Summary:
- “Loan-to-own” investing is a long-established means of distressed asset and business acquisition in the US. Its success depends primarily on the investor’s voting and credit bidding rights under the US Bankruptcy Code.
- India’s new Insolvency and Bankruptcy Code (IBC) is a “game changer” in debtor-creditor relations, dramatically shifting the historic balance of power in Indian corporate restructuring.
- The IBC may have other, secondary effects on distressed debt investment.
- Specifically, the IBC may impact (and be impacted by) existing debt-investment vehicles, banks’ distressed debt pricing, claims-trading opportunities and continued promoter influence.
This 2018 article comparing distressed debt investing under US and Indian insolvency law, focusing on “loan-to-own” transactions, was co-authored with Pramod K Singh, principal with Lux Veritas Solicitors and Advocates in New Delhi, India and is available here. This article first appeared in Butterworths Journal of International Banking and Financial Law‘s November 2018 issue. Republished with kind permission of LexisNexis Butterworths.
