Op-Ed Contributors

'Buy American' gets a whole new meaning

By Leonard P. Goldberger (China Daily)
Updated: 2010-05-25 07:55

Second, Chinese investors must create strategic relationships with experienced US insolvency practitioners who can provide access to deal and advise how to best navigate the US distressed marketplace. Operating in this marketplace requires its own particular form of guanxi. This process can be accomplished on either an individual basis, or in connection with government-sponsored delegations of Chinese investors visiting the US. There are many opportunities for making introductions to US insolvency practitioners active in the distressed marketplace, which is, of course, the beginning of strategic relationship building.

Finally, the presence of Chinese investors must be made better known to sellers of financially distressed assets and, more important, the financial advisors who service the US distressed marketplace. Once US financial advisors begin effectively marketing financially distressed US assets to Chinese investors, some of the more exclusionary sale terms will likely be relaxed, thus leveling the playing field, especially with so many investment transactions now occurring in liquidating bankruptcy cases (as opposed to true reorganizations).

Enlightened self-interest should compel US financial advisors to reach out to Chinese investors. This will promote effective cross-border marketing channels. Various Chinese private equity exchanges also can provide an efficient means for exposing opportunities to acquire financially distressed US assets to Chinese investors. There is no doubt that relationships can be easily forged between US financial advisors and the growing Chinese private equity community, especially if encouraged by Chinese government agencies that promote overseas investment.

Placing Chinese investors on an equal footing in the US distressed marketplace will be a win-win situation for the US and China. The meaningful participation of Chinese investors in the US distressed marketplace will create additional liquidity available for payment of US creditors.

Moreover, to the extent that Chinese investors continue to operate formerly distressed businesses through reorganizations - as opposed to liquidations - one of the essential economic policies underlying US bankruptcy law would be effectuated by the preservation of going concern values.

The author is a cross-border insolvency lawyer, and works with Chinese investors in acquiring financially distressed businesses and assets out of US bankruptcy cases. The opinions expressed here are solely his own and do not represent those of either his law firm or its clients.

(China Daily 05/25/2010 page9)