Business Law archivos | Kepler Karst

Compensation Scheme Proposed by the Petersen Companies

Success Story: Judge Validates the Compensation Scheme Proposed in the Petersen vs. Republic of Argentina Case

11 de September de 2023 no comments in Business Law, Press Release, Restructuring and Insolvency, The Firm

New historic ruling in favor of the Petersen companies, whose insolvency trustee and promoter of the lawsuit is Armando Betancor, Of Counsel of Kepler-Karst. The federal judge of the Southern District of New York, Loretta Preska, ruled that Argentina has to compensate the two Spanish companies that went bankrupt after the expropriation of YPF in 2012.

The judge has validated the compensation scheme proposed by the plaintiffs and, subject to final computations by the parties’ experts, the total damages, adding interest to date, could reach a total of approximately $14.3 billion for Petersen.

In addition, Judge Preska echoed the situation of the companies and the litigation funding agreement reached by the insolvency administration on behalf of the companies with Burford, after several interpellations and objections from Argentina about it.

The ruling comes six months after the Judge confirmed that there was a breach of contract by the Sovereign State when it expropriated Repsol’s shares in the oil company YPF.

Our Special Situations and Insolvency and Restructuring teams have proudly received the news. Armando L. Betancor Alamo, Of Counsel of the firm, together with the support of the rest of the Kepler-Karst team —Luis A. Barber Marrero (team co-leader and Partner), Rodrigo Olivares-Caminal (team co-leader and Of Counsel), Eduardo Frutos (Partner), Davinia Sánchez De la Cruz (Partner) and Guido Demarco (Consultant)— have managed both legal proceedings, the insolvency process in Spain and the lawsuit in New York, in coordination with four national and three American law firms, the latter representing the companies in the courts of New York.

Litigation Funding Agreement

Judge Preska echoed the situation of the companies and the litigation funding agreement reached by the insolvency administration on behalf of the companies with Burford, after several interpellations and objections from Argentina about it.

Thus, the Judge said: “The Court also rejects the Republic’s effort to inject Burford Capital into these proceedings. This remains a case brought by plaintiffs against a defendant for its wrongful conduct towards them, and the relevant question is what the Republic owes Plaintiffs to compensate them for the loss of the use of their money, not what Plaintiffs have done or will do with what they are owed. The Republic owes no more or less because of Burford Capital’s involvement. Republic owes no more or less because of Burford Capital’s involvement. Furthermore, the Republic pulled the considerable levers available to it as a sovereign to attempt to take what it should have paid for and has since spared no expense in its defense. If Plaintiffs were required to trade a substantial part of their potential recovery to secure the financing necessary to bring their claims, in Petersen’s case because it was driven to bankruptcy, and litigate their claimsto conclusion against a powerful sovereign defendant that has behaved in this manner, this is all the more reason to award Plaintiffs the full measure of their damages”.

As already mentioned by Armando in March, when Judge Preska ruled in favor of the Petersen companies in the breach of contract claim against the Argentine Republic for the expropriation of Repsol’s shares in the oil company YPF, in the trial that had been taking place in New York, this has been a long and hard process: “It was an arduous task that took many years, balancing two open fronts in Spain and New York. From the beginning we have set up an interdisciplinary and sophisticated team that has allowed us to get this far”.

Thanks to the diligent actions and an innovative strategy proposed by Mr. Betancor, the insolvent companies were able to pursue the lawsuit against Argentina in New York despite their insolvent condition. Everything was possible thanks to a litigation funding agreement that enabled the insolvent companies to meet the litigation costs in the US for almost 10 years.

In this regard, Betancor commented: “[w]e have been at the forefront from the beginning, with the litigation funding agreement that allowed us to defray the costs of the litigation, and to get this far. We are facing a historic ruling that will have international repercussions”.

The Story

In March 31st, 2023, after almost 10 years of judicial conflict, Judge Loretta Preska, of the Southern District of New York, ruled in favor of the Petersen companies after understanding that Argentina breached YPF’s bylaws by taking control of 51% of the company’s shares without having launched a public tender offer (PTB) for the shares of the remaining shareholders, as stated in Articles 7 and 28 of YPF’s bylaws.

For this reason, the judge ruled that Argentina must indemnify the Petersen companies for the damages caused as a result of the breach of contract. The ruling that concerns us now validates the compensation scheme set by the plaintiffs, which calculates a compensation of US$ 14.3 billion for Petersen. In order to determine it, the judge had to determine the exact date on which Argentina took control of YPF’s shares.

