Restructuring and Workouts
Strategies for Maximising Value, Third Edition
This third edition of 'Restructuring and Workouts: Strategies for Maximising Value' provides an essential resource, providing legal and practical guidance for restructuring professionals. Updated since the last edition in 2013, it includes several entirely new chapters, with in-depth coverage and analysis including overviews of the current market.
This third edition of Restructuring and Workouts: Strategies for Maximising Value provides an essential resource, providing legal and practical guidance for restructuring professionals. Fully updated since the last edition in 2013, it includes several entirely new chapters, with in-depth coverage and analysis including:
•overviews of the current market;
•a focus on topical sectors including retail and offshore/shipping;
•analysis of legal regimes in France, the US and Spain;
•examination of key themes such as distressed M&A and the restructuring of pensions obligations; and
•an exclusive retrospective from the architects of the Lehman Brothers restructuring – the case which has done more than any other to shape the restructuring market over the last 10 years.
This comprehensive publication makes required reading for private practice lawyers, insolvency practitioners, financial advisory and turnaround professionals, investment professionals and in-house lawyers alike
Table of Contents
|Table of Contents||3|
|The restructuring and workout environment in Europe||7|
|The World Bank Group: insolvency, restructuring and economic development||17|
|Valuation of distressed businesses||27|
|Pre-packs at an operational level||51|
|UK defined benefit pension schemes and restructuring situations||73|
|Cross-border insolvency: solutions to maximise stakeholder value||89|
|Creating value in distressed M&A transactions||101|
|Shipping and offshore restructurings||117|
|The Lehman bankruptcy||219|
|About the authors||231|
|About Globe Law and Business||255|
This third edition is timely as Europe is on the brink of implementing the Preventive Restructuring Directive in national legislations. In new or renewed legislation, the key word is rescue of viable business. The third edition of the book provides useful practical tools to maximise value in restructuring situations.
Professor Bob Wessels
Partner, Willkie Farr & Gallagher LLP
Alexandra Bigot is a partner in the Business Reorganisation and Restructuring Department at Willkie in Paris, a position she has held since 2003. Ms Bigot is regularly involved in out-ofcourt and cross-border restructuring matters on behalf of debtors, sponsors and hedge funds, especially with respect to troubled leveraged buyout (LBO) cases (including loan-to-own strategies) and sales of underperforming or distressed branches of international groups.
She also advises investors (corporate investors, hedge funds and recovery funds) seeking investment opportunities in insolvency proceedings and out-of-court restructuring cases. Ms Bigot has significant previous experience advising private equity funds in LBO acquisitions with regard to corporate, finance and tax matters. She also gained specific experience as a former private equity investor at Lazard.
Ms Bigot is a member of the board of the Association pour le Retournement des Entreprises (ARE), of the LBO Committee of AFIC and of the International Insolvency Institute (III).
Managing director and head of Financing Advisory and Restructuring for Europe, Greenhill
Carlo Bosco is a managing director and head of Financing Advisory and Restructuring for Europe at Greenhill. Prior to joining Greenhill in London in 2014, Carlo spent eight years in the Restructuring Group at Lazard in New York and Milan. He has represented clients in over 25 closed transactions in EMEA and North America, in a wide range of corporate finance activities including M&A, out-of-court and incourt restructuring, rehabilitations and debt and equity financings. Corporate clients over the years include the AA, Lonmin, Avanti Communications, Airopack, Stemcor, Dynegy, Local Insight, Rural / Metro, FGIC, PMI, Limoni, Italtel and La Rinascente.
Carlo holds an MSc in finance (CLEFIN) and a BA in international economics and management (DIEM) from Bocconi University. He was selected by Financial News as one of the top 40 “Rising Stars” in the investment banking industry in March 2016.
Ignacio Buil Aldana
Partner and head of the London office, Cuatrecasas
Ignacio Buil Aldana is a partner in the finance practice at Cuatrecasas. He is head of the London office, where he has been based since September 2013. He is qualified in Spain and New York.
