Courting Chapter 11
Troubled Latin American companies increasingly are seeking to reorganize their finances under United States bankruptcy regulations. They provide more control and greater certainty for many companies than their home country's insolvency laws.
Latin American companies, like their counterparts in the
United States, have been hard hit by the economic downturn that
has dug in its heels around the world. Those suffering the most
are companies that during the economic boom of the late 1990s
tapped the US debt markets for secured and highly sophisticated
US-dollar denominated financing but operate their revenues
primarily in their local Latin American currency. Poor
financial results, bleak economic forecasts and currency
devaluations throughout Latin America that increased corporate
debt loads forced many of these companies to default on their
US dollar denominated debt.
In response to threats of legal action or foreclosure from
their US-based lenders, these financially strapped companies
have been forced to scramble for options to preserve their
businesses as going concerns for the benefit of their
employees, customers, shareholders and other creditors.
However, traditional options such as shareholder and government
financial support have been...
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