Debt, Defaults, and Desperation: The Global Restructuring Maze

Welcome to The Cramdown - your source for all news restructuring and distressed investing at Indiana University!

– Matthias Wagner, Evan Patrick, Ryan Gaertner, Malyka Abbas

News for the Week:

• Country Garden’s Debt Jigsaw: Rehiring Old Friends to Patch Up a Sinking Ship

• Singapore’s Boom-and-Bust: Growth Rebounds, But Bankruptcies Surge

• Northvolt Shock: Canadian Pensions Get Zapped by EV Gamble

• Sneak Peek at Next Week

News We’re Following

Country Garden’s Debt Jigsaw: Rehiring Old Friends to Patch Up a Sinking Ship

Country Gardens Holdings Co has rehired Houlihan Lokey and China International Capital Corp (CICC) as financial advisors to their offshore restructuring. This comes after the two were phased out due to costs concerns. They’ve been brought back on to win over creditor support for its debt plan.

Country Garden defaulted on its debt in 2023. Since then, they’ve struggled to receive broad support for any type of restructuring plan. The company and creditors haven’t been able to see eye to eye on conversion prices and debt payment dates.

Cross border restructurings are some of the most complex in the world. Dentons, a multinational law firm, stated “The larger the stakes and the more borders crossed, the more access to substantial experience, inventive thought and practical cultural sensitivity is required”. Different countries have different insolvency procedures, which can lead to jurisdictional issues.

Singapore’s Boom-and-Bust: Growth Rebounds, But Bankruptcies Surge

Sticking to the Asia-Pacific region, Singapore saw the highest number of bankruptcies since 2010. 307 firms shut their doors in 2024, up from 201 the previous year. In January of 2025, 38 companies shut their doors!

Singapore saw a sharp rebound in 2024 with GDP growth of around 4.4%. Experts predict that this growth will be short-lived, with 2025 estimates ranging between 1% and 3%.With Singapore's economy heavily reliant on trade, the question remains: how will it respond to the rise of protectionist policies?

Northvolt Shock: Canadian Pensions Get Zapped by EV Gamble

Moving back to North America, the Ontario Municipal Employees Retirement System (OMERS) booked a loss on its $325mln investment in Swedish EV battery maker, Northvolt AB. Northvolt filed for bankruptcy protection last year.

OMERS made three significant investments in Northvolt, including a private placement of equity and a convertible note. The pension fund manages approximately $96 billion, making this investment account for less than 0.5% of its total portfolio.

Two other Canadian Pension funds were also significant investors in the now bankrupt EV battery maker. The Caisse de Depot et Placement du Quebec and Investment Management Corp. of Ontario wrote down a combined $550mln.

The great Warren Buffet once said “The First Rule Of Investment Is Don't Lose. The Second Rule? Don't Forget The First — That's All The Rules.”

Next Week…

This following Monday we will release our write up on the Los Angeles fire, the most devastating fire in US history…

Glossary

Private Placement of Equity – A method of raising capital in which a company sells shares directly to a select group of investors, such as institutional investors or high-net-worth individuals, rather than offering them to the public through an initial public offering (IPO). This approach allows companies to raise funds quickly and with fewer regulatory requirements but often at the cost of reduced liquidity for investors.

Offshore Restructuring – A debt restructuring process that involves companies with financial obligations in multiple jurisdictions, typically utilizing legal and financial mechanisms in foreign markets. Offshore restructurings are often used by multinational corporations to negotiate debt settlements, extend payment timelines, or convert liabilities while navigating different insolvency laws. These processes can be highly complex due to differing legal frameworks, creditor rights, and enforcement mechanisms across countries.