February 2, 2009 6:22 PM
Bankruptcy & Restructuring Roundup: The Gathering Storm
Posted by Brian Baxter
With the bugaboos about bankruptcy fees increasing by the day, we decided it was an opportune time to round up the latest in Chapter 11 and restructuring assignments.
Bloomberg reported last week on the hourly fees requested by some firms in bankruptcy proceedings that have taken place the past several months. (When the wave hits, you want to be ready to ride it, right?)
The Deal also had a nifty column noting the top firms for bankruptcy work--Delaware's the place to be--and the bankruptcy lawyers with the most new engagements last year. (Kelley Drye & Warren bankruptcy and restructuring chair James Carr, come on down.)
For now, we'll stick to a listing of new appointments. We'll return with another post later this week that breaks down the largest assignments in the past few months and the leaders in the all-important billables category.
The Portage, Mich.-based auto parts supplier filed for Chapter 11 protection in U.S. bankruptcy court in Detroit on January 30, becoming the latest casualty snared in the downturn in the U.S. automotive industry. Contech, which makes lightweight components for cars and trucks, stated in court documents that sales had plummeted nearly 30 percent in the past year.
Contech is being advised by Paul, Hastings, Janofsky & Walker partner Richard Chesley, of counsel Stacey Kern, and associate Kim Newmarch. Chesley previously worked as a senior vice president and restructuring general counsel for Los Angeles-based investment bank Houlihan, Lokey, Howard & Zukin, where he advised on restructurings of Nextel International, CTI Movil, and United Airlines.
Christopher Grosman and David Schlackman from Bloomfield Hills, Mich.-based Carson Fischer are serving as local counsel. Both firms had yet to file billing information with the bankruptcy court.
It can't be a good sign for the health of the nation's economy when the company that makes President Barack Obama's suits is having cash flow problems. Hartmarx, a Chicago-based maker of men's suits and sports coats for high-end clients and retailers, filed for Chapter 11 protection in U.S. district court in Chicago on January 23.
Hartmarx has retained Skadden, Arps, Slate, Meagher & Flom corporate restructuring partner George Panagakis in Chicago as bankruptcy counsel. Panagakis has handled Chapter 11 cases for Avado Brands, Eagle Food Centers, and Ingersoll International.
While all three of those companies have since liquidated their operations, Hartmarx at least has some hope that it will emerge from Chapter 11 relatively intact. The clothier recently won bankruptcy court approval for $160 million in debtor-in-possession financing from a group of its lenders.
Skadden had yet to file billing information with the bankruptcy court.
Considering that we might all be living under one soon, it also doesn't bode well when the country's largest manufacturer of cardboard boxes files for bankruptcy. Chicago-based Smurfit-Stone doesn't limit itself to cardboard--it also makes metal containers and paper bags, and operates one of the world's largest recyclers of paper fiber.
Citing a decreased demand for packaging products, Smurfit-Stone filed for Chapter 11 protection in U.S. bankruptcy court in Delaware on January 26. James Conlan, cochair of the corporate reorganization and bankruptcy group at Sidley Austin, has been retained as counsel. Restructuring partners Matthew Clemente and Dennis Twomey and associate Bojan Guzina are also working on the matter.
Bankruptcy and restructuring chair Robert Brady, corporate restructuring partner Edmon Morton, associate Matthew Lunn from Delaware's Young Conaway Stargatt & Taylor are serving as local counsel.
Stikeman Elliott has been retained as Canadian bankruptcy counsel under the Companies' Creditors Arrangement Act (CCAA). Smurfit-Stone owns about a million acres of timberland in Canada that it harvests for its operations.
Smurfit-Stone is trying to secure $750 million in DIP financing to continue its operations. One of the company's listed creditors is the Los Angeles employment firm of Posner & Rosen, to which it owes $8.75 million stemming from class action litigation brought by former employees.
Bloomberg reports that the Van Buren Township, Mich.-based auto parts supplier--the nation's second-largest after Troy, Mich.-based Delphi--is on the verge of bankruptcy and had reportedly hired Kirkland & Ellis to advise in preparation for a filing.
Visteon subsequently stated that the relationship with Kirkland & Ellis is not a new one, and that it in fact dates back to 2003. That was three years after Visteon was spun-off from Ford Motor Company. Visteon has been restructuring its business for the past several years, receiving some aid from its former parent.
Unfortunately for Visteon, Ford is now struggling for its own survival. The auto giant has said that no further aid will be forthcoming and that it will have to work through its problems on its own.
Kirkland's name has also been mentioned in connection with a reportedly imminent bankruptcy filing by St. Louis-based Charter Communications. With more than five million subscribers in 40 states, the nation's fourth-largest cable television provider is said to have a debt load of $4,000 per subscriber.
Reuters reports that Charter, which is being advised by Kirkland, could pursue a prepackaged bankruptcy with bondholders.
Charter's chairman--billionaire Paul Allen, who holds a controlling stake in the company--is reported to be represented by lawyers from Skadden.
Sibling publication Legal Week reports that Linklaters and Weil, Gotshal & Manges have secured lead roles in a deal that will see the Woolworths Group brand in the U.K. relaunched online. (The company entered administration--the U.K.'s version of bankruptcy--late last year.)
Legal Week reports that Weil private equity partner Marco Compagnoni, IP partner Barry Fishley, associate Alicia Speake, and trainee Christopher Oliver advised Sir David and Sir Freddie Barclay, owners of The Daily Telegraph, who have stepped in to save Woolworths by funding the relaunch.
The venture will be in tandem with Liverpool-based Littlewoods Shop Direct Home Shopping.
Linklaters, which has been advising Woolworths since it entered administration, fielded a team led by restructuring partner Richard Bussell and associates Tina Evans and Clare Nicholson. Restructuring and insolvency partner Rebecca Jarvis is advising Deloitte with respect to the Woolworths administration.
Freshfields Bruckhaus Deringer restructuring and insolvency chief Ken Baird, restructuring partner Adam Gallagher, corporate partners Mark Trapnell and Andrew Hutchings, finance partner Neil Falconer, and dispute resolution partner Neil Golding are also advising Woolworths.
Legal Week also reports that Herbert Smith has landed a lead role for Toronto-based telecommunications manufacturer Nortel Networks on its U.K. administration. The Am Law Daily previously reported on Cleary Gottlieb Steen & Hamilton's handling the company's filing for Chapter 11 protection in New York.
Herbert Smith restructuring partners Stephen Gale and Laurence Elliott, corporate partners Gavin Davies and Alan Montgomery, pensions partner Roderick Morton, and employment partner Andrew Taggart are working with closely with alliance firm Gleiss Lutz in Germany and The Netherlands. Legal Week reports that nearly 20 others firms are working on Nortel-related matters in Africa, Europe, and the Middle East.
In Canada, where Nortel was once the country's largest company by market value, three firms have secured roles under the CCAA. Derrick Tay, the head of the insolvency and restructuring practice at Ogilvy Renault, is advising Nortel along with restructuring and insolvency partner Mario Forte.
Insolvency and restructuring practice chair Edward Sellers from Osler, Hoskin & Harcourt is advising various Nortel boards along with senior litigation partner Lyndon Barnes and insolvency and bankruptcy partner Rupert Chartrand.