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NEWSINTERNATIONAL

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Fourth Quarter 2005

New Model Approved for International Chapters

AmessagefromTMA’sVPofInternationalRelations

by William Skelly

Bill Skelly is a Partner at the Canadian law firm of Heenan Blaikie LLP. He is a former President of the Northwest Chapter and an ardent supporter of TMA’s global expansion.

I am very excited to announce that, at the October meeting of the Board of Directors, the recommendations

of International Task Force 2 were ap-proved. A new model for international chapter structure will take effect on January 1, 2006. This new structure is explained in the article that follows this message.

I would like to thank all of those who participated in International Task Force 2 and all of the members of the Execu-tive Committee and the Board who had the vision to approve this new model. I am sure that the new model will generate continued success for TMA worldwide.

I would also like to single out and commend John Rizzardi, former TMA president and chairman, for his hard work, diligence and perseverance in leading the Task Force from its incep-tion through the implementation of its recommendations.

This will be an exciting time for our existing international members, as well as for many of the prospects who have contacted us about forming new chap-ters. The simplified format will facilitate

membership in TMA while allowing for the legal, cultural, and social diversity of our global communities.

I’m also pleased to announce that, at the October Board meeting, provisional chapter status was granted both to Tai-wan and to South Africa. We welcome the members from these chapters to the TMA family.

The International Committee will spend the balance of the year transitioning our existing international chapters into the new license model. In 2006, we expect to pursue expansion of TMA in numer-ous jurisdictions under the new licens-ing system.

As this will be our final newsletter for 2005, I wish all of you the best of the holiday season, and health, happiness and prosperity in the New Year. If any of our international members would like to become more involved in the interna-tional committee, please drop me a line at [email protected]

TMA International News 4th Quarter 2005•2

NEWSINTERNATIONAL

TMA International News is a publication of Turnaround Management Association, 100 S. Wacker Drive, Chicago, Illinois 60606. Published quarterly, it serves TMA’s non-U.S. members and focuses on topics of major interest to the international community of corporate renewal professionals. © 2005 Turnaround Management Association. EditorialAdvisoryBoard William E. J. Skelly – VP TMA International Relations Ward Mooney – TMA Chairman Linda M. Delgadillo – TMA Executive Director Donna Steigerwald – Managing Editor

To encourage and support the growth of its membership worldwide, begin-ning January 1, 2006, TMA will put

into effect a new licensing model and pricing structure for all its international chapters.

The licensing system will provide both the structure and flexibility that current and future international chapters will need to address their varying cultural, financial, and organizational needs.

While the services and benefits available to licensees and their members will be reduced, those that are most valuable and relevant to them will remain. They include the ability to use the globally recognized TMA logo and brand, membership listings in TMA’s Directory of Members and Services, and the opportunity to participate in TMA events at member prices.

Some other services, such as receiving The Journal of Corporate Renewal, will be op-tional to licensees, subject to special pricing arrangements.

Key features

• The license will be granted for an exclusive regional area to a not-for-profit entity.

• The licensee will be authorized to use the TMA brand and logo for all chapter events.

• All of the chapter’s members will be required to abide by TMA’s Code of Ethics.

• The chapter and/or the founding mem-bers will be responsible for paying the chapter’s formation costs, license fees and other initiation costs.

• A chapter representative will be a voting member of TMA’s Board of Directors.

• The licensee will set and collect mem-bership fees in accordance with local cultural expectations, business practices and economic conditions. The licensee will pay a base membership fee to TMA for each of its chapter members.

• The licensee will pay the initial license fee, annual renewal fee and membership fees.

• Strict guidelines will be imposed upon the use of TMA intellectual property.

These changes will enable TMA’s interna-tional chapters to retain needed resources that can be used to increase their member-ship and promote the corporate renewal industry in their regions.

The new system reflects TMA’s recogni-tion of important differences in business environments around the world and aims to facilitate the success of its international affiliates.1

TMA to Implement New International Chapter Structure

TMA International News 4th Quarter 2005•�

NEWSINTERNATIONAL

Global Restructuring Roundtable

InternationalPanelDiscussion

Discussion:WilliamE.J.Skelly:As our members have expanded into the global market, the Turnaround Management Association has also expanded its borders outside Canada and the United States. This is partially to accommodate many of our members in larger accounting, law and turnaround firms who have established offices through-out the world.

