Finance & Banking

Financial collapses

We have advised on and been involved for clients in an array of financial collapses. The British Steel liquidation of 2019, the Hanjin collapse of 2016, the OW Bunkers failure of 2015, various corporate collapses out of the 2008/9 Global Financial Crisis and the HIH Insurance collapse of 2001 are examples of financial collapses that we have been involved in.

Our partners have acted for creditors in all of these global issues, taking steps to protect their position, seeking to secure assets if possible, asserting liens and/or equitable charges over property, and navigating through the bankruptcy and restructuring process.

Most recently, we have been handling an increasing number of cases related to the economic fallout from the pandemic of 2020. While initially reluctant to take harsh positions against counterparties, many market participants are now having to mitigate their exposure and launch recovery actions.

Trade Finance

Buying and selling commodities is typically underpinned by trade finance, whether on a per trade or portfolio basis. The global supply chain has set up mechanisms to protect the involvement of financiers. The entire Letter of Credit system is about securing the sellers’ payment in respect of goods to be shipped across the seas, while simultaneously setting up a clear, reliable mechanism by which the buyer has confidence that the seller has provided the necessary documents to obtain payment and to allow the buyer to on-sell title if it so chooses.

In addition to assisting clients with structuring trade finance platforms and advisory projects, we handle major trade finance disputes in arbitration and litigation. They may involve the acceptance of discrepant documents, unnecessary delays in the banking channel, pursuing a bank for liabilities under a bill of lading, and other finance related issues. As an example, we recently acted for a financing bank that had wound up a borrower’s trading facility and then had to recoup its position under a series of open bills of lading. The difficulty was that the goods had since been delivered without presentation of the original bills and the shipowners had liquidity issues.

Finance related disputes

We have experience acting for financiers and banks in the winding up or foreclosing process with their borrowers. This can involve asserting rights in property that may be been pledged under loan documentation. Such work plays to our strengths in understanding the finance documentation and also how to pursue companies’ assets globally – in these cases, the borrowers’ assets. Often when banks are needed to take such harsh action against customers it is because the prevailing market conditions have contributed to the borrowers’ financial failure. The effect of this is that the pledged asset class may also not have the realisable value that the financier had been contemplating. This is where we step in to search for and seize other possible assets.

Insurance

Financial institutions globally continue to be under regulators and legislators’ watchful supervision. The post-2008 Global Financial Crisis rearrangements in the US, the Brexit-related restructuring of financial institutions in Britain and Europe, and the recent Australian Royal Commission into the Banking, Superannuation and Financial Services Industry, are all examples. The current US approach towards banking sector deregulation possibly bucks that trend, although there remains significant, multi-layered oversight throughout the US.

These macro events impact on the prevalence of disputes. They exemplify why it is important legal advisors understand the inner workings of financial institutions and the regulatory context in handling related insurance work. Our lawyers have been involved in many high profile cases, including major litigation that followed the HIH insurance collapse in Australia defending a leading reinsurance broker, acting for primary insurers in multiple reinsurance coverage disputes, and handling a regulatory investigation into a major bank’s pension policies for primary insurers. We also have corporate experience acting for an international foreign exchange trading company in large-scale cases in England and the US.

We have advised primary insurers on various professional indemnity cases involving financial advisers, accountants, lawyers and other professionals. These cases require careful and efficient management, meeting insurer service levels and expectations.