Of Corporate Bondage: How Bondholders May Be Adversely Affected By The Bankruptcy Code

This edition of Argentine Business Law Watch¹ highlights concerns about the imposition of "prepackaged" reorganization plans on bondholders (the unabashed parody of W. Somerset Maugham’s classic notwithstanding). We also take a look at the latest anti-evasion proposal by the

Administración Federal de Ingresos Públicos (the tax revenue authority). Finally, this issue closes with a brief summary of a ruling by the Inspección General de Justicia (the superintendency of corporations) that could prove troublesome to Argentine companies with foreign shareholders.

Nonconsensual Plans and Bondholders

By the end of the last decade, Argentine corporate bonds totaled approximately US$ 25 billion² . Economic recession coupled with the 2001 devaluation left many companies unable to service U.S. dollar-denominated debt and led to widespread default. To restructure their debt, several companies have worked with their creditors to reach agreement both with and without judicial involvement.