Telefonos de Mexico SA de CV encountered a few challenges during their acquisition of AT&T Latin America out of bankruptcy protection early in 2004. Although AT&T Latin America consisted mainly of operating subsidiaries in Argentina, Brazil, Chile, Columbia and Peru, their parent company was based in the United States. This created a twist in the case and a collision between U.S. Bankruptcy Code and laws of foreign countries.
"The unsecured creditors had certain leverage by having claims against AT&T Argentina, a foreign operating company, that would have allowed them to hold their breath and blow up the deal," said Kirkland partner Jonathan Henes. "At the same time, the creditor's committee was balancing the leverage it had to cut a deal with the risk of pushing it too far and losing the deal."
This article appeared in its entirety in the April 23, 2004 edition of The Deal.