biicl presentation may 2007 wwii · slide 17 presentation biicl may 2007 1. summons to pay to...

O M N I B R I D G E W A Y

Omni Bridgeway Emerging Market Debt Recovery

Wieger Wielinga – Managing director Omni Bridgeway Debt Trading BV

Presentation BIICL May 2007Slide 2

Debt collection and Asset tracing

A small debt makes a man your debtor - a large one makes a man your enemy Irish Proverb


Omni Bridgeway

Omni Bridgeway provides recovery solutions for distressed emerging market debts since 1986:– Emerging Market Debt Recovery

• Sovereign and semi-sovereign debtors or large corporate debtors. • Focus on defaulted trade and commercial debt• Legal recovery or Debt Trading and investment• Business Model: No success no fee Mandate or Purchase

– International Dispute Management and Support• Litigation funding • Enforcement of international arbitration proceedings in investment

disputes (ICC, ICSID, other)• No Success no Fee

– Expert Services and Consultancy on stand alone basis


Omni Bridgeway

• Typical Omni Bridgeway clients:

– Multinationals and Banks

– Lloyds, exclusive mandates for political risk insurance claim portfolios

– Exporters, commodity traders, maritime companies

– Insurance / Re-insurance companies

– Export Credit Agencies

– Asset Traders and Investors

• Business model: different options for creditors

– Mandate basis (no cure no pay)

– Outright purchase for own book

– Combination


Debt Recovery

Debt recovery/collection:

• “Softball” Consensual Debt Collection: through amicable means

• “Hardball” – non consensual debt collection: through legal means

• “Passing the ball” to investor: sale of the debt


Consensual Debt Recovery (“Softball”)

• Diplomacy

• Restructuring and rescheduling

• Swaps

– Debt for debt swaps

– Debt for equity

– Debt for aid

• Advantage:

– Commercial relationship spared

• Disadvantage:

– Often lower return

– Assumes “willing” debtor


Non-consensual debt recovery: “Hardball”

“A kind word with a gun is always more effective then just a kind word”


Non-consensual debt recovery: “Hardball”

• Legal enforcement against the debtor’s assets

– Pre- or post- judgment/ award?

– Analysis of legal enforcement possibilities

– Asset tracing in favourable jurisdictions

– Effectuate attachments

– Force opposition to negotiation table

• Asset tracing KEY


Asset tracing: KEY

• Fact finding mission:

– What:

• Recurring monetary flows or one-offs

• “Hard assets”

• assets held by debtor itself

• assets of debtor under third party: Garnishment

• Garnishment of assets held by “fourth party”


Asset tracing: KEY

– Where: in favourable jurisdiction

• Legal considerations

– what legal system applies?

– pre-judgment attachment allowed?

– prevailing immunity doctrine

– Prevailing identification/piercing corp. veil doctrine

• Strategic considerations:

– Geographic location

– Risk and potential magnitude of adverse cost orders

– Practical challenges of certain jurisdictions


Asset tracing

– How:

• Project planning

• Integrated aproach: teamwork of legal and

investigative researchers;

• Desktop homework using:

– Proprietary asset tracing databases;

– External databases and sources

– On the ground local investigation through

extensive network of investigators

• Gut feeling/experience


Recovery case study

Timely asset tracing effort and local knowledge is KEY

Country : NigeriaCreditor : West European oil traderDebtor : Nigerian oil distribution companyAmount : US$30 millionGuarantor : NoneJudgement : US final Award


Debtor’s corporate HQ...

Getting an award is not the same as getting paid.....


Some lessons learned

– Asset tracing / investigative intelligence starts asap and

doesn’t stop at effecting attachment itself;

– Timing can be crucial

– Each case is different

– What is right timing and what are right assets depends

on specific case dynamics;

– Shock effect or quiet model?


Recovery Case: Danish multinational

Country : DenmarkDebtor : Danish multinationalAmount : 6 millionStatus : Arbitration award obtained

Circumstances: • Very “unwilling” debtor• Danish jurisdiction unfavourable for attachments and award recognition • Debtor started reorganizing assets after client’s previous lawyer made

strategic error in France by prematurely exposing recovery effort.

Solution:• Global asset tracing effort identified key assets in Germany • successfully attached and defended in court • Subsequently settled out of court with minimal discount


Creditor : UK chemicals multinational

Debtor : Ukraine

Guarantor : National Bank of Ukraine

Insurer : None

Instruments : Letters of Credit

Principal Amount : USD 11,847,946 (excl. overdue interest)

Recovery case: National Bank of Ukraine


1. Summons to pay to National Bank of Ukraine. No full payment followed

2. Concerted attachments were effectuated in France, Germany, Luxembourg and The Netherlands.

3. Assets attached > amount owed

4. Main legal proceedings initiated.

5. National Bank of Ukraine forced to the negotiating table to reach an amicable settlement.

6. A settlement agreement was signed between the creditor and the National Bank of Ukraine for the amount of USD 13 million (i.e. full principal amount plus overdue interest).

Recovery case: National Bank of Ukraine


Recovery Case: Zimbabwe

Country : Zimbabwe

Lender : West European Bank

Borrower : Ministry of Health and Ministry of Finance

Principal : EUR 25 million, maturity 1993-2000

Award : No

Solution: Asset tracing and subsequent attachments in various western jurisdictions

Negotiation started soon after attachments were made.

Recovery within one year :

• approx. EUR 10 million +

• for the remainder: restructuring agreement with improved conditions


Recovery Solution 3: Sale of the claim to third party investor

• Increasing interest from investors with appetite for atypical assets• Market knowledge and access required

• Investors• Motives

• Many types of investors with different motives: – Specialized Investment funds – Exporters with local interests that seek extra leverage– Buy-Back by vehicle controlled by the original Debtor

• Pricing. Relevant factors:• Age of debt• Size of the debt• Quality of documentation• Statute of limitation• Security

Remember: Sale = immediate liquidity but on average lowest return


Case study Sale

• Country : Mexico• Exporter : Asian Multinational• Debtor : Insolvent Mexican Steel company• Principal : USD 8 million• Collateral : Steel grinding equipment• Status Debtor : In Suspension of Payments• Acknowledged : USD 8 million incl PDI

Recovery through sale to Hedge Fund investor: USD 6 (approx. 75% of principal)


Where does Omni Bridgeway fit in a lawyers practice

• Network for “softball” approach;

• Arbitration / litigation funding Attractive for creditors that prefer to mitigate risk of (further) financial exposure of litigation and/or creditors with limited financial resources to fund best possible recovery process;

• Asset tracing services (no cure no pay);

• Management of multi-jurisdictional attachment/enforcement effort;

• Debt Trading;

• Debt Pricing;

O M N I B R I D G E W A Y

Omni Bridgeway Emerging MarketsEmerging Market Debt Solution Provider

Wieger Wielinga – Managing director Omni Bridgeway Debt Trading BV

biicl presentation may 2007 wwii · slide 17 presentation biicl may 2007 1. summons to pay to...

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