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15 Defaults and Workouts: Restructuring Project Financings »

Nick Angel, Suzanne Szczetnikowicz
From: International Project Finance (3rd Edition)
Edited By: John Dewar
This chapter discusses restructuring, which is defined as a transaction which results in some form of an adjustment to a project company’s capital structure, or the terms of its debt, which is intended to avoid a default and the subsequent failure of the business. In the context of project financing or a company operating a group of project assets, decisions taken relating to any restructuring can be driven by the strategic nature of the assets or the need to secure energy supply or the ongoing monetization of natural assets. Topics covered include restructuring protagonists (e.g. directors, financial creditors, sponsors, etc.); process (e.g. restructuring ‘trigger’, project finance covenants, impact of covenant ‘loosening’, etc.); and restructuring options (e.g. creditors’ rights under project finance documents, defaults during development/construction, defaults during operation, etc.).

14 Defaults and Workouts: Restructuring Project Financings »

Nick Angel, Kate Colman
From: International Project Finance: Law and Practice (2nd Edition)
Edited By: John Dewar
This chapter considers issues relating to the restructuring of project finance companies experiencing financial difficulties. Restructurings may take many forms, but in all cases there will be a number of protagonists with often competing interests: the project company itself, its directors, its sponsors, its creditors, and, especially in a project finance context, key commercial parties or governments connected to the project. This chapter considers the motivations and legal rights and obligations of each of these protagonists, including the heightened duties of directors as a company’s financial situation deteriorates. It also considers the various stages of restructuring—from default through to enforcement or implementation of a consensual restructuring transaction—and examines some of the options available which allow companies to reorganize or reschedule liabilities and continue as a going concern.