Ignacio has extensive experience in negotiating financing and refinancing agreements involving a wide range of capital structures, including the refinancing of LBO financings, project finance, real estate and corporate finance.
He represents borrowers and lenders, and advises financial institutions, hedge funds and private equity funds on several national and multijurisdictional financing and refinancing transactions, distressed investment strategies and acquisitions of NPL portfolios. He worked as an associate in the New York office of a major American law firm representing several debtors and creditors in Chapter 11 reorganisations, including advising on 363 sales and DIP financings. He has been recommended by several directories, including Chambers Global and Chambers Europe 2018 (“Banking and Finance” and “Investment Funds”).
Co-head of EMEA Restructuring, Evercore
Stephan Chischportich is co-head of Evercore’s EMEA Restructuring Group and is based in London. Stephan has advised companies and their stakeholders in many of the most complex debt financing and financial restructuring transactions globally. He has represented both debtors and creditors across a number of jurisdictions and has significant experience in debt financing, liability management, restructuring and distressed M&A. He has advised on a number of highprofile transactions, including advising ZIM Integrated Shipping in connection with its financial restructuring and charter-hire renegotiations; Ocean Rig in connection with its financial restructuring and COMI shift; and senior lenders to Dubai World on an amend & extend transaction involving over $15 billion of debt obligations.
He has been recognised by Financial News as a “Rising Star in Investment Banking – Top 40 Under 40” and by M&A Advisor as an “Emerging Leader of Finance”. He was a finalist in Turnaround Management Association’s Young Turnaround Professional award.
Managing director, AlixPartners
Kevin Coates is a managing director in the turnaround and restructuring practice at AlixPartners, the global financial advisory firm. He has over 20 years’ experience in advising and leading management teams and stakeholders through periods of significant change and high pressure situations, gaining a broad range of financial management, turnaround, advisory and restructuring experience across various sectors from the midmarket to large corporates.
Kevin has developed and led numerous distressed M&A transactions, carve-outs, prepackaged insolvency sales and distressed refinancings. Prior to joining Alixpartners, he spent 10 years each with the restructuring teams of EY and Zolfo Cooper, including 12 months working for the restructuring team of a major UK clearing bank. He has a degree in civil engineering and is a Fellow of the Institute of Chartered Accountants in England and Wales, the Association of Business Recovery Professionals and the Insolvency Practitioners Association (where he holds an insolvency practitioner’s licence).
Partner, PwC LLP
Russell Downs is a partner in PwC’s business recovery services practice, focusing on largescale corporate insolvency. He has worked on the Lehman Brothers engagement for eight years during which he has addressed some of the company’s most challenging issues. Russell led the resolution of the US broker-dealer relationship, leading to $10bn of recoveries and the development of the consensual proposal with relevant clients to enable distributions of $8bn. In addition, he conducted the Waterfall proceedings, a complex set of UK court directions. Most recently, he has led the negotiation, proposal and approval of the surplus scheme, leading to distributions of £6bn.
Away from Lehman Brothers, Russell has acted as special manager of certain Carillion Plc subsidiaries and as administrator of Beaufort Securities.
Managing director and head of UK Insolvency & Regional Restructuring, Alvarez & Marsal
Mark Firmin has over 25 years of experience providing restructuring advice and support to under-performing businesses and their stakeholders. He specializes in helping boards to implement strategic, operational and financial restructurings and also helps businesses to develop contingency plans. His work often includes helping to quickly stabilise the business, improve stakeholder communication, generate additional cash headroom, implement an accelerated sale, and develop contingency plans. He has led a large number of insolvencies and has been particularly successful in keeping businesses intact throughout the insolvency process, thereby maximising value for stakeholders and preserving jobs. Prior to joining Alvarez & Marsal, Mark was UK head of restructuring at KPMG.
