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Budapest NPL Seminar

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Transcript of Budapest NPL Seminar

Budapest NPL Seminar
Case Study
12 October 2017
The Case:
Cross-Border
Co-Financing
2 Hungarian banks and 1 foreign bank
Financed assets and collaterals in two jurisdictions
No cross-collateralisation, but
interconnection at guarantor level
No intercreditor agreement
High collateral value

Debtor Group notifies of difficulties
One bank remains unaware
Each bank acts alone
Banks approach debtors to enable sharing of information
One bank remains unaware
Each bank acts alone
Only one bank uses
advisors

Other bank freezes bank accounts
Banks set up meeting and appoint joint advisor
Banks approach debtors to enable sharing
of information
One debtor files for moratorium
Unaware bank files for enforcement
One bank remains
unaware
Each bank acts alone
Only one bank uses advisors
Other bank freezes accounts
Banks grant temprorary moratorium
Debtors satisfy overdue claims

Banks approach debtors to enable sharing of information
Banks set up meeting and appoint joint advisor
Third parties stop supplies
All debtors file for moratorium
One bank remains unaware
Each bank acts alone
Only one bank uses advisors
One debtor files for moratorium
Unaware bank files for enforcement
Other bank freezes accounts
Limited going concern
Restructuring discussions covering the entire group

Banks approach debtors to enable sharing of information
Banks set up meeting and appoint joint advisor
Banks grant temporary moratorium
Debtors satisfy overdue claims
No agreement reached
Blackmail effect
One bank remains unaware
Each bank acts alone
Only one bank uses advisors
Other bank freezes acount
One debtor files for moratorium
Unaware bank files for enforcement
Third parties stop supplies
All debtors file for moratorium
Restructuring agreement concluded
Wind-down process

Banks approach debtors to enable sharing of information
Banks set up meeting and appoint joint advisor
Banks grant temporary moratorium
Debtors satisfy overdue claims
Limited going concern
Restructuring discussions covering the entire group
Bankruptcy procedures turn into liquidation
Fragmented procedures
One bank remains unaware
Each bank acts alone
Only one bank uses advisors
Other bank freezes accounts
One debtor files for moratorium
Unaware bank files for encforcement
Third parties stop supplies
All debtors file for moratorium
No arrangement reached
Blackmail effect
Close and direct control
Approach of institutional and professional investors

Banks approach debtors to enable sharing of information
Banks set up meeting and appoint joint advisor
Banks grant temporary moratorium
Debtors satisfy overdue claims
Limited going concern
Restructuring discussions covering the entire group
Restructuring agreement concluded
Wind-down process
Business liquidated
Collateral value lost
Junior financing by investor


Joint venture or takeover

Focus is not on what could have happened
but what should not have happened

Recommendation does not envisage a linear
process or a box-ticking exercise

Recommendation provides a platform to facilitate
achieving "lowest common multiple"

Recommendation is not about ignoring own
interest, but to eliminate "blackmail effect" and
to promote win-win solutions
Full transcript