partners in Germany. Olaf Benning and Christian Staps have been named to the Firm's partnership, effective 1 January 2012.

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