International Bank of Azerbaijan noteholders oppose recognition motion

By Caroline Salls

Pittsburgh, June 13 – An informal group of holders of notes issued by the International Bank of Azerbaijan objected to the bank’s motion for U.S. court recognition of its Azeri restructuring proceeding, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

“At this early stage, there is no confirmed plan for IBA to enforce, and the requests made of this court are limited,” the noteholders said.

“It is evident already, however, that the debt impairment IBA will seek to carry out and enforce in the United States through the auspices of this court will be implemented through a process that runs rough-shod over certain fundamental rights of IBA’s creditors ... in order to benefit equity holders, the largest of which are instrumentalities of the republic.”

The noteholder group said the bank’s restructuring is based on a new law that was drafted specifically for International Bank of Azerbaijan, and that law allows the bank to seek to impair foreign debts only, while leaving local debts and equity unimpaired.

“The Azeri IBA Restructuring Law is precisely the type of law that should not be afforded comity by courts in the U.S.,” the noteholders said.

“The absence of even basic levels of procedural or substantive due process for third party creditors, along with the fundamental lack of fairness to non-Azeri creditors, present a compelling case that the court should decline to recognize a restructuring under the Azeri IBA Restructuring Law.”

International Bank of Azerbaijan is based in Baku, Azerbaijan. The company filed bankruptcy on May 11 under Chapter 15 case number 17-11311.

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