Downward pressure on asset values drives restructuring and distressed debt market

Newsroom 16/03/2011 | 16:16

A combination of pressure on asset values, debtors seeking support from lenders or investors taking action over debtor defaults are the key drivers of the restructuring and distressed debt activity market, according to seminar on “Current trends in the international financial markets” organized by Gide Loyrette Nouel. Just as in international markets, Romania is expected to see a boom in the market for restructuring services, while secondary legislation on restructuring is still being considered by the Central Bank.

The pre-crisis complexity of the financial environment and over-leverage has been among the most important factors in recent restructuring activity, as identified by the two speakers at the seminar: Claire Pointing, from the London office of GLN, and David Malamed from the Paris one. As high levels of liquidity have left many borrowers struggling to maintain their current debt levels, even companies that emerged out of the recession in good financial condition are facing difficult conditions as maturing debt falls to be refinanced in debt markets with tight liquidity and debt levels under pressure.

At the same time, despite of the difficult financial environment, refinancing remains ‘surprisingly cheap and capital markets focused,’ the GLN presentation found.

Gide Loyrette Nouel established a Bucharest office in 1998, and has a team of 18 lawyers locally. In CEE, the firm has offices in Warsaw, Moscow, Budapest, Istanbul, Kyiv, and St. Petersburg.

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