Special Situations Opportunities in Upcoming Asia Restructurings


Latham & Watkins partner David Heller moderated a panel discussion at the November 5, 2013 “Maximizing Outcomes in Upcoming Asia Restructurings” industry summit co-hosted by Latham and the Asia Securities Industry & Financial Markets Association (ASIFMA), a regional trade association.

At the event, industry leaders from across Asia, the UK and the US discussed the economic environment, rising debt levels in Asia and signs that more Asian companies will have to restructure their obligations. In this lw.com interview, Heller shares his insights into investment alternatives in a stressed environment, including special situations opportunities in future Asia restructurings.

“There are billions if not trillions of dollars of capital flowing into Asia and presumably at some point out of Asia. And whenever capital flows, a certain percentage of that capital gets it wrong and deals fail — creating distressed situations or special opportunities,” said Heller. “Historically, this economic cycle has been undeniable.”

“It’s pretty clear that there will be opportunities to re-capitalize companies — to infuse additional equity into companies that are over leveraged,” he added. “And perhaps opportunities to — although it is not a foregone conclusion — buy and sell debt owed by companies in Asia.”

How would you describe a special situations opportunity?

Heller: A special situations opportunity is anything other than a traditional or routine opportunity. In other words, it’s where you create unusual investment vehicles and techniques — whether it’s a hybrid of capital instruments, a combination of notes and equity, or notes with an equity upside or preferred stock. These special situations arise out of the financial distress we would expect in any market.

How has the flow of foreign capital into Asia influenced restructuring techniques?

Heller: Historically, Asia hasn’t had a Western-like restructuring process. It has been a much more closed, government-centric system — rather than private enterprise driven. As foreign capital has been embraced in Asia and as more Asian companies are seeking capital outside of Asia — the idea is that as Western capital flows, Western restructuring techniques will become relevant. And from a legal perspective, nobody knows for sure how much — if any — of the Western restructuring techniques will be embraced in Asia.

It’s a historical, cultural and systemic difference. Many of the Asian economies are much more government driven than private sector driven. And if the government handles the restructurings by fiat then there is less of an opportunity for Western-style legal work. On the other hand, as Western-style legal approaches become more accepted there will be more of an opportunity.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Latham & Watkins LLP | Attorney Advertising

Written by:


Latham & Watkins LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.