Debtor vs. Creditor side Bankruptcy? Forum

[Anonymous User]

Assuming top quarter grades from CCN and set on bankruptcy for various reasons (want blend of corp-lit, like that it ties in a federal statute, enjoy dreaming of the rare finance exit options, etc.), is there any real reason to go to a top law firm with a strong creditor practice (E.g., DPW, Cleary) vs. one of the two big debtor firms (WGM, KE)? I understand that the debtor will file the Ch.11 plan, has to deal with multiple stakeholders (E.g., various secured vs. unsecured creditors, etc.). Does this uniformly translate into better training and thus exit ops? I know this is a tad premature, but I appreciate any perspective or anecdotes people may have as EIP is coming up quickly.

[Anonymous User]

I'll be starting in the fall at one of the debtor shops you named. Debtor work does have the advantages you mentioned, and it's often said to be the better side because of that. But I think there are reasons to want to do creditor-side work.

For one, you'd be working more with institutional investors, like banks and hedge funds, rather than buy-side companies. You'd also probably have more repeat clients because of this. Together, these factors might enhance the exit options.

Further, the idea that the debtor runs the bankruptcy proceeding is not entirely true and a bit too simplistic. The dominant secured creditor, which is usually also the debtor-in-possession lender, is arguably the true controller of the bankruptcy process. The transaction that establishes the postpetition lending facility is now arguably the fulcrum of any major corporate restructuring. Creditor shops will play a large role in this part of the case, which often translates into exercising a great deal of control over subsequent proceedings.

I don't think anyone could fault you for taking Davis Polk over Weil or Kirkland, but that's definitely not an uncontroversial proposition.

[anonymous2012]

There is virtually no debtor work in secondary markets, if that's a consideration.

Long term, I guess I would consider the differences in how the two different sides are paid. If you'd much rather have a client reviewing your bills than an examiner or court, go for creditor work.

[Anonymous User]

There is virtually no debtor work in secondary markets, if that's a consideration.

Long term, I guess I would consider the differences in how the two different sides are paid. If you'd much rather have a client reviewing your bills than an examiner or court, go for creditor work.

I assume OP is looking at New York based on the schools and firms he mentioned. Kirkland Chicago would also be a major exception (if Chicago counts as a secondary market).

Regarding billing, why do you think this is one of the more important factors? It seems like a side issue or at least a very remote issue for someone at OP's level. Also, I believe it's the case that committee's counsel needs their fees approved by the court as well, so in some cases creditors firms will be in the same boat.

[Anonymous User]

I'm talking about within nyc. Is there ever an advantage to going to Cleary, DPW, or maybe Skadden? for top creditor side work? Or if you definitely want restructuring, and have offers from KE or Weil NYC, take it?

[Arbiter213]

.

[anonymous2012]

There is virtually no debtor work in secondary markets, if that's a consideration.

Long term, I guess I would consider the differences in how the two different sides are paid. If you'd much rather have a client reviewing your bills than an examiner or court, go for creditor work.

I assume OP is looking at New York based on the schools and firms he mentioned. Kirkland Chicago would also be a major exception (if Chicago counts as a secondary market).

Regarding billing, why do you think this is one of the more important factors? It seems like a side issue or at least a very remote issue for someone at OP's level. Also, I believe it's the case that committee's counsel needs their fees approved by the court as well, so in some cases creditors firms will be in the same boat.

Certainly committee work is subject to fee review, but since DPW etc don't really do creditors" committee work I don't see how that is relevant. I guess if you had a position on the long term prospects for one side or another that would feed into your view. Professional fees in bankruptcy are becoming increasingly politicized and, accordingly, more scrutinized.

It's a nice problem to have. A decision like this is subject to a lot of unknown variables, like the impact of a potential revised Chapter 11 down the road. For exit options, I'd take the creditor-side work.

[Anonymous User]

Certainly committee work is subject to fee review, but since DPW etc don't really do creditors" committee work I don't see how that is relevant. I guess if you had a position on the long term prospects for one side or another that would feed into your view. Professional fees in bankruptcy are becoming increasingly politicized and, accordingly, more scrutinized.

It's a nice problem to have. A decision like this is subject to a lot of unknown variables, like the impact of a potential revised Chapter 11 down the road. For exit options, I'd take the creditor-side work.

Why do you say the likes of DPW don't do committee work? DPW has represented committees: http://www.davispolk.com/practices/corp ... y-matters/. But they do seem to focus on representing the DIP lender. In any event, I understand debtor's work to be the most lucrative in the field, so I'm still not getting the focus on fee approval. I suppose if you're really worried about the political stuff, but I doubt that's going to have much of an impact.

OP, I would consider whether you're more interested in debt finance, in which case creditors work might be better, or whether you're more interested in the whole of the bankruptcy process and the debtor's operations. Consider, for example, the debtor's first day declaration, which is something debtor's counsel prepares. It's basically a long story about the company's operations, how it ended up in bankruptcy, and how it's going to get out.

This is the kind of stuff that debtor's counsel does that moves away from the high finance stuff that DPW will tend to focus on. I think in many of the matters that DPW handles the principal work product is the DIP lending agreement and financing order. You might sign up for Bloomberg Law and go to the docket of a big chapter 11 and look at some of these documents to get a sense.

Again, to a certain extent this dichotomy can be overstated because of the secured creditor's increasing involvement in every step of the process. But I still think it's probably the best basis on which to try to make a decision.