In addition, TMA has had significant new in-terest from various parts of the world—from India to Russia, from Finland to South Africa. Generally speaking, these people are thirsty for the knowledge and experience that the North American members have and are trying to leverage off some of this information to apply to their jurisdictions.

Six leaders in the Turnaround Management Association discuss recent developments and trends in the global insolvency area.

Panel:

HowardBrodBrownstein,CTPCertified Turnaround Professional and member of TMA’s Executive Commit-tee and International Committee. He is a principal in the Philadelphia, Pennsylvania, turnaround firm of NachmanHaysBrown-stein Inc.

WardK.MooneyChairman of the Turnaround Management Association. He is president of Bank of America Retail Finance Group in Boston, Massachusetts.

WilliamE.J.SkellyVice President of International Relations and member of TMA’s Executive Commit-tee. He is a partner in the Canadian law firm of Heenan Blaikie LLP.

AlanTilleyPresident of the TMA United Kingdom Chapter and a member of TMA’s Board of Directors and International Committee. He is a managing director of Glass & Associates European Division.

JanL.vanderWaltA leader in the South Africa TMA chapter in formation. He is the managing director of Corporate Renewal Partners, a turnaround firm in Johannesburg, South Africa.

JeffreyA.WurstA member of the TMA International Com-mittee, the Board of Directors and past president of the Long Island Chapter. He is a partner in the law firm of Ruskin Moscou Faltischek PC, in Uniondale, New York.


NEWSINTERNATIONAL

GlobalRestructuringRoundtable

WhatappearstobeoccurringisthatmanyjurisdictionsaremovingtowardaNorthAmericanorEuropeanstyleofrestructuring.

Several jurisdictions like Mexico, for ex-ample, have enacted new legislation to bring their legislation in line with that of North America and Europe. What appears to be oc-curring is that many jurisdictions are moving toward a North American or European style of restructuring.

Very similar to the United States, Canada has had a stable and strong economy over the past couple of years, both from a fi-

nancial growth and a political perspective. This has trans-lated into an abundance of capital available for credit for

investing in new companies and for restructuring. It has led to fewer liquidations and encouraged more employment and more companies to stay in business.

Generally speaking, the insolvency busi-ness is somewhat slow because of a buoyant economy. Not unlike those in the States, some Canadian industries have gone through transitions. The largest airline carrier in Canada, Air Canada, restructured in the last year and a half, as well as some larger steel manufacturers.

The government has proposed some changes in legislation, mostly to protect workers in insolvent situations and also to deal with some of the more exciting financial instru-ments now available such as derivatives and income trusts.

Over the past year or so, Canada and the United States have entered into a protocol to deal with cases in Chapter 11 proceedings in the States. In restructurings under the CCAA (Companies’ Creditors Arrangement Act) or our Bankruptcy and Insolvency Act, judges in the U.S. and Canada have agreed

on how hearings will be held, the types of orders that can be granted, and other techni-cal and administrative matters.

Q:Hasthatprotocolworkedwell?Doyouanticipateanychangestothatprocess?

Skelly:Now that there’s a protocol estab-lished, there’s no mystery to the process. It was established about a year and a half ago and Canada tried to model it after the UNICITRAL model for dealing with international insolvencies. We took the parts from it that made sense for our jurisdictions. I’d say we’ve had very good success with it for cross border insolvencies.

WardMooney: Certainly, what is happening in the United States is very similar to Can-ada. Over the past 18 months to two years, an immense amount of capital has come into market that has really focused on all aspects of restructuring corporate America.

A number of large and prominent bankrupt-cies—airlines, supermarkets—have imme-diately been able to attain the appropriate debtor in financing (DIP) to provide the necessary liquidity to restructure.

Financing for smaller transactions also has been readily available, not only from com-mercial but also from nonregulated lenders such as hedge funds that frequently join into a restructuring financing with the bank to provide liquidity.