Managing director and head of European Restructuring, Alvarez & Marsal
Richard Fleming has over 30 years of restructuring experience across a wide range of industries and has played a key role in a number of high-profile stressed, distressed and insolvency cases in the public and private arena. Richard acted as the administrator of MF Global and Leeds United FC and led the company-side restructuring of Southern Cross Plc, the largest nursing home operator in the UK at the time with 41,000 employees. He led the restructuring of JJB Sports Plc and Blacks Leisure Plc, breaking new ground by taking these privately listed companies through company voluntary arrangements without any share suspension, paving the way for subsequent equity raises.
He has acted as administrator to more than 20 retailers including Threshers, Peacocks and La Senza, and has led or advised lenders on numerous CVAs including Homebase, Travelodge, Fitness First, Suits You, Toys “R” Us, Prezzo and Carpetright.
Sandra Gómez San Esteban
Sandra Gómez is an associate in the finance team of the Cuatrecasas London office and a member of the Madrid Bar Association. She graduated in law and business administration from the University of Navarra and she holds a master’s degree in corporate law from the University of Navarra.
Her practice focuses on the secondary loan trading markets, where she advises financial institutions and investment funds, mainly based in the UK, in the acquisition of distressed debt and insolvency claims. She also advises on debt restructuring and refinancing deals, corporate finance and direct lending transactions.
Partner, PJT Partners
Martin Gudgeon is a partner and head of the European Restructuring and Special Situations Group at PJT Partners, based in London. Prior to joining PJT Partners, Martin worked at Blackstone for eight years, serving as a senior managing director. Before that he was the chief executive and head of restructuring at Close Brothers; and before that he was at Hill Samuel, where he spent two years on secondment to Macquarie Bank in Sydney. Martin’s clients have included debtors, creditor groups and governments in all major jurisdictions in EMEA. He is a chartered accountant and a member of the Chartered Institute of Electrical Engineers. He undertook his accountancy training at Price Waterhouse and received his BSc (Hons) in engineering from Durham University.
Director, Lincoln Pensions
Luke Hartley is a director at Lincoln Pensions, having joined in January 2017 from the pensions advisory practice at AlixPartners (formerly Zolfo Cooper). He has over twelve years’ experience in employer covenant assessment and his work includes triennial reviews, annual monitoring, corporate restructuring and M&A activity, from both trustee and sponsor perspectives. Luke has particular experience in litigation, distress and regulatory involvement and has worked on a number of landmark cases. He is an active participant in the Employer Covenant Working Group and co-wrote the working group’s guidance on the best practice assessment of employer covenant.
Luke is a fellow of the Association of Chartered Certified Accountants and has a BSc (First Class) in economics from the University of Warwick.
Managing director, Lincoln Pensions
Alex Hutton-Mills is a managing director of Lincoln Pensions and co-founded the business with Darren Redmayne. He qualified as a solicitor in Norton Rose’s corporate finance department. Alex has extensive experience in UK pensions matters and their impact on corporate finance transactions, in particular, M&A, capital markets and restructurings. He has advised on multiple M&A and restructuring transactions across a range of industries including UK and cross-border public and private M&A, debt and equity capital raisings, joint venture arrangements and restructurings.
Alex co-founded the pensions advisory business of Lincoln International (now Lincoln Pensions) in 2008 having previously worked at Citigroup where he was part of the Global Special Situations and Insurance and Pensions Structured Solutions groups. At Citigroup, he was a member of the team that successfully completed the innovative, non-insured buyout of the Thomson Regional Newspapers pension scheme.
Managing director, Restructuring and Special Situations Group, PJT Partners
Shirish Joshi is a managing director in the Restructuring and Special Situations Group of PJT Partners, based in London. Before joining PJT Partners’ predecessor firm, Blackstone, in 2007, Shirish worked in the European Special Situations Group of Houlihan Lokey. He began his career in the Mergers & Acquisitions Group at Morgan Stanley & Co in New York. He studied finance at the Brigham Young University and undertook graduate work in law & accounting at the London School of Economics.
