Houston: Corporate to Bankruptcy Transition in Recession Forum

[Anonymous User]

Didn’t want to derail the other Houston thread, but an interesting question was raised there: which firms are best positioned to weather the predicted recession/downturn in oil prices?

Assuming a downturn occurs, which groups are most likely to loan associates to restructuring groups?

Finally, I’m an incoming M&A associate at one of the top transactional firms (KE/LW/VE) and plan on sticking around as long as possible. Is it advisable to volunteer for restructuring work in order to stay busy, or best to stay in my M&A lane in order to maximize experience in what I assume will be a slower but not completely dead practice area?

[jarofsoup]

It depends, but just stay in your lane at first.

You may work with the restructuring group. Lots of bankruptcies involve sales.

[soft blue]

Transacational bankruptcy work often involves M&A, either in a pre-bankruptcy distressed sale or in a sale of the company/major company assets once it has entered in bankruptcy. It also often involves leveraged finance, either for the acquirer or for the debtor's short-term financing. Any firm with a strong PE presence will do a lot of this work.

K&E is a top debtor-side firm, which requires a really tremendous number of junior bodies. (K&E and Weil are really the only two firms capable of running a bankruptcy on the scale of e.g. Sears.) I have no idea how much of that work will be done in the Houston office (almost all major bankruptcy practices sit in NYC, though K&E bankruptcy also has a real presence at the Chicago HQ). Maybe K&E will let you work in the Houston office for a matter being run out of NYC, I couldn't say.

The other firms are not major players in the NYC bankruptcy world; Latham seems to be trying to build a debtor shop to rival K&E / Weil but they're a ways away.

[Anonymous User]

I work at one of the top debtor shops. My advice is not to seek out bankruptcy work - just focus on getting good deal experience generally. I've worked on a couple bankruptcy deals and they're not drastically different from a regular deal - you're just working in the bankruptcy context. The bankruptcy group will loop in M&A deal teams as needed (bankruptcy lawyers at my firm deal more with the bankruptcy code, bankruptcy court procedure, general process management/strategy - they don't really know how to paper a complex deal), so that work will naturally become a larger part of your M&A practice group's deal flow as more bankruptcies are filed. At the end of the day, each bankruptcy results in some sort of deal that needs to be papered.

At the margins, there may be some benefit to having a few under your belt before going into a downturn but I will tell you that from a quality of life perspective, bankruptcy deals can be brutal. They move quickly with little notice. The timing of the deal is often determined by the status of whatever litigation is happening in the bankruptcy court and the M&A deal team often doesn't have great visibility into the timing of that. For example, I had a bankruptcy that I was staffed on for over a year and maybe billed 100 hours or so over the course of the year. Then randomly one week (at least to me), the bankruptcy group let us know that the litigation was resolved and we needed the close the deal in 2 weeks to meet a creditor deadline. I was already busy with other deals but I had to fit another 100 hours or so in over the next two weeks. They are not always that bad but just an example of what could happen.