On the other hand, the judge also ruled that YPF did not breach the bylaws, since the bylaws did not impose on the company the obligation to take actions to restrain the Argentine Republic.

This Friday’s ruling is not final and Argentina has already announced that it will appeal it.

Armando Betancor, together with his team at Kepler-Karst, has led and managed the judicial process from Spain in coordination with three American and with four Spanish law firms representing the companies and the different parties involved in the U.S. and local courts proceedings.

Kepler-Karst recognized by the Legal 500 ranking in Restructuring and Insolvency

12 de April de 2023 no comments in Business Law, Restructuring and Insolvency, The Firm

The Legal 500 has recognized Kepler-Karst as one of the leading firms in Restructuring and Insolvency in Spain.

The prestigious international directory lists us as one of the “Firms to Watch”, and states that we have “extensive experience in the management of complex insolvency proceedings”, advising creditors and debtors, as well as acting as insolvency practitioners.

Davinia Sánchez, managing partner, and Armando Betancor, Of Counsel, have led the Restructuring and Insolvency department since its foundation in June 2020. Together they have led and participated in some of the most relevant transactions of the last years, such as the restructuring and sale of the production unit as a going concern of Room Mate Hotels, the restructuring of the companies Interfronteras and Cife Spain, and the internationally relevant case of the Petersen companies, in which Armando Betancor has acted as Insolvency Trustee.

At Kepler-Karst we could not be prouder for this recognition. Congratulations Davinia and Armando for your leadership.

Access the ranking by clicking here.

Good job, team!

Success story: Judgment in favor of Petersen Companies in breach of contract claim against Argentina

1 de April de 2023 no comments in Business Law, Press Release, Restructuring and Insolvency, The Firm

Our Special Situations and Insolvency and Restructuring teams have won a summary judgment in favor of the Petersen companies due to the breach of contract by the Republic of Argentina, resulting from the expropriation of Repsol’s shares in YPF—the Argentine national oil company—in a trial in New York.

The Kepler-Karst team involved in this matter included Armando Betancor, insolvency trustee since 2012 when the companies filed for bankruptcy, Rodrigo Olivares-Caminal, Of Counsel at Kepler-Karst and restructuring expert, partners Luis Barber, Eduardo Frutos and Davinia Sánchez, and consultant Guido Demarco.

“It was an arduous task that took many years, balancing two open fronts in Spain and New York. From the beginning we have set up an interdisciplinary and sophisticated team that has allowed us to get this far,” said Betancor.

The Judgment

After almost 10 years of judicial conflict, Judge Loretta Preska, of the Southern District of New York, ruled in favor of the Petersen companies after understanding that Argentina breached YPF’s bylaws by taking control of 51% of the company’s shares without having launched a public tender offer (PTB) for the shares of the remaining shareholders, as stated in Articles 7 and 28 of YPF’s bylaws.

For this reason, the judge ruled that Argentina must indemnify the Petersen companies for the damages caused as a result of the breach of contract. Now damages have to be determined, and, according to the criteria to be established, will range between $10 to $20 billion. In order to determine the exact amount, the judge must determine the date when Argentina took control of YPF’s shares.

On the other hand, the judge ruled that YPF did not breach the bylaws, since the bylaws did not impose on the company the obligation to take actions to restrain the Argentine Republic.

Should Argentina wish to appeal the decision, it will have to submit financial guarantees to the court, which puts the country in a very difficult position.

Armando Betancor, together with his team at Kepler-Karst, has led and managed the judicial process from Spain in coordination with three American and with four Spanish law firms representing the companies and the different parties involved in the U.S. and local courts proceedings.

Kepler-Karst, a Leading Restructuring and Insolvency Law Firm Specializing in Complex Matters, Advises Room Mate on Restructuring and Sale

29 de July de 2022 no comments in Business Law, Press Release, Restructuring and Insolvency, The Firm

PRESS RELEASE

The pre-packaged sale and reorganization of Room Mate, S.A. was approved in less than a month within the framework of a reorganization tool under the Spanish bankruptcy act.

Madrid, Spain | July 28, 2022. Kepler-Karst (the “Firm”), a leading law firm specializing in restructuring and insolvency proceedings, has advised Room Mate, S.A. (“Room Mate” or the “Company”) on its reorganization and the sale of the business as a going concern.

