Insights

• The ability of bondholders to sue bond issuers to enforce their rights without going through the cumbersome process of instructing a bond trustee has long been in question.
• However, an important ruling in New York court, obtained by Kobre & Kim on behalf of a group of international bondholders, took the first step in establishing standing.
• This decision potentially removes key barriers to enforcement in key offshore jurisdictions such as Cayman and the British Virgin Islands (BVI), as well as Hong Kong.

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• More investors are taking their disputes against sovereign states and entities to arbitration and judicial forums.
• However, demanding payment of a defaulted debt, judgment or award does not always lead to the sovereign paying up.
• We explore aggressive non-traditional strategies investors should deploy to ensure a sovereign debtor agrees to a settlement.

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• For international investors and companies, winning an arbitration award against a sovereign state marks just the beginning of a lengthy, globe-spanning enforcement campaign.
• To make a greater impact on the enforcement process, award holders should not be afraid to use more creative approaches.
• A recent Kobre & Kim victory demonstrates how this approach can put legitimate pressure on sovereign debtors and bring them to the negotiating table.

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• More investors are taking their disputes against sovereign states and entities to arbitration and judicial forums.
• However, demanding payment of a defaulted debt, judgment or award does not always lead to the sovereign paying up.
• We explore aggressive non-traditional strategies investors should deploy to ensure a sovereign debtor agrees to a settlement.

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• Winning an arbitral award often marks the beginning of a long and costly global enforcement campaign for international investors, especially against a sovereign state.
• To speed up a settlement, investors should take a bold stand against sovereigns, leveraging international treaty protections.
• A recent landmark win against the Kingdom of Spain shows one way for investors.

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• A coming global economic downturn will put sovereign debt under pressure.
• It may appear near impossible for creditors and investors to enforce this debt against sovereigns, but those who succeed can see extraordinary returns.
• We explain how deploying creative cross-border strategies can overcome the toughest sovereign debtors and unlock the key to success.

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• Prevailing case law in BVI and Cayman has historically not allowed injunctions to be granted by the offshore courts unless there is an existing claim against the defendant within the jurisdiction of the Court granting the injunction.
• Fortunately, that position has changed in the Cayman Islands and now in BVI, with claimants, including those from onshore jurisdictions such as Hong Kong and the People’s Republic of China, able to obtain “free-standing” injunctive relief in both offshore jurisdictions.
• With the advent of the new law in BVI, and the continuing willingness of the Cayman Islands’ Courts to make protective orders, victims of fraud are now in a better position than they have ever been to guard against a defendant’s dissipation of its offshore assets whilst they are waiting for a judgment.

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• The current economic downturn has triggered record-breaking amounts of debt owed by governments to overseas investors.
• The crisis, however, has the potential to create large returns for creditors and investors willing to aggressively pursue their claims over a sovereign government.
• A proven yet unorthodox cross-border litigation strategy that catches sovereigns by surprise can achieve the monetization of judgments previously thought too tough to enforce.

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• Investors and creditors can gain potentially large returns if they successfully enforce a large judgment against a sovereign debtor.
• However, with such high-stakes, sovereign governments have begun fighting back using state powers against creditors, turning civil proceedings into a quasi-criminal cross-border dispute.
• A creditor must employ anticipatory and nonconventional counteroffensive measures in order to protect themselves and maximize their odds of success.

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• International creditors continue to face significant challenges when monetizing claims against debtors based in the People's Republic of China.
• Actions such as a standalone freezing injunction can be used in English common law jurisdictions to freeze assets that are held by innocent third parties.
• Injunctions and receiverships can be made without giving notice to the debtor, bestowing the "element of surprise."

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• For international creditors, monetizing claims against debtors located in the People’s Republic of China has proven difficult.
• The first challenge is finding where the assets are, specifically via offshore discovery.
• Time is of the essence, and “freezing” the money is next.

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• There are many reasons why sovereign debtors can be challenging targets.
• The right combination of high-pressure tactics, coupled with aggressive, creative, multijurisdictional strategies, can force sovereign debtors to take a seat at the bargaining table.
• Here are specific examples of effective techniques from recent successful matters where legitimate claims were recovered against sovereign entities.

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• While a divorce for the ultra-wealthy might be local, monetizing the resulting judgment requires sophisticated cross-border expertise.
• A timely, proactive and creative asset recovery strategy leads to more money faster.
• Obtaining a court judgment against the recalcitrant debtor is just the start of a global game of chess in which experience, creativity and global reach are essential.

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• Recent judgments have provided victims with a new route to claim damages from third parties, and thereby widen the pool from which to make a recovery.
• Claimants in numerous common law jurisdictions now can bring two new types of claims against associates of fraudsters who have assisted in the dissipation of assets after a freezing order or judgment has been obtained.
• Creditors seeking to make recoveries against fraudsters based in offshore jurisdictions should consider these two new, but related, claims against third parties when developing their asset recovery strategy.

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