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US court rejects claims of IBAâ€™s creditors

29 June 2017 13:49 (UTC +04:00)

In his ruling Wednesday, Judge James Garrity said issues raised by the bondholders "did not rise to the level of violating fundamental U.S. principles."

Court papers show the objecting bondholders, owed $220 million, include funds and accounts managed by Fidelity Management & Research Co., Franklin Templeton Investment Management Ltd., Promeritum Investment Management LLP and VR Global Partners LP.

Thomas MacWright, a lawyer for the bank, pointed to the fact that the objecting bondholder group holds less the 10% of the bank's overall debt. And he said that Cargill Financial Services International Inc., the bank's largest creditor owed $715 million, supports its chapter 15 petition.

The process of voting on the plan of voluntary restructuring of obligations of the International Bank of Azerbaijan to foreign creditors began on June 19 and will end on July 18, 2017, the Bank told APA-Economics.

Taking into account the proposals of foreign creditors, with the approval of the Ministry of Finance of Azerbaijan, some changes were made in terms of restructuring.

Information about changes made in the restructuring plan:

• Amendments have been made in eth terms of payment of new bonds to be issued by the Republic of Azerbaijan. So, the payments on the bonds will start within last three years. Previously, it was within last two years.

• The creditors may choose state bonds with different terms. The creditor will be able to choose bonds by using voting process or special form of attorney.

• The mechanism “coming firstly – choosing firstly” has been changed to advantage of those “applying in first 11 working days”. During this period, the creditors participating in the voting will have certain advantages while choosing bonds.

• Terms of providing of subordinated interests and interests on other liabilities (excluding deals on funding of trade) are determined as follows:

- Only claimants voluntarily voted for restructuring plan will have right of demand on calculated interests.

- Interest on debts will be calculated till September 1, 2017 (previously – July 13, 2017) and calculation of interests for new bonds to be issued as a part of restructuring plan will start from this date.

- Till September 1, 2017, the calculated interests for abovementioned liabilities will be paid to claimants. However, other interests, which are calculated before payment date but until September 1, 2017 but, will be capitalized and taken into account in calculation of basic amount of claimants’ new bonds.