To the extent that money is the answer to everyone’s issues, capital has been very available to allow companies to continue to operate and use either an out-of-court or in-court process to continue restructuring. It is universally accepted that we are in a frothy capital market environment, which has al-lowed many restructurings to occur.


NEWSINTERNATIONALQ.Doyouthinkthatthishas

causedmoreout-of-courtrestructuringsthanin-courtreorganizations?

Mooney:I don’t have any statistics, but my feeling is there are more out-of-court restructurings than three or four years ago.

The primary driver is intelligent capital that is unlocking liquidity for companies before going into Chapter 11 and also a desire on the part of all constituen-cies to avoid the expenses inherent in a bankruptcy filing. It’s much more of an environment of “Let’s see if we can figure out how to do it out of court and really put our capital to use.”

Having said that, there’s still a useful pro-cess in bankruptcy—to be able to clean up a company, restructure to its fullest extent, and then have it as an attractive investment to buy after cleanup.

Q:ForthoseonthepanelfromtheUnitedStates,whatdoyouthinktheeffectofthenewBankruptcyAbusePreventionandConsumerProtectionActof2005willbe?

Mooney:The major effect we see is, given the fact that the time periods that a company in bankruptcy can now obtain exclusivity have been shortened a great deal, a company has to do a lot more planning before they go into bank-ruptcy—financial, strategic, operational. They’ll need to have a better idea of exactly what they need to achieve in the 120-160 days they’ll be allowed to be in bankruptcy and obtain certain privileges. The process is going to be much more time sensitive.

JeffreyWurst:I do not believe that the exclusivity provision is going to be as signifi-cant. I am not anticipating many fights over competing plans. The bigger issue is retail bankruptcies, with the timing on assuming or rejecting leases.

We’ve learned that in retail liquidations, the most significant asset is often the value of those leases. If not assumed in a timely man-ner, those leases will fall back into the hands of the landlords who may become the big winners. Previously, it was the reorganizing debtor who had been able to capitalize off those leases.

Mooney:I agree. The legislation is focused on quick decisions on leases and gives land-lords very much of a new seat at the table in retail bankruptcies.

HowardBrodBrownstein: I would say that the pendulum definitely has taken a rightward swing, as in many areas of politics and economics in our country. Congress in its wisdom has decided to shift more of the control back in the direction of creditors. This is not a drastic change, more of a tweak.

There were some problems in the bankruptcy process that have been addressed, but others remain. In general, that’s how many turn-around practitioners view the bankruptcy reform act: an unmistakably rightward shift in the policy of our country in the area of corporate renewal.

JanL.vanderWalt: I’d like to talk about driving forces in the turnaround industry in South Africa as well as the constraints it faces. The most significant influence on our turnaround industry is our government’s intention to introduce new business rescue legislation. Presently our insolvency legisla-tion is such that liquidation of distressed businesses is almost automatically guaran-teed, leaving little scope for turnaround work.


NEWSINTERNATIONAL Last year I set up the so-called “task group

for organizing the turnaround and busi-ness rescue industries” in response to the government announcement of plans for new business rescue legislation. The task group represented turnaround professionals from all disciplines, consisting of 20 Work Group members who met weekly for five months, supported by 80 Advisory Group members. This led directly to the formation of the South African chapter of TMA. Presently, we have 33 members and we haven’t done any marketing yet.

That’s the good news. The bad news for the turnaround industry is the present robust-ness of the economy. Interest rates are at an all-time low, compulsory company liquida-tions are at a quarter to a third of the level experienced during the ‘90s, and workout activities have slowed down tremendously.

The result is that the sales funnel to the banks is pretty empty. Turnarounds are taking place in state enterprises such as the national airline carrier, but these don’t really involve private sector turnaround professionals.

To my mind, the biggest barrier to develop-ing the turnaround industry here, and giving effect to new business rescue legislation is lack of private equity funding and a very skeptical financial sector.

Another constraint is stringent labor legisla-tion. For instance, when a distressed business is sold, its employees form part of the deal. This was not always so.

Also the tax regime is unfriendly—not allowing past and assessed losses is a stum-bling block preventing entrepreneurs and financiers from stepping forward to invest in turnarounds.

