Partner Christopher Peterson Describes How US Bondholders Will Be Affected by Suntech’s Bankruptcy Filing in Bloomberg

Bloomberg reports that investors in Suntech Power Holdings Co. are likely to lose over $1 billion after the company’s main manufacturing unit was pushed into a bankruptcy filing by a group of eight Chinese banks. The manufacturing unit is based in China and subject to Chinese law; however, its parent company is incorporated in the Cayman Islands and subject to New York law. It is uncertain as to how the filing in China will affect Suntech’s US-based bondholders, who are creditors to the parent company.

Kaye Scholer Partner Christopher Peterson believes that US-based creditors must deal with “a fundamental disadvantage that non-Chinese lenders have in a bankruptcy.” According to Peterson, this is because “they would need to get the consent of a Chinese court to get action in China, which the Chinese lenders don’t have to face.”