Restructuring

[Lauren]

When working on restructuring/insolvency, why is it important for a law firm to have strong links to fund/financial advisers?

Is it simply to help with the financial considerations of how to restructure? I'm thinking in terms of Kirkland and Ellis

 

[Dheepa]

Hi Lauren,

Interesting question.

So put simply, restructuring work involves re-negotiating the terms of an existing loan/credit facility with debtors/creditors (depending on who the law firm is representing - although in Kirkland's case they usually represent borrowers/debtors) Sometimes this can be as simple as negotiating lower interest rates or longer repayment terms and other times it can be far more complex i.e. involving debt to equity swaps, registering security over a larger range of assets, etc. Insolvency or the threat of insolvency makes matters more complex because especially in the US, where things like CVAs and out of court settlements aren't popular at all (see this article), firms would almost always need to represent clients in court. The US Chapter 11 bankruptcy proceedings are actually pretty popular with a lot of companies because of the greater return creditors are likely to see, so that is one aspect in which I'd assume Kirkland's team of US qualified lawyers help put their restructuring practice ahead. Other than that, strong links to financial institutions just means a better understanding of what the market terms are on loan provisions and of course greater exposure to potential clients.

In terms of strong links to funds (I assume you mean PE funds and hedge funds), I don't think any firm needs strong links to help with restructuring work but instead the funds are a completely different client base that need restructuring work in a different capacity. US based private equity firms are particularly active in distressed debt (more so than UK ones are). They buy particularly bad debt of a company with the aim of converting that debt into an equity stake through the aforementioned debt to equity swap method, which is where the restructuring lawyers come into play. This form of investment for PE companies has been particularly popular because of all the insolvencies and distressed companies arising out of COVID.

I've kept this rather brief but I hope that helps out your understanding of restructuring work and Kirkland's advantage in the area.

 

[Romiras]

Hi Lauren,

Interesting question.

So put simply, restructuring work involves re-negotiating the terms of an existing loan/credit facility with debtors/creditors (depending on who the law firm is representing - although in Kirkland's case they usually represent borrowers/debtors) Sometimes this can be as simple as negotiating lower interest rates or longer repayment terms and other times it can be far more complex i.e. involving debt to equity swaps, registering security over a larger range of assets, etc. Insolvency or the threat of insolvency makes matters more complex because especially in the US, where things like CVAs and out of court settlements aren't popular at all (see this article), firms would almost always need to represent clients in court. The US Chapter 11 bankruptcy proceedings are actually pretty popular with a lot of companies because of the greater return creditors are likely to see, so that is one aspect in which I'd assume Kirkland's team of US qualified lawyers help put their restructuring practice ahead. Other than that, strong links to financial institutions just means a better understanding of what the market terms are on loan provisions and of course greater exposure to potential clients.

In terms of strong links to funds (I assume you mean PE funds and hedge funds), I don't think any firm needs strong links to help with restructuring work but instead the funds are a completely different client base that need restructuring work in a different capacity. US based private equity firms are particularly active in distressed debt (more so than UK ones are). They buy particularly bad debt of a company with the aim of converting that debt into an equity stake through the aforementioned debt to equity swap method, which is where the restructuring lawyers come into play. This form of investment for PE companies has been particularly popular because of all the insolvencies and distressed companies arising out of COVID.

I've kept this rather brief but I hope that helps out your understanding of restructuring work and Kirkland's advantage in the area.

I'd clarify the following:

• Kirkland usually represent sponsor side (e.g. investors).
• Kirkland's relationship with financial institutions (e.g. funds) is an important thing, because they are involved in the entire lifecycle of the funds/investors they're representing. That's the point of their strong link, to win mandates. They represent debt funds, sponsors in the leveraged finance space, etc. So it's natural for them to deal with insolvency related advice.

 

[aspiring_solicitor]

Hi @Dheepa I am filling out application form for Weil and one of the questions is what attracts you to weil gotshal?

I wanted to address firm's specialty in restructuring practice area and I was thinking of linking it back to myself via a week long experience I had at a bank where i dealt with recovery suits, which prompted my interests towards debt related issues/procedures. however even though I like restructuring practice area because of its complexity and the time pressured nature of the work which demands quick action to save the company- how could I reason these interests out? and is my approach right?