This transaction involved a pre-packaged reorganization and sale of Room Mate’s hotel business and its management companies to Angelo Gordon and Westmont Hospitality Group.

Room Mate filed for reorganization on June 24, 2022, and the Commercial Court No. 14 of Madrid recently approved the transaction. The legal strategy deployed by Kepler-Karst supported the expedient execution of this transaction, which was necessary given the highly distressed financial situation of the Company, as the Firm developed a solution for the continuity for the hotel business along with the request for a voluntary reorganization.

Armando Betancor, leader of the Kepler-Karst team that worked on this transaction, stated, “The success of this strategy was due in large part to the pre-planning process, which allowed us to provide the necessary guarantees so that the Insolvency Practitioner and the Judge could act quickly and on solid ground. As experts in restructuring and insolvency proceedings, our role has been and continues to be to seek solutions and viable alternatives that help businesses in situations like this one.”

Some key steps in the pre-planning process included (1) the identification of the best possible buyer of the business unit – which included a commitment to preserving the jobs of the Company’s current workforce – through a process carried out by Kroll, an independent and highly reputable firm in the market; and, (2) once the buyer was identified, Baker Tilly – a leading international accounting firm – valued the business unit as a going concern, as well as what it could have been in a liquidation scenario, to verify that the offer received was reasonable within the expected parameters. All of this contributed to ensuring the legal security and independence of the process.

Luis Barber, partner at Kepler-Karst, said, “This is a clear example of how bankruptcy proceedings, filed in a timely manner and along with a well-prepared offer for the purchase of the business unit, can support the continuity of a company.”

Davinia Sanchez, partner at Kepler-Karst, added, “We could not be prouder of the work done here and of having helped a business in a sector that has faced pandemic-related challenges in recent years. The pre-planning work, the identification of potential buyers, and the development of a valuable and independent proposition were key.”

Rodrigo Olivares-Caminal, Counsel at Kepler-Karst and expert in financial distress situations, stated, “This transaction demonstrates the importance of knowing the global legal context. In this situation, the process was aligned with the tools available in the best global insolvency legislations, such as the schemes of arrangement or the pre-packaged administrations in the UK or the sub-rosa sale in the U.S., allowing for an expedited sale of the business as a going concern.”

The Kepler-Karst team that worked on this transaction was led by Armando Betancor, together with Luis Barber, Davinia Sánchez de la Cruz, Rodrigo Olivares-Caminal, Ana Carpintero and Guido Demarco.

Russian debt: a circle to be squared

27 de June de 2022 no comments in Banking and Finance, Business Law, Opinion

By Rodrigo Olivares-Caminal, Of Counsel at Kepler-Karst Law Firm and expert in Sovereign Debt.

Russia recently missed an interest payment on two of its sovereign bonds, the 2026 USD and 2036 EUR bonds, and, as it is common in these instruments, they enjoy a 30-day grace period that just ended. Things are getting difficult.

The 2026 USD prospectus is quite interesting, because it allows for payments to be made in USD, but also in EUR, GBP or CHF if, for reasons beyond its control, Russia is unable to make payments in USD (in whole or in part).

In the same sense, the 2036 EUR prospectus allows payments in currencies other than EUR as well, but goes even further and also adds the RUB as a possible alternative payment currency.

Although these conditions may seem positive, the reality is that not fulfilling obligations in the established currency –EUR or USD- may not be ideal for the original creditor (e.g. currency mistmatch).

If this was not enough, there is another relevant clause that makes things more difficult to square the circle: the so-called Currency Indemnity Clause. This clause allows for a discharge of the payment obligation in situations where someone receives or recover (not necessarily recover) a payment in another currency (and, why not, in another place). However, the payment received in RUB, must allow the creditor to purchase the necessary amount of USD to offset the original obligation due.

In any event, clarity is required on whether there has been a discharge for Russia on its obligations, what is the difference between receiving and recovering payments, or whether Russia was prevented to pay because of the Western sanctions (or if these were self-inflicted and thus Russia is not excused for not making the payment).

All these issues are subject to interpretation by a court of law, but Russia has not waived any of its sovereign immunity and has not submitted to the jurisdiction of any court in any of the two prospectuses.

What a circle to be squared and here at Kepler-Karst we can assist.