[peter2009]

Assuming top quarter grades from CCN and set on bankruptcy for various reasons (want blend of corp-lit, like that it ties in a federal statute, enjoy dreaming of the rare finance exit options, etc.), is there any real reason to go to a top law firm with a strong creditor practice (E.g., DPW, Cleary) vs. one of the two big debtor firms (WGM, KE)? I understand that the debtor will file the Ch.11 plan, has to deal with multiple stakeholders (E.g., various secured vs. unsecured creditors, etc.). Does this uniformly translate into better training and thus exit ops? I know this is a tad premature, but I appreciate any perspective or anecdotes people may have as EIP is coming up quickly.

Weil and Kirkland do some creditor work as well, so it is not like it is an either/or proposition.

[anonymous2012]

Creditors' committe representations twenty years ago and the opportunity to write first day motions. Great points.

[Anonymous User]

Creditors' committe representations twenty years ago and the opportunity to write first day motions. Great points.

Maybe I was wrong about DPW. That's why I asked your opinion. As to first day motions, I was not offering that as an advantage of debtor work. If anything I was saying it might be something one would be less interested in doing if they're more interested in the finance aspects of the work.

Also, your sarcastic dig at my posting is not really justified given how little of substance you've offered ITT.

[Anonymous User]

I'm still not getting the focus on fee approval.

There is no reason to factor this into your career choice. I've worked at a restructuring firm wherein the principal was the CRO in multi-billion dollar bankruptcies, externed for a bankruptcy judge, worked with a creditor's committee, and worked at a bank that was implicated in a few bankruptcies. Your fees will always be subject to scrutiny, all sides of the table may end up fighting over fees at some point.

OP: apply to all of the aforementioned firms and then see where you get offers. Those groups aren't on the huge side generally, do you have a demonstrated interest and/or background?

In regards to exit oportunities, what are you looking for?

[Anonymous User]

How hard is it to exit into a quasi-legal role that pays 300k at a PE/HF from one of these firms, as a senior associate?

[Anonymous User]

Bankruptcy is one of the "hot" groups at Davis Polk right now, i.e. more people want to slot into it than there are spots available. I know somebody who had to do a lot of work he / she wasn't at all interested in for a year or two before finally getting a swing at bankruptcy. But it's hot for a reason. The group is made up of really great and cool people. The partners are some of the best I've worked with. Stuff like this is worthy of consideration. I have heard some not-so-stellar things about the type of associates and partners doing bankruptcy at Cleary (if there is a "type").

As for what's better? I have done both creditor- and debtor-side work, and I think stuff on the debtor side is a lot more interesting. A lot more.

[Anonymous User]

Bankruptcy is one of the "hot" groups at Davis Polk right now, i.e. more people want to slot into it than there are spots available. I know somebody who had to do a lot of work he / she wasn't at all interested in for a year or two before finally getting a swing at bankruptcy. Stuff like this is worthy of consideration. I have also heard some not-so-stellar things about the type of associates and partners doing bankruptcy at Cleary (if there is a "type").

As for what's better? I have done both creditor- and debtor-side work, and I think stuff on the debtor side is a lot more interesting. A lot more.

Good post. Can you describe why you consider debtor work more interesting and if you think there are any positives to creditor work? Also, do you have any info on exit options?

[Anonymous User]

How much does an exit into one of the roles you described above (Evercore, Oaktree, etc) usually pay all-in? Is this a realistic career objective coming from 5 years or so out of Weil/Kirkland ?

[Anonymous User]

I have heard some not-so-stellar things about the type of associates and partners doing bankruptcy at Cleary (if there is a "type").

Disagree completely- they're absolutely fantastic.

[Anonymous User]

I have heard some not-so-stellar things about the type of associates and partners doing bankruptcy at Cleary (if there is a "type").

Disagree completely- they're absolutely fantastic.

You disagree that the anonymous poster above has heard some not-so-stellar things?

FYI, I've also heard things in this vein, but then again, I've thought a lot of people I've met from Cleary have been kind of weird.

[Anonymous User]

I have heard some not-so-stellar things about the type of associates and partners doing bankruptcy at Cleary (if there is a "type").

Disagree completely- they're absolutely fantastic.

You disagree that the anonymous poster above has heard some not-so-stellar things?

FYI, I've also heard things in this vein, but then again, I've thought a lot of people I've met from Cleary have been kind of weird.

No, I obviously disagree with the substance, not the form, of the assertion. And, FYI, my basis for this isn't random hearsay.

[Anonymous User]

Anyone else have anecdotes about where people have gone upon leaving restructuring?

Sounds like we have some people at Cleary and/or DPW - where have people gone to from these firms or others?

[Anonymous User]

Anyone else have anecdotes about where people have gone upon leaving restructuring?

Sounds like we have some people at Cleary and/or DPW - where have people gone to from these firms or others?

I can only think of one departure recently, which was to a Corporate Counsel's office.

[peter2009]

Bankruptcy is one of the "hot" groups at Davis Polk right now, i.e. more people want to slot into it than there are spots available. I know somebody who had to do a lot of work he / she wasn't at all interested in for a year or two before finally getting a swing at bankruptcy. But it's hot for a reason. The group is made up of really great and cool people. The partners are some of the best I've worked with. Stuff like this is worthy of consideration. I have heard some not-so-stellar things about the type of associates and partners doing bankruptcy at Cleary (if there is a "type").

As for what's better? I have done both creditor- and debtor-side work, and I think stuff on the debtor side is a lot more interesting. A lot more.

How do people slot into the Restructuring group if they do not have any experience?

[Anonymous User]

Debtor side is way easier to get more substantive experience by say, year 4, I'd imagine because you counsel the client through the entire process, as opposed to maximizing value for only one creditor -- or a creditor's committee.