Changing Roles in Commercial Cases: The Impact of Hedge Funds on the Restructuring Landscape
Panelists:
Peter M. Gilhuly
Latham & Watkins LLP; Los Angeles
Paul S. Aronzon
Imperial Capital; Los Angeles
Susan M. Freeman
Lewis and Roca LLP; Phoenix
Eric D. Maloy
Bank of America Business Capital; Dallas
Steve R. Strom
Jefferies & Company, Inc.; New York
Recent years have seen the geometric growth of investments by well-heeled hedge funds in insolvency situations. The liquidity and sophistication that the hedge funds have brought to insolvency cases has dramatically changed the landscape of many larger bankruptcy cases. The dynamic among hedge funds, private equity funds, and traditional banks is just starting to play out at the bargaining table and in the courts.
One cannot discuss the explosion of hedge fund investments in insolvency scenarios without addressing the dramatic explosion of two forms of second-lien financings commonly marketed in the United States: (1) second-lien term loans designed for sale in the institutional loan market, and (2) second-lien high-yield offerings. According to Standard & Poor's (S&P), 172 second-lien deals raised $16.298 billion in 2005, compared with 129 deals raising $12.012 billion in 2004 and 25 deals raising $3.076 billion in 2003.
Read the full article. (Materials from the 2006 Southwest Bankruptcy Conference)
Matters of First Impression—Business: The Death of Retail Chapter 11? BAPCPA in Practice in Retail Bankruptcy Cases
Panelists:
Laura Davis Jones
Pachulski Stang Ziehl Young Jones & Weintraub LLP; Wilmington, Del.
Ivan Gold
Allen Matkins Leck Gamble Mallory & Natsis LLP
Jay R. Indyke
Kronish Lieb Weiner & Hellman, LLP; New York
M. Steven Liff
Sun Capital Partners, Inc.
Peter M. Schwab
Giuliani Capital Advisors LLC
The revisions to the Bankruptcy Code implemented by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), have had wide-ranging effects on nearly all aspects of business and consumer bankruptcy. Highlighting provisions of interest in consumer cases as opposed to business cases is comparatively straightforward. However, any effort to narrowly identify a set of provisions of particular interest in retail cases is doomed to be incomplete—the changes wrought by BAPCPA are so numerous and far-reaching, and the details of any retail case so idiosyncratic, that nothing less than a complete survey of the revisions to the Title 11 of the U.S. Code (the “Bankruptcy Code”) would suffice. Such a review is beyond the scope of this panel or these materials. The following pages review six significant amendments under BAPCPA that have had and will continue to have a significant impact on retail cases. The six could as easily be four or 10, and reasonable minds will differ on those changes of most import to retail cases. Suffice to say that these six substantial changes present significant challenges for retail cases.
Read the full article. (Materials from the 2006 Winter Leadership Conference)
Valuation Principles
by Sam Maizel
Pachulski Stang Ziehl Young Jones & Weintraub LLP; Los Angeles
Jeremy Richards
Pachulski Stang Ziehl Young Jones & Weintraub LLP
For purposes of valuing a debtor, the Supreme Court has suggested that courts use the inherent reorganization value as opposed to any depressed, liquidation value of a debtor. The Supreme Court has defined reorganization value to mean “the expectation of income” from the reorganized debtor and has described it as the “present worth of future anticipated earnings.” Given that the Supreme Court has not mandated any precise methodology, bankruptcy courts have discretion to determine the “extent and method of inquiry necessary for a valuation… dependent on the facts of each case.”
Experts have developed and generally utilize discounted cash flow analysis, together with other approaches such as comparable company analysis and comparable transaction analysis (often to bolster or test reliability), in determining the enterprise value of a corporate debtor; subsequent to Consolidated Rock, courts have looked to and accepted one or more of these valuation approaches.
Read the full article. (Materials from the 2006 Winter Leadership Conference)
Agenda for 2006 Winter Leadership Conference
The Financial Advisors and Professional Compensation committees will hold a joint session on Saturday, Dec 2, at 9:30 a.m. titled “Emerging Issues in the Retention and Compensation of Professionals: Is the Playing Field Changing?”