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LAW, JUSTICE AND DEVELOPMENT WEEK 2020 | Insolvency in the Context of COVID-19: Can Out-of-Court Workouts Flatten the Curve of Insolvency Cases?

November 18, 2020

VIRTUAL

MULTIMEDIA

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Corporate debt in Emerging Market and Developing Economies (EMDEs) was at a historic high prior to the pandemic. The crisis will lead to a large increase in corporate insolvencies, which are forecast to grow by 35 percent globally by 2021. Fifty percent of firms worldwide may not have enough cash to pay debt servicing costs over the coming year and the International Monetary Fund predicts that Small and Medium-sized enterprises (SMEs) could see a tripling of insolvencies. A Facebook/OECD/World Bank global survey of 30,000 small businesses found that over 25% closed between January and May 2020. Prior crises showed a serious decline in creditors’ ability to recover from defaulting debtors. During the Asian financial crisis, Non-Performing Loans (NPLs) rose to almost 30% in key Asian EMDEs from 4.7% the year the crisis started; in the global financial crisis of 2008, NPLs in key EMDEs rose to 27.5% from 3% the year the crisis started.

The surge in the number of bankruptcy cases is likely to result in higher costs, longer procedures and worse capital reallocation decisions. This is especially problematic in countries with weak insolvency systems, where courts can quickly become overwhelmed. The average time to resolve an insolvency case pre-pandemic in EMDEs was over two years, and studies have shown that lengthy resolution periods severely inhibit positive outcomes. Out-of-Court Workouts (OCWs) can help. To address a large amount of financial distress in a timely manner, governments may need to develop an OCW framework to encourage negotiations between private debtors and their creditors, which has been a successful as a tool in past crises. As largely informal tools, which can be put in place relatively quickly, they can be a complement or alternative to formal insolvency legal systems.

This session examines the following questions in the context of EMDEs:

What are OCW frameworks (spectrum from hybrid to purely out-of-court)?
Why is OCW important in the context of COVID-19, especially in emerging economies?
How have OCW frameworks been successfully applied and why was a certain model of OCW chosen for the country?
What are the benefits and challenges/limitations of OCW frameworks?

SPEAKERS

Scott Atkins
Partner, Deputy Chair and Head of Risk Advisory Norton Rose Fulbright, Australia
Scott Atkins is the firm's Australian deputy chair and head of its risk advisory practice, with more than 25 years of industry experience, and is based in Sydney. Scott has unique, globally-recognised dual-track insolvency and risk experience. He is a leading lawyer in one of the most reputable insolvency and restructuring practices in the Asia-Pacific region, having been recognised as Australia's only Eminent Practitioner for this category in the Chambers and Partners 2020 regional legal rankings. Scott is also vice-president and an inaugural fellow of INSOL International, as well as chair of INSOL's Asian Advisory Council and its strategic review body TaskForce 2025. Additionally, Scott serves as president of the Australian Restructuring Insolvency and Turnaround Association (ARITA), Australia's peak insolvency and restructuring professional association with over 1800 members. Scott is recognised by his peers for his leading experience in cross-border insolvency, acting on both inbound engagements in Australia and advising Australian clients on outbound engagements in jurisdictions including the United States, the United Kingdom, the Cayman Islands, Hong Kong, New Zealand, Indonesia, Singapore, Nauru and The Netherlands.

Bruno Navarro

Founder, Ipso Facto Ltd., United Arab Emirates
Bruno Navarro founded Ipso Facto Ltd, an expert consultancy boutique registered in Masdar City, Abu Dhabi. Bruno Navarro is a well-recognized restructuring practitioner, with a key focus on companies in distress. Ipso Facto addresses the needs of shareholders faced with unsustainable debt and creditors coping with mounting non-performing assets (NPA). Bruno Navarro provides advisory services to financial institutions and companies operating in a challenging environment: from business turnaround or rehabilitation; to debt restructuring, bankruptcy or liquidation assistance. He specially assists financial institutions in building in-house capabilities for NPA resolution and managing provision. Bruno Navarro has been a Senior Advisor to Rothschild & Co since 2019, supporting the Investment Bank’s restructuring mandates. Additionally, Bruno Navarro sits at the Board of companies under severe financial stress. From 2015 to 2018, Bruno Navarro restructured and managed the Asset Recovery Management Dept. of Abu Dhabi Islamic Bank (ADIB). In 2010, he had created the Special Assets & Restructuring Dept. of Abu Dhabi Commercial Bank (ADCB). In those capacities, he resolved complex restructuring in the region, chaired several creditors’ committees, and catalyzed important recoveries and provision reversals. Bruno Navarro frequently provides lectures and training seminars related to topics of debt workout, corporate restructuring and distressed assets. He holds a master in Finance from the University of Paris and a post- graduate degree in Corporate Strategy from University of Paris and HEC. In 2008, he graduated as a Fellow of INSOL, the International cross border insolvency organization.

Ancois Plaatje

Deputy Director, Banking Supervision Department, Bank of Namibia
As the Deputy Director in the Banking Supervision Department at the Bank of Namibia, Ancois plays a key role in providing oversight over the banking institutions and credit bureaus in Namibia. Some of her responsibilities is to ensure that the risk management frameworks of banking institutions are effective in managing risks with the aim to safeguard financial stability. Ancois’ knowledge and experience in regulatory matters and central banking spans over a period of 15 years. Her career began in a financial accountant role at Alexander Forbes before she assumed the financial analyst role in the Credit Department at Nedbank Namibia in 2002. Thereafter she moved to the Bank of Namibia in 2004. Under her leadership, various successful projects have shaped the way the Bank and SADC region regulate and supervise institutions. Ancois holds a MSC in International Banking and Finance.

Tayo Oduwole

CEO, Frontier Capital Alternative Assets, Nigeria
Olutayo Oduwole is currently the CEO of Frontier Capital Alternative Assets Limited; the premier private asset management company in West Africa. He started his career in Agusto & Co. Limited in 1994 as a Banking Industry Analyst before joining its Consulting Group where he worked on several advisory assignments for bank and non-bank clients. He has considerable experience in the areas of corporate and project finance advisory, project feasibility/evaluation and business planning. He is a Director in Frontier Capital Limited, a financial advisory and proprietary investment business. He is also a director of several companies in which Frontier Capital has proprietary interests.

Mahesh Uttamchandani (Moderator)

Practice Manager, World Bank
Mahesh Uttamchandani is the Practice Manager for Financial Inclusion, Infrastructure & Access in the Finance, Competitiveness, and Innovation Global Practice at the World Bank Group. He manages Payment & Market Infrastructures, Responsible Financial Access, Credit Infrastructure, the global Financial Inclusion Support Framework program, the global Financial Consumer Protection program. He also jointly leads (with an IFC co-Head) the Universal Financial Access 2020 initiative. He was previously Practice Manager for SME Access to Finance and Credit Infrastructure. Mahesh also served as a Global Lead for Credit Infrastructure Global Solutions Group, where he led the WBG's work in the areas of secured transactions, credit reporting and insolvency, including the insolvency and creditor/debtor rights initiative. Mahesh joined the World Bank’s Legal Vice Presidency in 2006, and has since held various positions at both the World Bank and IFC Prior to joining the WBG, Mahesh worked at the EBRD and as a commercial litigator at a leading Canadian law firm. Mahesh is a member of the Executive Committee of CGAP, a board member of the legal journal, International Corporate Rescue, and a board member of INSOL International. He has published and taught at the university level and lectured extensively in North America, Europe and Asia.