1 EFFECTIVE SECURITY INSTRUMENTS FOR TRADE CREDITORS SELLING TO
LATIN AMERICA
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2 The Alta Group 2012 About the Panelists Moderator: David H.
Conaway, Senior Partner Shumaker, Loop & Kendrick, LLP
Panelists: Patricia Medeiros, Legal Counsel Syngenta Brazil Omar
Guerrero Rodriguez, Partner, Barrera Siqueiros and Torres Landa,
Mexico Rafael Castillo-Triana, CEO FTAA Consulting, Inc and The
Alta Group Latin American Region, LLC, Fort Lauderdale,
Florida
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3 Moderator: David H. Conaway Partner in the Charlotte office
of Shumaker, Loop & Kendrick, LLP, an American Lawyer and
National Law Journal Top 350 U.S. Law Firm, having five offices and
over 250 legal professionals. Honored as a North Carolina Legal
Elite, Best Lawyers in America, AV Peer Rated by Martindale-Hubbell
and a North Carolina Super Lawyer. He is the Chair of Shumakers
Bankruptcy, Insolvency and Creditors Rights Practice; the Chair of
Shumakers Global and Cross-Border Insolvency Practice; the Co-Chair
of Shumakers Marketing Committee; and the past Managing Partner of
Shumakers Charlotte office, 2002- 2011. Davids experience is
primarily Bankruptcy and Insolvency and also International Sales,
Transactions and Disputes, Business Litigation, Commercial and
Corporate Transactions Business.
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4 Panelist: Patricia Cristina Medeiros Brazilian attorney of
the University of Sao Paulo, with Specialization in Tax and
Business Law Completing LLM in International Business Law in the
University of California, Davis School of Law Experience as
in-house counsel: Andersen Consulting Legal Brazil Ciba-Geigy
Siemens Bearing Point Vivo Imbraparsul Syngenta, with major
achievement structuring an agribusiness credit instrument in
Brazil
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5 Panelist: Luis Omar Guerrero Rodrguez Mr. Guerrero received
his law degree from the Universidad Iberoamericana, Len Campus
(1987-1991), and obtained an LLM at the London School of Economics
and Political Science (1996-1997). He completed postgraduate
degrees on Rgimen Jurdico de los Negocios Internacionales en Mxico
(Legal Framework for International Business in Mexico) and
Commercial Law at the Escuela Libre de Derecho (1993-1994 /
1994-1995). He also secured two additional diplomas in ICC ELD
arbitration and also in Constitutional lawsuits (amparos) at the
Barra Mexicana Colegio de Abogados (2006-2007). He has excelled in
areas of Litigation (mainly Commercial, Reorganization and
Bankruptcy and Administrative); Commercial Arbitration and Economic
Competition- Antitrust Law.
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Panelist: Rafael Castillo-Triana International Attorney raised
and educated in Colombia Former CEO and COO of financial
institutions in Colombia Regional Counsel for several financial
institutions doing business in Latin America, including CIT Group,
Inc. and Cisco Systems Capital Corporation Diplomatic
Representative of the Republic of Colombia at the 1988 Ottawa
Diplomatic Conference that adopted the UNIDROIT Conventions on
International Leasing and on International Factoring Consultant to
the Central Bank of El Salvador, in drafting the El Salvador
Leasing Law, 1998 Consultant to the International Finance
Corporation in the field of Asset Based-Equipment Financing Law
for: Nicaragua, Honduras, Madagascar, Tanzania, Ghana, Cameroon,
Rwanda, Jordan, Yemen, West Bank and Gaza, and Lesotho; Consultant
to the Kenya Ministry of Finance- Drafting Leasing Law Consultant
retained by the USAID for the government of the former Soviet
Republic of Georgia CEO of FTAA Consulting, Inc. and The Alta Group
Latin American Region LLC
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7 About Rafaels firm Drawing in a tradition of 75 years,
F.T.A.A. Consulting became leader in the provision of investors and
creditors rights protection and solutions in Latin America; Our
affiliation with The Alta Group, the worlds largest consultant
focused in equipment leasing and financing dates back 17 years and
tested our combination of legal management strength with business
acumen; These are some of the key clients that have enjoyed of our
services:
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8 Open Accounts: Must you be afraid of them? Best practices in
dealing with open accounts in Latin America What is going on in the
marketplace? Main Issues
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9 What can go wrong? Customer defaults Shall you be afraid of
Open Accounts in Latin America? To trust or not trust in your
client? Customer becomes insolvent
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10 What is your risk approach? Risk High Definition Do you
avoid challenging risks? or, do you embrace risk, get to understand
the different color pixels and seek how to mitigate?