In summary, turnaround activity in South Africa is presently at a low point, and I believe it will remain so for a year or two.


Q:Then,whatisdrivingtheinterestinaTMAchapterthere?

VanderWalt:I do believe that the new business legislation as well as the inevitable upswing in interest rates will provide the turnaround industry with a substantial boost in the medium term.

Presently, when a company goes insolvent, we have a process called judicial manage-ment, which unfortunately in practice invariably leads to liquidation. When the government announced plans for new legis-lation, all our liquidators overnight claimed to be turnaround professionals. That’s why industry stepped forward and formed a local chapter of the TMA. There’s a major op-portunity for the future, but it will take two years for new legislation to take effect.

AlanTilley:In the past two to three years, Western Europe has actually seen significant developments in legislation and practice in turnarounds. It is being recognized that con-sensual restructuring ahead of formal process can preserve enterprise value.

Whereas historically most European regimes have been very pro-creditor, there is a drift in legislation towards more of a balance between debtor and creditor. The applica-tion of the legislation has been influenced a lot by U.S. practitioners, law firms and turnaround/workout firms coming into the marketplace and pushing the legislation.

In Germany, it’s taken industry professionals three to four years to really begin to adapt to the 1999 legislative changes. The U.K. had new legislation in 2003. Italy had the Parma-lat affair that prompted pretty strict action on large company reform. Spain introduced new legislation in 2004, and France is in the process. All of it is being prompted by government recognition that they needed a better balance between creditor and debtor.


NEWSINTERNATIONAL

InEurope,theeconomyin2003-04hasbeenquitebenignfortherestructuringindustrywiththeexceptionofGermany,

Many look to the U.S., but nobody has gone as far as Chapter 11. Nowhere is there a situ-ation where management retains day-to-day business control once you get into formal process. In every regime there is a court-ap-pointed administrator.

More important, there is no developed mar-ket for DIP funding, so the critical issue of liquidity ahead of insolvency is still a major factor and an impediment to the U.S. style of restructuring.

TMA has been in Europe since 2000, with the U.K. being the first chapter in 2000; France in 2002; Italy’s formative meeting was last year. Germany had its first kickoff meeting in June and Spain is looking at a kickoff in 2005. Ireland has also expressed interest but will probably piggyback off the U.K. Chapter in the short term.

In other exciting developments, the U.K. Chapter launched a Certified Turnaround Professional program in July, with a lot of research and heavy lifting to make sure we have a program that will import into the U.K. We have a well-established top univer-sity director as faculty.

Q.ArethosetypesofcredentialsmoreimportanttherethanintheU.S.?

Tilley:All professional activities are con-trolled or supervised by self-managed professional bodies, which all have quite challenging exam-based qualification re-quirements. Most professions need a bach-elors’ degree, then secondary professional qualifications. That’s true of accounting, law, actuarial, and banking. So it is extremely important. The banks in particular are very keen to see that there is some form of ac-creditation.

As for the economic situation in Europe—the economy in 2003-04 has been quite benign for the restructuring industry with the exception of Germany, which is going through significant restructuring issues. Banks are addressing Basel-2 regulations and there’s a lot of talk about German nonperforming loans that have come onto the market. German professionals were very conservative, but the EU regulation that introduced primary and secondary jurisdictions and opened up the possibility of forum shopping saw some German administrations go into more friendly jurisdictions such as the U.K. It was a wake-up call for German professionals, who are now adapting some of the provisions. We’re beginning to see prepack arrangements and better implementation of the terms of the 1999 legislation.

In terms of industries, retail in the U.K. has begun to suffer. Automobile and supply in-dustries have seen some large restructurings and fallout from some big U.S. Chapter 11s. Those who had factories in 506 legislations, brought that difficult cross border element.

Wurst:The Russian economy continues to be very challenging. It has a high inflation rate approaching 14 percent, with low wages and low productivity.

The Yukos affair has discouraged domestic investment, yet foreign investors continue to have an interest in Russian businesses.

The ruble is appreciating against the dollar. This is not necessarily a good thing for their economy because if you’re doing business in Russia, you tend to do business not in rubles but in U.S. dollars.


