Venezuela’s Potential Debt Restructuring and Economic Recovery Efforts: Some Key Legal and Policy Challenges

By Steven T. Kargman (Kargman Associates/International Restructuring Advisors)

Steven T. Kargman

The article provides an overview of certain key legal and policy issues that are likely to arise in any eventual Venezuelan debt restructuring.  Specifically, the article focuses on what will likely be some of the central elements of any future debt restructuring, including the possibility of debt-for-equity swaps and oil warrants, and it also reviews various considerations in connection with a possible insolvency filing by Venezuela’s state-owned oil company, PDVSA.  Further, the article discusses legal and policy considerations related to economic recovery efforts that Venezuela may undertake in the future, including matters related to any efforts to revive Venezuela’s oil industry as well as any attempts to diversify Venezuela’s economy so that it is not so reliant on a single commodity, oil.  Finally, the article examines the issue of asset recovery and how a future Venezuelan regime might seek to recover assets that have been misappropriated from Venezuela.

This article recently appeared in the Venezuelan law journal, La Revista Venezolana de Legislación y Jurisprudencia (Venezuelan Journal of Legislation and Jurisprudence).  The full article can be found here.

Emerging Economies and Cross-Border Insolvency Regimes: Missing BRICs in the International Insolvency Architecture

By Steven T. Kargman, President, Kargman Associates

SK-Roslyn (July '14) (1) Many of the world’s major advanced economies are subject to some form of cross-border insolvency regime, such as Chapter 15 in the United States. However, despite this clear and important progress in the adoption of cross-border insolvency regimes among many advanced economies, there appears to be a glaring gap in the international insolvency architecture. Specifically, very few of the major emerging economies – and, in particular, none of the BRIC countries (Brazil, Russia, India and China) – have adopted the UNCITRAL Model Law on Cross-Border Insolvency or otherwise enacted effective alternative regimes for handling cross-border insolvencies.

With their growing integration into the global economy, these emerging economies may face a rising number of cross-border insolvencies at some point in the coming years. Nonetheless, while the current absence of cross-border insolvency regimes in major emerging economies may not represent an immediate problem in the next few years, it may pose challenges for the international insolvency framework over the longer term given that these economies are playing an increasingly important role in the global economy.

This two-part article, originally published in 2012-2013 in Insolvency and Restructuring International, reviewed the status of the adoption among major emerging economies of comprehensive insolvency regimes along the lines of the UNCITRAL Model Law and outlined possible pathways that emerging economies might pursue that could lead to the adoption of such cross-border insolvency regimes in these jurisdictions. The article also explored intermediate steps that emerging economies might adopt as a means of growing more comfortable with the concepts that are central to any meaningful cross-border insolvency regime.  Such intermediate steps might serve to pave the way ultimately for the adoption by these emerging market jurisdictions of a more comprehensive cross-border insolvency regime.

Part I of the article (September 2012) can be found here and Part II (April 2013) can be found here.  (This article was first published in Insolvency and Restructuring International, Vol. 6 No. 2, September 2012 and Vol. 7 No. 1, April 2013, and is reproduced with the kind permission of the International Bar Association, London, UK © International Bar Association.)