Rodrigo commented for Reuters on this subject and he appeared in numerous international media outlets such as Euractiv, Daily Mail and Magnet.

8 key aspects for a Merger of Equals

10 de February de 2022 no comments in Business Law, M&A

Companies have the possibility of merging with others, pooling their assets and forming a new organization. This operation is known as a merger of equals (MOE), and for it to be successful, eight key aspects must be addressed. .

1. Perform a complete and detailed assessment of the two companies and detect the synergies and coststhat the merger will generate.

2.Analyze the financial policies and the fiscal framework of both companies and define which one will be adopted by the merged company.

3.Establish a balanced relationship between the two companies: certain compromises must be made and some sacrifices must be made in order to achieve equality and stability.

4. Establish a clear organizational chart in advance to avoid conflicts.

5.Define the brand name under which the company will operate and the legal name: a new one, that of one of the companies or a combination of both can be adopted.

6. The corporate culturewill be different. One of them can be kept intact, a combination of both can be created or a new one can be generated. This will depend on the characteristics of the merged companies.

7. The internal and external policies and procedures of both companies must also be combined and fit into both merged companies. There are the same ways as in the previous point. Whatever the decision, tools should be provided and all employees should be notified of the changes implemented.

8. If the objective is to integrate the structures, culture and workforce of two merged companies, it is important to strike a balance between decisionsmade by individuals and decisions made by departments. The way a message is sent is key for the company.

Our team of experts offers you comprehensive support and advice on this matter. Do not hesitate to tell us about your project.

Kepler-Karst signs Magistrate Eduardo de Urbano Castrillo as Of Counsel.

6 de September de 2021 no comments in Business Law, Economic Criminal Law, Press Release, The Firm

Press release

Kepler-Karst, law firm specialized in Restructuring and Insolvency, Corporate and Financial Law, has announced the appointment as Of Counsel of Eduardo de Urbano Castrillo, Doctor in Law and Criminal Judge at the Provincial Court of Madrid, who is now on leave of absence.

As a specialist in economic crime, de Urbano will also be the coordinator of the firm’s Economic Criminal Law area, an area that encompasses all types of crimes in which a legal entity may be involved: corporate crimes, tax crimes, fraud, white collar, crimes against workers, punishable insolvency, urban and environmental crimes, corporate compliance, etc.

From 2013 to 2021, Eduardo served as Criminal Magistrate at the Provincial Court of Madrid. He previously was President of the Provincial Court of Las Palmas (1992-1999) and for fourteen years was coordinating magistrate in the Criminal Chamber of the Technical Office of the Supreme Court (1999-2013). During this time, among other activities, he coordinated the preparation of the annual Jurisprudence Notebooks of the Chamber, the Chronicles of the Criminal Chamber of the SC, and the thematic notebooks of jurisprudence (Criminal Cassation, Sexual Crimes, Corporate Crimes, Fraud, Punishments and Punishable Insolvencies), all of them so useful for the daily work of all judicial bodies.

His high technical expertisein criminal procedures and in ethics and legal safeguards led him to collaborate with international institutions in international legal matters in America (USA, Colombia, El Salvador, Peru, Guatemala) and Europe (Germany, Luxembourg, Holland, Poland, Bulgaria, Albania, Serbia, Romania).

PhD in Law and BA in Political Science and Sociology from the UCM, he is also a member of the Royal Academy of Jurisprudence and Legislation of Spain, holder of the Cross of San Raimundo de Peñafort, 1st Category. Eduardo is accredited by ANECA as a university lecturer, he is a professor at the UNIR and at the IEB, where he leads a course on Economic Criminal Law. He also directs doctoral theses.

Kepler-Karst, a firm recognized for its ability to handle highly complex and public matters and with a presence in Madrid, London and Las Palmas, strengthens not only the area of Economic Criminal Law, but also the comprehensive advice it offers to companies and its position in the market of highly specialized boutique firms.

“Eduardo’s experience as a Criminal Magistrate and his high technical knowledge in all types of economic crimes is the perfect reinforcement for our services to companies, from the implementation of criminal risk prevention models to advice on corporate operations. And of course for the team; working with a person with more than 30 years of experience in the judicial career is an honor and a privilege”, says Davinia Sánchez, Partner and President of Kepler-Karst.