Christopher S Koenig
Associate, Restructuring, Kirkland & Ellis LLP
Christopher Koenig, formerly of Willkie Farr & Gallagher LLP, is an associate at Kirkland & Ellis LLP. Chris graduated from Johns Hopkins University (BA, 2010) and the University of Illinois College of Law (JD, 2013). His practice focuses on the representation of both debtors and creditors in connection with Chapter 11 restructurings, out-of-court restructurings and cross-border matters in Chapter 15 cases. Chris represented Westmoreland Coal Company and its affiliated debtors in their Chapter 11 cases, the COFINA Agent in the Commonwealth of Puerto Rico bankruptcy cases, the independent directors of the debtors in the FirstEnergy Solutions Chapter 11 cases, and the independent directors of Clear Channel Outdoor Holdings, Inc in the Chapter 11 cases of iHeartMedia, Inc. Chris also represented Momentive Performance Materials, Inc in its Chapter 11 cases, and the largest senior secured creditor in the Chapter 11 cases of LightSquared, Inc and its affiliated debtors.
Financial sector specialist, The World Bank Group
Olena Koltko is a financial sector specialist with the financial inclusion, infrastructure & access team in the Finance, Competitiveness and Innovation Global Practice at the World Bank Group. Olena is part of the Credit Infrastructure Program, where she works on insolvency and secured transactions projects in Eastern Europe and Central Asia, the Middle East and North Africa and Sub-Saharan Africa. Olena joined the World Bank Group in 2012 as part of the Development Economics Vice Presidency. Prior to that, she practised law in the United States and in Ukraine.
Partner, Willkie Farr & Gallagher LLP
Graham Lane is a partner in the Business Reorganisation & Restructuring Department of Willkie Farr in London. He advises par and distressed debt investors, private equity sponsors and other stakeholders in all types of restructuring and insolvency matters, with a particular focus on complex cross-border projects.
Graham has over 15 years’ experience gained from roles in significant market-leading restructurings, including Premier Oil, Agrokor, Danaos, MF Global, Eitzen, European Directories, Sea Containers and Japan Airlines. He is also known for his broad experience in the French market having been involved in Vivarte, CGG, Latécoère, Eurotunnel, and many other significant French restructurings. Amongst other accolades, Graham is cited in Chambers UK 2019 and the IFLR 1000 UK 2019. In the IFLR 1000, he is described as “Highly Regarded” in the area of restructuring/ insolvency and is described by his clients in Chambers as having “well-honed commercial and legal acumen”.
Graham is a member of the Insolvency Lawyers’ Association and the International Insolvency Institute. He is a guest lecturer at the Centre of Commercial Law Studies at Queen Mary, University of London, and is a frequent speaker at international restructuring conferences.
John C Longmire
Partner, Business Reorganisation & Restructuring Department, Willkie Farr & Gallagher LLP
John Longmire graduated from New York University (BS, 1987) and St John’s University School of Law (JD, 1995). John is based in Willkie’s New York office. He has received numerous awards and recognitions for his work in complex restructuring matters. For example, Chambers USA has ranked John among New York’s leading attorneys on several occasions; he has been included in Best Lawyers in America each of the last six years; Expert Guides lists him as one of the leading restructuring attorneys in the world; Turnarounds and Workouts included him as one of its 12 Outstanding Restructuring Lawyers (2015); Best Attorneys in America has named him among the top 100 lawyers in the US; and Global M&A Network has included him in a list of the top 100 restructuring professionals. John was also recently shortlisted for The Deal’s Lawyer of the Year in the energy and power sector. Recent engagements include the restructurings of Westinghouse Electric Corp, CGG, SA, Relativity Media and Danaos Corp.
Assistant director, Deloitte
Matthew Mawhinney is an assistant director in restructuring services in Deloitte, London and has spent the last eight years predominantly focusing on contingency planning and implementation projects of complex multijurisdictional corporate structures.
During his career, Matt has gained experience of complex restructuring and contingency planning engagements plus options development and implementation for varying stakeholders. Work has focussed on detailed day 1 insolvency plans, continuity of service and value preservation across a range of sectors including the public sector, financial services, real estate and oil and gas. Recent projects have included the liquidation of Abraaj Investment Management Limited, the CVA of New Look Retailers Limited and contingency planning on behalf of the Cabinet Office in respect of the restructuring of a critical government supplier. In addition, Matt has led the administration of Paragon Offshore through the successful implementation of the wider Chapter 11 restructuring. Matt is a chartered accountant and qualified insolvency practitioner.
