October ABI Journal Article Examines How Asian Companies Use the Bankruptcy Code to Collect Assets
Alexandria, Va. — An article in the October edition of the ABI Journal examines the growing trend of Asian companies using Bankruptcy Code provisions to expand their U.S. asset portfolios. “Bankrupt companies hold particular appeal for foreign investors who are eager to benefit from the advantages and safeguards that the Bankruptcy Code affords acquirers and purchasers,” Edward E. Neiger, Joseph L. Steinfeld, Jr. and Dina Gielchinsky of ASK LLP (New York and St. Paul, Minn.) write in their article “Made in the U.S., Acquired by Asia: How Asian Companies Use the Code to Collect Assets.” The authors point out that Asian companies, particularly those based in China and Hong Kong, have been collecting U.S. assets for several years, similar to how the Japanese acquired U.S. assets in the 1980s. “The bankruptcies of Jennifer Convertibles Inc. and The Connaught Group Limited display prime examples of Asian companies utilizing the Bankruptcy Code to acquire U.S. assets,” the authors write. One safeguard identified by the authors that is appealing to Asian companies looking to acquire bankrupt U.S. companies is that §363(f) allows for the sale of assets “free and clear of any interest in such property of an entity other than the estate,” provided that the debtor can satisfy one of certain specified conditions. “These include, among other things, a showing that applicable nonbankruptcy law permits the sale free and clear, that the sale price exceeds the amount of all liens encumbering the property, or that the interest being sold is in bona fide dispute,” according to Neiger, Steinfeld and Gielchinsky. A reorganization plan may also provide for the sale or transfer of the debtor’s assets free and clear of any other interests, provided that the secured creditors receive the “indubitable equivalent” of the value of their liens against the sold assets. While Asian companies may face some objections when acquiring U.S. companies in bankruptcy, particularly if the U.S. company operates in the defense or technology sectors, Neiger, Steinfeld and Gielchinsky find that the purchases of bankrupt U.S. companies in retail sectors have proven profitable for both U.S. and Asian economies. “Aided by the Bankruptcy Code’s promotion of asset sales and its protections for acquirers and purchasers, Asian businesses are expected to increase their portfolios of distressed U.S. companies,” the authors write. To obtain a copy of “Made in the U.S., Acquired by Asia: How Asian Companies Use the Code to Collect Assets,” published in the October edition of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected] ### ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
Friday, October 12, 2012