NEWSINTERNATIONAL This year Russia has seen a significant slow-

down in industrial growth, from 8 percent to 4 percent, primarily due to the drop in exports following the Yukos crisis

But with all this going on in the economy, Russia continues to grow on a personal level. It now has 1 percent of the world’s mil-lionaires. About 88,000 millionaires live in Russia, and that number is growing.

The banking and lending picture has been plagued with money laundering scandals.

Sodbusiness-bank failed in May 2004 after it was closed down for money laundering. In July of the

same year, Guta Bank experienced significant problems and as recently as May 2005, a major bank in St. Petersburg had allegations of money laun-dering. In part as a result of these scandals, Alfa-Bank, one of Russia’s strongest banks, had a run on the bank last year, but it seems to have gotten through it pretty well. All in all there is not a lot of confidence in the banking industry.

Russia’s economy is a very young economy in comparison to other industrialized nations and is going through some growing pains. The economy had a serious downturn in 1998 with a great recovery.

In 1998, it enacted ineffective bankruptcy legislation that essentially provided the opportunity for hostile takeovers under the guise of involuntary bankruptcies. Russia had to revamp its bankruptcy law in 2002 and is relying more on the American model to provide for restructuring. Of course this is a good thing for people in our profession.

Cross border bankruptcy issues are very interesting. Yukos, a major player in the Russian economy, filed for bankruptcy in the United States and went through litigation before its case was dismissed by the Texas bankruptcy court. The court essentially said that the case did not belong in the U.S. Part of the reason was that the Russian govern-ment was a major party in the Yukos bank-ruptcy. It had foreclosed upon tax liens and there were issues as to the propriety of these liens.

Bankruptcy is still very volatile, but people are becoming more optimistic now that there is the opportunity for restructuring and not just liquidations. No significant turnaround management industry exists in Russia, and TMA is in early stages of investigating a pos-sible chapter in Russia, hopefully with a late fall 2005 or early spring 2006 organizational meeting.

Q:Whereistheinterestinachaptercomingfrom?

Wurst:So far interest has come primarily from professionals in American law and accounting firms that have a presence in the Russian Federation. A U.S./Russian banking seminar held in Washington, D.C., last April discussed turnaround issues, but so far no one has rolled up his sleeves to address how to fix what is broken. With a little bit of en-couragement from our colleagues there, we will be approaching Russian banks that don’t know much about the turnaround industry. It’s an education process and hopefully, they will see there are better options than liquida-tion in dealing with distressed borrowers.

Brownstein: The situation is Japan is one of progress. In the last five years, the economy has made a lot of progress toward recovery from the bursting of the economic bubble on a number of fronts: corporate initiatives


InRussia,peoplearebecomingmoreoptimisticnowthatthereistheopportunityforrestructuringandnotjustliquidations.


NEWSINTERNATIONAL

ThereiscurrentlyhugeinterestincorporaterenewalinJapan,asevidencedbythemeteoricriseofTMA’sJapanChapter,nowwith130members.

to improve operations, and engaging in restructuring methods that until recently were unheard of in Japan, such as layoffs, closure of operations, disposal of non-core assets, and refocus on core businesses. The idea of maximization of shareholder value, rather than treating a corporation as just a trust to be passed on to the next generation of managers and employees, is taking hold in Japan.

In the government and legal area, the bank-ruptcy laws have been somewhat modernized to make restructuring easier. New account-ing rules were introduced to reflect more of a mark-to-market mentality. Some new players have emerged following the first deal that caused, pardon the expression, “ripples:” the Ripplewood deal involving the Long Term Credit Bank, now Shinsei Bank. There has been a growing acceptance of the idea that private equity and the takeover of distressed companies can be a viable alternative for corporate renewal. These are relatively new ideas in Japan.

It’s important to realize how far the Japanese economic environment has come. Historically, bank regulators did not enforce loan quality as regulators did elsewhere. If a bank got into trouble, the regulators worked with the bank behind the scenes, but the bank was rarely forced to foreclose on its borrowers.

