Public Policy Exception continued from page 56 Looking Ahead Chapter 15 remains a valuable mechanism for multinational debtors seeking U. S. protection and implementation, as well as for those seeking to extend more potentially favorable foreign insolvency regimes to U. S.-based companies. 20 As such boundaries continue to be
20
See, e. g., In re Fossil Group, Inc., No. 25-90525( Bankr. pushed, however, public policy considerations may continue to evolve.
S. D. Tex. 2025)( recognizing a U. K. restructuring plan under chapter 15 to implement a targeted financial restructuring for a U. S. public company); In re New Fortress Energy Inc., No. 26-11268( MG)( Bankr. S. D. N. Y. June 2026)( granting chapter 15 recognition to a U. K. restructuring plan for companies with U. S.-based parent).
Venezuela Debt continued from page 19 under transparent procedures to ensure that Venezuela receives fair value for such development rights.
Venezuela could also consider debt‐for‐nature or climate swaps, which have been used in recent restructurings involving countries such as Barbados, Belize, and the Seychelles. These instruments could contribute both to debt reduction and environmental protection and may be particularly relevant given Venezuela’ s rich biodiversity and environmentally significant ecosystems. With many Venezuelan ecosystems under threat from illegal activities and weak enforcement, such swaps could be especially important today.
But debt‐for‐nature / climate swaps are complex, multi‐step and multi‐party transactions that can be difficult and costly to structure and execute, and therefore the parties to a Venezuelan restructuring would want to carefully weigh the costs and benefits of such swaps. Moreover, effective implementation of these swaps requires robust monitoring and governance systems to ensure the sovereign’ s compliance with conservation commitments and its proper use of funds earmarked for conservation. The parties to any Venezuelan debt‐for‐nature / climate swap would want these elements firmly in place at the time of implementation of these swaps.
Q: What role might value recovery instruments( VRIs) play in a Venezuelan debt restructuring?
A: Value recovery instruments( VRIs) provide creditors with additional payouts when a sovereign’ s economic performance exceeds baseline assumptions. Even if a sovereign adopts conservative projections to reduce the risk of a future default, creditors can share in the upside if the sovereign’ s actual performance is stronger than expected.
GDP‐linked warrants are the most widely used form of VRIs and have appeared in several major restructurings, such as Greece in 2012 and Argentina in 2005 and 2010. Under these instruments, creditors receive supplemental payments if economic growth exceeds agreed benchmarks.
For Venezuela, GDP‐linked warrants could play a role, but oil‐linked warrants may be even more relevant given the central importance of the hydrocarbon sector to the Venezuelan economy. Traditional oil‐linked warrants rely solely on global oil prices, but in the Venezuelan context price alone is an imperfect proxy for Venezuela’ s repayment capacity, especially given the collapse of the country’ s domestic oil production.
A more suitable trigger, in my view, would be total oil revenues— global oil prices multiplied by domestic production volumes— which would more closely reflect Venezuela’ s capacity to generate income and would better align creditor recoveries with Venezuela’ s ability to repay its debt. continued on page 58
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