BBM attend International Bar Association Insolvency meeting in Barcelona

We were at the International Bar Association, Insolvency Section, annual meeting in Barcelona, last week.

A sceptic might say that perhaps Scots lawyers just like holidays to sunnier climes but, in actual fact, there was a great deal of interest for anyone involved in Scots insolvency law and related enforcement issues.

We wanted to flag up one particular issue, that is perhaps worth reflecting on for any stakeholder involved in the Scottish insolvency system.

The conference heard a presentation on behalf of the World Bank, giving reflections on their “Doing Business” report. Effectively the report (which can be accessed here ranks countries according to business effectiveness. The report is worth a read generally. However, one of the big issues is how efficient restructuring systems are. Different countries’ restructuring systems are ranked depending on various factors, but particularly in relation to time involved, cost and ultimate outcome (particularly for secured creditors). We will not replicate the league table in full, and it is worth a read, but Japan came out on top!

Insolvency practitioners will also be delighted to know that the research tends to suggest that where there is a qualified regulated profession, the outcome for creditors ultimately does seem to be better at the end of the day!

The second point worth picking up from the conference was the discussion of distressed real estate investments. During the discussion of non-performance loan (“NPL”) purchasing, it was concluded by the panel that the greatest opportunities (including for UK funds) are likely to be in the Netherlands, Italy and Greece, over the next couple of years. Ireland is apparently now routinely considered too expensive. The panel calculated that Lloyds (including Bank of Scotland) had had 14 deleveraging sales of loan books since the recession began, whereas RBS seem to have adopted a differing policy, selling off individual debts.

Anecdotally, in our experience, dealing with the secondary loan market in Scotland, purchasing funds do tend to be more aggressive than first-tier high street lenders, and businesses finding themselves in a situation where their loan has been sold on should take advice. We also have experience of advising funds and debt purchasers on the legal context, and particularly security and enforcement differences in Scotland. As usual, we are happy to chat through with business or funds affected by these issues.

We should add, the conference was good, but it did indeed help that Barcelona was sunny!

Eric Baijal leads BBM’s Insolvency and Restructuring Team (emb [AT] bbmsolicitors [DOT] co [DOT] uk)