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11 What are the rewards you are looking after? Incremental
sales Profitability Shorten D.S.O. Minimum to null credit
losses
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12 Best Practices for Open Accounts Due diligence: Check
Character Check Capacity Check Collateral Check Legal Framework
Check Market Practices Focus on good documentation: Invoice
Additional contracts Instruments: promissory notes, drafts, etc.
Perfect securities if you can Foreign exchange issues
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13 The Alta Group 2014 What is going on in Latin America today?
Legal and Economic Realities
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14 The Alta Group 2014 Brazil Case Study
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15 Common Issues Fluctuation of Interest Rate RisksFluctuation
of Foreign Currency Risk
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Brazilian Market The same as in other jurisdictions, but with a
few particular features. Regulators: BACEN, CVM, Cetip (self-
regulation) and BM&FBovespa (self- regulation). Based on
transparency and systemic risk management. Trade environments
>Stock exchange and OTC Prior approval by CVM for all
derivatives contracts (new & standard) Derivatives
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Current Regulatory Requirements Registration is mandatory for
all derivatives contracts (OTC & Exchange-Listed).
>Registration, settlement and netting (CETIP or Clearing
BM&FBovespa) >Local and international transactions
>Limited types of derivatives can be registered >Timing for
registration Daily detailed reporting to BACEN and CVM.
Derivatives
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Syngentas participation in agribusiness securities Certificate
of Agribusiness Receivables (CRA) A registered security instrument,
openly traded in the Brazilian capital market, backed by
agribusiness credit rights and issued by securitization companies.
>Investment option to ones fixed income portfolio >Income tax
exemption for individual investors Recent participation of Syngenta
in CRA offerings: >as administrative agent in Octante
Securitizadora, 1 st issuance, 1 st series (BRL85,500,000) as of
August 2012. >as administrative agent in Octante Securitizadora,
1 st issuance, 9 th series (BRL83,750,000) as of September 2013.
>as corporate guarantor in Octante Securitizadora,1 st issuance,
10 th series (BRL90,000,000) as of January, 2014.
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Syngentas participation in agribusiness securities Syngentas
Activities While acting as Administrative Agent, Syngenta is
formally responsible for the overall process related to the
creation and monitoring of agribusiness credit rights that served
as basis (lastro) for the CRA. While acting as Corporate Guarantor,
Syngenta formally acts as responsible for the payment of certain
agribusiness instruments that back the CRA, in case of its default
(usually as a second loss guarantor and limited to a certain
amount). Syngentas additional activities in CRA issuances involve:
>gathering participants to act either as debtors of agribusiness
instruments or as investors of the CRA >assisting the CRA issuer
to engage insurance companies for the coverage of an eventual CRA
default
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20 The Alta Group 2014 Mexico Key Issues
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21 Economic and political climate in Mexico Political issues
Industry analysis Economic Reform Laws impacting business Banking
system Trading partners Hot and Not industries Open account sales
Collateral security Other comments
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22 Legal Realities Legal environment improved in: Honduras
Colombia El Salvador Chile Peru Guatemala Mexico Costa Rica Panama
Guyana Dominican Republic Why? Because they adopted recent legal
statutes improving: Enforceability of invoices Security interests
Creditors rights in insolvency
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23 Short Cash-to-Cash Cycles (DSO) Banking System Foreign
Exchange Controls Current Receivables Rule of Law + Efficiency of
Courts + Low Corruption Bank System + Foreign Exchange Controls
Delinquent Receivables Two Scenarios:
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24 Rule of Law Are your receivables enforceable in the country
of your debtor? Does the country have an effective Law regulating
security interests/rights as effective collateral? Are secured
creditors duly protected in cases of debtors insolvency? What could
be the expectations for unsecured creditors?
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25 Champions of Rule of Law Security Interest Laws: PERU HON
DUR ASMexicoGuatemalaHondurasColombiaPeru
BrazilChileArgentinaPanama Costa Rica Nicaragua
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26 Efficiency of the Courts Best:MexicoNicaraguaPeruBahamas
Dominican Republic Chile Worst:SurinameGuatemala Trinidad and
Tobago ColombiaHondurasBelize Costa Rica El Salvador Brazil
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27 Potential for credit losses- Insolvency protection
Best:BelizeJamaicaColombiaBarbadosBoliviaMexicoUruguay St. Lucia
NicaraguaPanama Puerto Rico (U.S.) Worst:GrenadaHaiti St. Kitts and
Nevis St. Vincent & Grenadines EcuadorSurinameBrazilDominica
Venezuela, RB ParaguayHonduras Dominican Republic El Salvador