Where is a company?

Europe’s patchwork of insolvency laws gives canny corporates and creditors the chance to pick the jurisdiction they want to use. That leads to absurd outcomes — and the sooner it ends, the better.

  • By Owen Sanderson
  • 29 Aug 2019
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Where would you expect the headquarters of a company with most of its factories and employees in Germany, established in Luxembourg, to be?

If you guessed a small industrial park in southern England, you’d be exactly right. Galapagos SA, an over-indebted maker of heat exchangers, relocated there in June, purely to push through a restructuring proposal which would see one arm of Triton Capital Partners buy it from another Triton fund.

This sort of move isn’t exactly unheard of — Nyrstar, the troubled Belgian zinc smelter, relocated to a corporate letterbox in London this year, to ease its takeover by Trafigura — but it’s increasingly hard to justify.

Insolvency regimes are passed by sovereign states, that wish, understandably, to set their own balance between equity, creditors, employees and society.

Sometimes these regimes clash with the demands of international financiers, but mostly, there are well understood workarounds to reassure creditors that their rights will be respected, such as issuing loans and bonds under New York or English law.

If, however, the company itself can simply pull up its roots and re-establish itself wherever seems congenial, this balance is upset, and can lead to damaging outcomes.

In the case of Galapagos, the sudden move to the UK puts senior creditors, who stand to make more than the face value of their stake out of the stricken company, in the driving seat, at the expense of junior bondholders.

These creditors have challenged the move — and the market will be better off if they succeed. Jurisdiction shopping makes an ass of the law, and it’s time it was stopped.

  • By Owen Sanderson
  • 29 Aug 2019

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 294,431.58 1323 8.57%
2 Citi 267,175.53 1124 7.78%
3 Bank of America Merrill Lynch 229,132.49 937 6.67%
4 Barclays 211,780.31 853 6.16%
5 Goldman Sachs 169,480.13 704 4.93%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 34,500.40 147 7.53%
2 Credit Agricole CIB 33,521.86 144 7.31%
3 JPMorgan 25,404.62 68 5.54%
4 Bank of America Merrill Lynch 23,368.44 65 5.10%
5 SG Corporate & Investment Banking 22,509.71 104 4.91%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 9,157.42 55 10.33%
2 Morgan Stanley 8,122.33 40 9.16%
3 Goldman Sachs 7,432.91 40 8.38%
4 Citi 6,426.54 47 7.25%
5 UBS 4,913.18 26 5.54%