Banks in Japan were not subject to as much of this type of discipline as banks faced in the U.S. and elsewhere, and banks therefore did not have to enforce that type of disci-pline upon their borrowers. As long as the economy kept improving and the tide kept rising, it didn’t matter.

However, the minute when the bubble economy burst, then as in the Japanese prov-erb, “When you lower the water, the rocks will appear.” A Japanese version of the U.S.’s Resolution Trust Corporation was created,

called the Industrial Revitalization Corpora-tion of Japan. It established the principle that banks have to clean up portfolios, and that distressed companies have to be restruc-tured. The Japanese economy has come a long way.

In terms of what remains to be done, how-ever, everything I’ve described has occurred mostly in the larger cities and the largest companies. As you move down to prefectural capitals—what we would call states or pro-vincial capitals in North America—not much has changed for the small and middle sized banks and borrow-ers there, which struggle with too much debt, still suffering from the effects of the bubble economy. The government has set up some centers to assist them in the prefectural capitals.

The turnaround profession as we understand it still hardly exists in Japan. Because there was less discipline of debt, companies did not historically “get into trouble,” and a pro-fession to help companies out of trouble had no reason to develop. Underperformance was always addressed from within.

There is currently huge interest in corpo-rate renewal in Japan, as evidenced by the meteoric rise of TMA’s Japan Chapter, now with 130 members. Its members mostly come from the accounting profession, which is where the turnaround profession in the United States had its genesis 20 to 30 years ago. TMA members in Japan are keenly interested in establishing a Japanese version of the Certified Turnaround Professional program. I think that TMA as an organiza-tion is greatly appreciated by the TMA Japan


NEWSINTERNATIONAL Chapter for supporting the development of a

distinctly Japanese chapter that everyone can be proud of.

In China, TMA is assembling a database of likely prospective members in Hong Kong, where the first—but, we suspect, not the last—TMA chapter in China will be formed. We are planning a chapter formation meet-ing in Hong Kong later in 2005, and many law and accounting firms in Hong Kong that have connections to European and North American firms have already evidenced strong interest.

Q:ArethereanyindustrysectorsinJapanthatarebusinessopportunitiesforturnaroundprofessionals?

Brownstein:Japanese industries that had construction or real estate components were among those with the biggest problems. The large ones have been mostly identified and addressed by now. The remaining problems span across industries, because any company that had real estate on its books probably leveraged it up too high. In general, Japan is dealing with the fact that countries in the rest of Asia are becoming lower cost produc-ers. That’s a relatively new development in the last decade or so, a problem not unlike manufacturing in the U.S.

Q:Lookingintoyourcrystalball,wheredoyouseethefutureofrestructuringgloballyfiveyearsfromnow?

Wurst:I see an international trend away from what I’ll refer to as the British system of having an administrator liquidate the business and more movement toward the American-type reorganization. I also suspect


that we will see the insolvency business continue to grow, with more loan defaults as interest rates come up from the present historic lows.

Brownstein:To me, corporate renewal is a process, not an event. Interest rates will go up, and they’ll go down. There will be prob-lems of an economic and political nature in various parts of the world at various times. The beauty of corporate renewal is that it’s a continuous process. An analogy that I use is the Amazon rainforest: it is teeming with life, but ultimately animals and plants die. The nutrients get recycled, just as the assets of a company and the operations of a busi-ness that are worth saving, are recycled.

Much of the rest of the world does not yet have methods of corporate renewal as ad-vanced as we are fortunate to have in North America, but all are interested in developing their own version. While other countries will not likely adopt methods exactly as those in North America, the fundamental principal of continuous corporate renewal will prob-ably be developed everywhere. That is why TMA has such a huge contribution to make.

TMA is the premier corporate renewal or-ganization in the world, and we are realizing our destiny to make a unique contribution to the world. It’s a very exciting time to be involved in corporate renewal around the world today. 1

This article first appeared in Financier Worldwide’s Annual Global Restructuring and Insolvency Review 2005. © 2005 Financier Worldwide Limited. Permission to use this reprint has been granted by the publisher. For further information on Financier World-wide and its publications, please contact James Lowe on +44(0)845 345 0456 or by e-mail: [email protected].


