The Complications Involved with Cross-Border Restructuring
Cross-border restructurings often present a variety of challenging issues, not only for the entity involved, but also for the practitioners engaged to steer the process. This is often due to circumstances where the jurisdiction of incorporation of the company in financial difficulty does not have an efficient or sophisticated restructuring regime in place. It is standard practice for these companies to look to other jurisdictions for a clearer path forward or to seek to utilise parallel processes, such as (i) commencing Chapter 11 or Chapter 15 proceedings in the US Bankruptcy Courts or (ii) using a scheme of arrangement to implement the restructuring in England – provided the company can demonstrate it has a sufficient connection to England. However, it is clear that utilising these US or UK-based restructuring alternatives is not always appropriate. For example, it may be difficult to establish the nexus to the relevant jurisdiction or there may be adverse tax consequences associated with the proposal.
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Schemes of Arrangement: Restructuring in the Cayman Islands