On his side, Eduardo de Urbano states: “For me, this unexpected professional change has been a surprise, but the team of professionals that I have met, as well as the profile of clients and matters of the firm and, above all, its innovative, courageous and bold approach to understanding the law of our time, have been decisive in making this decision. I am delighted to put my knowledge and experience at the service of the firm’s clients and very excited about this new stage that will allow me to advise and defend all those who have problems in the corporate world and the possible criminal liabilities they may have to face”.

This signing, together with the incorporation earlier this year of Rodrigo Olivares-Caminal, Professor of Banking and Finance Law at Queen Mary University of London, positions Kepler-Karst as a leading boutique firm in the provision of comprehensive, high-level advice to companies.

“Our growth strategy is clear: to have professionals of the highest level and experience to offer the best advice to our clients, and to continue providing different solutions and developing innovative and effective legal strategies for the best defense of our clients’ interests,” concludes Davinia Sanchez.

Armando Betancor, ranked by the International Directory Chambers & Partners 2021 in the area of Restructuring and Insolvency (Europe)

18 de March de 2021 no comments in Business Law, Events, Restructuring and Insolvency, The Firm

Our Of Counsel Armando Betancor is once again ranked in the International Guide Chambers Europe 2021 in the area ofRestructuring & Insolvency. We cannot be more proud.

Armando Betancor joined Kepler-Karst in November 2020. Lauded for his specific litigation funding expertise, he has standout experience in high-profile insolvencies. Chambers & Partners highlights: “He is a force of nature,” says one interviewee, going on to explain: “He never surrenders, even if things look very complicated.” “He is extremely practical and is able to find novel approaches to issues that seem unsolvable,” states another source.

Take a look at his profile at Chambers & Partners here.

Congratulations!

How to overcome liquidation and bring a company back into business

23 de February de 2021 no comments in Business Law, Restructuring and Insolvency

This is a real example of a case of a company that filed for bankruptcy, reached an agreement with its creditors, but failed to comply with it, placing the company directly in liquidation. Faced with this situation, Kepler-Karst worked hard to achieve the best outcome for the company, which overcame liquidationand returned to business.

We are talking about a parent company of a designer furniture distributor in Spain and Latam, and Kepler-Karst worked on an innovative solution to avoid its extinction: the termination of the insolvency proceedings under Article 176.4 of the Spanish Insolvency Law.

What did we do?

-We reached agreements with creditors, mostly the main financial institutions in the country.

-A transaction was structured that included the purchase of a significant portion of the debt by an investor and its subsequent capitalization.

-We negotiated a partial waiving of claims with financial institucions.

-Certain assets were enhanced through a well-managed sale process and sold at market price.

The outcome: The company overcame liquidation and returned to business.

If you want us to help your company, contact us!

Rules for Equal Pay for Men and Women

7 de January de 2021 no comments in Business Law, Employment

As of April 2021, all companies with 100 or more employees must have an equal pay plan for women and men. This is set out in Royal Decree 902/2020 of October 13, which requires such companies to comply with the principle of transparency in remuneration, in order to obtain sufficient and meaningful information about remuneration.

These are the main points:

A remuneration registry must be created, i.e. a file in which the salaries of the employees must appear broken down by sex. This record should be dynamic.
The calculation of the staff must be made before the end of each semester of the year, and all contracts of an employment nature – regardless of their duration – must be calculated without exception, including executive personnel.
The registration must be done after a remuneration audit that diagnoses the company’s retribution policyand the assessment of the jobs according to the collective agreements to ensure proper categories and professional groups. Only in this way will it comply with the obligation of equal remuneration for work of equal value. The audit will be valid for the duration of the equality plan of which it forms a part, unless it is determined in the plan.
The remuneration must be broken down into basic salary, supplements and other salary payments.
Workers have the right to access the salary registry through the company’s legal representative. If there is no legal representation, the registry may be accessed, but the data will not be provided in full, just with percentage differences that may exist between men and women.
Workers also have the right to participate in the design of the salary registrythrough their legal representative and should be consulted.
Wage discrimination is considered a very serious offense according to the Law of Infractions and Sanctions of Social Order, and can lead to fines between 6,251 and 178,500 euros.

This regulation is another step forward in our employment system and at KEPLER-KARST we have the required knowledge and extensive experience to ensure that your equality plans achieve the desired goal in a meaningful way, gaining the practical relevance that consolidates and improves the relationship between the company and its workers.