Consultant, The World Bank Group
Ronen Nehmad is a consultant with the Credit Infrastructure Program Finance, Competitiveness, and Innovation Global Practice at the World Bank Group. He is currently completing a JD/MBA degree from Osgoode Hall Law School and the Schulich School of Business in Toronto, Canada.
Senior vice-president, AlixPartners
Craig Rachel is a senior vice-president in the transactions team at AlixPartners, the leading advisory firm.
Craig has worked in professional services for over ten years, the past six being spent executing complex M&A, valuation and refinancing transactions at AlixPartners. He has a particular focus on the consumer space (covering retail, pubs, bars and restaurants) but has advised on situations across a broad range of sectors. After qualifying as an accountant with PwC, he joined the equity research team at investment bank GCA Altium, before joining the Zolfo Cooper corporate finance team in 2012. Zolfo Cooper Europe was acquired by AlixPartners in 2015.
Director, Alvarez & Marsal
Vanessa Rudder has over 19 years of experience in complex cross-border restructuring and insolvency cases across a broad range of jurisdictions including the UK, Australia and across Europe and Asia. Both her UK and cross-border engagements have covered a variety of industries including the retail, healthcare, telecommunications, construction, PFI and steel and commodity sectors. Vanessa’s recent engagements include large UK and cross-border contingency and insolvency planning, options analysis, cash flow reviews, pre-pack planning, estimated outcome analysis and scheme of arrangement transactions. Prior to joining Alvarez & Marsal, Vanessa spent eight years with PwC in London and 10 years with Ernst & Young in Australia. Vanessa also did a 12-month secondment to RBS’s Global Restructuring Group. She is a chartered accountant and qualified insolvency practitioner.
Javier Segura Valero
Javier Segura is an associate in the finance team of Cuatrecasas and he is a member of the Madrid Bar Association. He is based in the London office. As part of the Pro-International Advocacy Program (PPAI), he has also worked in the São Paulo and Madrid offices, among others, where he gained experience in corporate law, tax law and litigation matters. He currently advises international clients on refinancing and restructuring transactions, and direct lending transactions. He also provides assistance to UK-based financial institutions and investment funds in the acquisition of distressed debt and insolvency claims on the secondary loan trading markets as well as the acquisition of non-performing loans.
Head of London Restructuring, BDO LLP
Mark Shaw’s practice covers a range of restructuring, insolvency and expert witness assignments. He has led some of the highestprofile matters of recent years. Most of his cases are cross-border with significant value or issues at stake.
Representative matters include: Abengoa (energy, telecoms, transport etc, €6bn); ARM Asset Backed Securities (finance, $250m); Britannia Bulk (shipping, $1bn+); Carlyle Capital Corporation v Conway & others (finance, claim of c. $2bn, $20 bn+ structure); various CDOs (aggregate $2bn+); Dawnay Day (property/finance, £1bn+); Dewey & LeBoeuf (legal, $225m); LIA v Goldman Sachs (finance, $1.2bn); LIA v SocGen & others (finance, $2.1bn); further LIA matters (finance, $800m+); Northern Rock (finance, £100bn+ structure); Northsea Base Investments (shipping, $180m); Tata Steel (industrial, £7bn+); and Torre Asset Funding v RBS (property/finance, £660m structure). Mark holds a first-class degree in accountancy and is a chartered accountant and authorised insolvency practitioner.
Managing director, AlixPartners
Graeme Smith is a managing director specialising in corporate finance and restructuring advice at AlixPartners, the leading advisory firm. He uses his experience and network to help companies and investors achieve their goals through M&A transactions, restructurings, and access to both equity and debt financing. He has two decades of UK and cross-border experience in advising clients on buy- and sell-side M&A, raising or refinancing equity and debt, valuation matters, specialsituations M&A, and financial restructurings. His experience was achieved across a broad range of industries but with a particular focus on consumer-based sectors, including hospitality & leisure and retail. Recent mandates include the restructuring of Prezzo, the UK casual dining group, advising the lenders to the Toys "R" Us propco vehicle, and the valuations of the Formula 1 group and the Iceland Food Group. Graeme is a chartered accountant and a mediator accredited by the Centre for Effective Dispute Resolution.
