SPVs as a barrier to cross-border insolvency proceedings: Lessons from Indonesia

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Abstract

The proliferation of international trade and investment coupled with the 2008 financial crisis and recent economic slowdown has highlighted the importance of cooperation and clear standards in cross-border insolvency proceedings. However, the use of special purpose vehicles (‘SPVs’), a common investment tool, casts doubt on the fairness and enforceability of restructuring plans. This article, while examining the Indonesian restructuring of PT Bakrie Telecom (‘BTEL’), illustrates how the use of SPVs to issue bonds on behalf of a parent company excludes investor participation in insolvency proceedings of the parent company by virtue of investors being creditors of the SPV. It further outlines how, in line with existing principles of directors’ duties upon a company’s insolvency, investors should be represented through the claims of the SPV against the parent company.
Original languageEnglish
Pages (from-to)241- 259
Number of pages18
JournalAustralian Journal of Corporate Law
Volume32
Issue number2
Publication statusPublished - 2017
Externally publishedYes

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