NEWSINTERNATIONALCentre of Main

Interestsby Bob Bailey, Business Recovery Partner, Numerica

ConflictshavearisenamongsomeEUstatesastheyattempttobringacentreofmaininterest“home.”

The European Union (EU) regula-tions on insolvency proceedings enable main insolvency proceedings

to be opened in the member state where the debtor has its centre of main interest.

This centre of main interest should corre-spond to the place where the debtor con-ducts the administration of its interests on a regular basis and is therefore ascertainable by third parties. Any other member state where the debtor has an establishment can only open up secondary proceedings that are limited to the assets located in that state and are in the nature of winding up proceedings.

With such a structure, it is probably not surprising that tensions have arisen between the courts in various jurisdictions willing to decide that the centre of main interest, in fact, rests in their national jurisdiction. Thus, we have seen conflicts among Britain, France, Ireland and Italy as they use different constructions and tests to bring the centre of main interest “home.”

At a practical level, this situation gives rise to difficulties when dealing with a company where the “secondary” establishments are significant and may represent an essential element of a business that has been seen by its management as a single unit on an EU-wide basis.

Regulations give the insolvency practitioner in charge of the main proceedings the power to seek a stay of the secondary liquidation

proceedings. These regulations also allow the secondary proceedings to be closed with-out liquidation by a rescue plan or similar measure (assuming the law applicable allows such). The practitioner driving the main proceedings is empowered to propose such a measure.

In practice, such an approach is cumbersome and potentially damag-ing to the “second-ary” business. Some observers believe that it would have been far better to allow second-ary proceedings to be stand-alone rescue proceedings in their own right.

The EU regulations envisage coordination of all the concurrent proceedings, accompanied by a flow of information and resources. So far, interpretations by individual courts have not been helpful in giving any real guidance as to how the courts will assist a truly pan-jurisdictional company to operate in insol-vency circumstances. 1

Bob Bailey is a Partner at Numerica and has been involved with restruc-turing and insolvency for 30 years. He is one of the few UK members of the American Bankruptcy Insti-tute and is a Licensed Insolvency Practitioner under UK legislation.

A former PwC Partner, he has worked in London, East & West Midlands and was seconded to Jakarta for two years where he led the restructuring team of more than 50.

EUInsolvencyproceedingsregulations


NEWSINTERNATIONAL Development of TMA

chapter in Austria moves forwardby Howard Brownstein, CTP

Bernhard�Klinger�(left)�met�with�Howard�Brownstein,�CTP,�in�Vienna�to�discuss�developing�a�TMA�chapter�in�Austria .

Preliminary efforts to develop a TMA chapter in Austria began recently with a meeting in Vienna between Bern-

hard Klinger, a partner at KPMG’s office there and TMA International Committee member Howard Brod Brownstein, CTP.

The chapter development process will begin with the organization of a steering commit-tee in Austria. Klinger held a formational meeting for this committee on November 2 to begin building a nucleus composed of the 25 minimum members necessary to form a chapter.

“The time is right for development of a TMA chapter in Central Europe, and Vienna is the most logical place to begin,” says Brownstein, a Principal of NachmanHaysBrownstein, Inc. “For centuries, Vienna has been the most important European commercial and cultural center between Germany, Italy and Russia, and has historical ties to several other Central European countries that make Vienna a strategic location.

Eventually, such countries as Hungary, Slovakia, the Czech Republic and the Balkan countries might have their own TMA chapters, but initial development of a chapter in Austria will serve as a magnet for interested professionals from throughout the region,” Brownstein says.

The steering committee in Austria will likely plan a program event for later in the fall that will be designed to attract larger general attendance and interest in TMA. If chapter development appears to have progressed sufficiently, this event may include formal request of TMA’s Board of Directors to grant the group provisional chapter status.

An Austria Subcommittee of the TMA International Committee has been formed, and all interested TMA members are invited to contact Howard Brownstein ([email protected]) or Dale West ([email protected]). 1

Documents

A message from TMA’s VP of International Relations New Model … 6 - 05Q4.pdf · 2008-02-27 · I’d say we’ve had very good success with it for cross border insolvencies. Ward