David Soden is a partner in the restructuring services team in Deloitte in London, responsible for financial institutions. A licensed insolvency practitioner in the UK and Dubai, David has over 15 years’ experience in international insolvency assignments. He has worked on formal insolvency assignments and performed complex security/option reviews and asset-based insolvency valuations for lenders and other stakeholders. David is a member of the Financial Services Regulatory Steering Group and has developed significant experience in the implementation of the Banking Resolution and Recovery Directive.
He has also led the liquidations of Abraaj Investment Management Limited and the Dubai private bank in the Espirito Santo Financial Group, both of which have involved managing a complex group of stakeholders, and resolving disputes across a number of jurisdictions.
David is a Fellow of the Institute of Chartered Accountants in England and Wales and a Member of the Association of Business Recovery Professionals.
Partner, Willkie Farr & Gallagher LLP
Lionel Spizzichino is a partner in the Business Reorganisation and Restructuring Department at Willkie in Paris. He has extensive experience in complex cross-border restructurings, and French pre-insolvency and insolvency matters including out-of-court restructuring, insolvency proceedings, restructuring litigation and distressed mergers and acquisitions, and frequently advises corporate entities on presenting open bids on assets of distressed companies. His clients include corporate debtors, creditors and investors in a wide range of sectors such as retail, media, chemical, financial services and the automotive industry. He regularly advises investment funds, recovery funds and hedge funds.
Lionel is a member of the Association pour le Retournement des Entreprises (ARE), the lnstitut Français des Praticiens des Procédures Collectives (IFPPC – French Insolvency Practitioners’ Association), the Association Française en Faveur de l’Institution Consulaire (AFFIC) and the Turnaround Management Association (TMA).
Practice manager, The World Bank Group
Mahesh Uttamchandani is the practice manager for SME Access to Finance and Financial Inclusion, Infrastructure & Access in the Finance, Competitiveness and Innovation Global Practice at the World Bank Group (WBG). He manages Payment & Market Infrastructures, Responsible Financial Access, Credit Infrastructure, the global Financial Inclusion Support Framework programme and the global Financial Consumer Protection programme. He also jointly leads (with an IFC co-head) the Universal Financial Access 2020 initiative. He was previously practice manager for SME Access to Finance and Credit Infrastructure. Mahesh also served as a global lead for Credit Infrastructure Global Solutions Group, where he led the WBG’s work in the areas of secured transactions, credit reporting and insolvency, including the insolvency and creditor/debtor rights initiative. Mahesh joined the World Bank’s Legal Vice Presidency in 2006 and has since held various positions at both the World Bank and IFC. Prior to joining the WBG, Mahesh worked at the EBRD and as a commercial litigator at a leading Canadian law firm.
Mahesh is a member of the executive committee of CGAP, a board member of the legal journal, International Corporate Rescue and a board member of INSOL International. He has published and taught at university level and lectured extensively in North America, Europe and Asia.
Co-head of EMEA restructuring, Evercore
Matthew Whiting is co-head of Evercore’s EMEA Restructuring Group and is based in London. Matthew has over 15 years of experience in the financial services industry and specialises in in-court and out-of-court financial restructurings and deleveraging transactions for debtors and creditors. Prior to joining Evercore, he spent the majority of his career in the restructuring groups at Lazard and Rothschild in both London and New York. During his time at Lazard and Rothschild, he was responsible for sourcing and executing balance sheet restructurings and capital raises. Matthew has represented clients in a wide range of industries and geographies. He has completed transactions in shipping, real estate, industrials, financials, media, automotive and gaming in the United States, Europe, Mexico, Africa and the Middle East.