November 11, 2009 7:03 PM
After Big Auto Bankruptcy Battles, a Partner Returns to Willkie
Posted by Brian Baxter
Matthew Feldman, a 20-year restructuring veteran at Willkie Farr & Gallagher, spent five months as a chief legal adviser to the Obama administration's presidential task force on the auto industry.
After handling deals for Chrysler, General Motors, GMAC, and Delphi, Feldman left the task force on August 14 and has been "happily on hiatus, unemployed, or retired" since then. On Tuesday, Willkie announced that Feldman would rejoin the firm as cochair of its business reorganization and restructuring practice. He says that taking time off to reevaluate his options was a necessity after a hectic few months.
"Most days we kind of went through 18-22 hours of work," he says. "None of us had our families around and we all lived about a block from the Treasury [in Washington, D.C.], so it was pretty intense."
The cabinet-level group, officially part of the Treasury Department, first took shape in late 2008 amidst a caravan of Big Auto executives heading to Capitol Hill to seek federal funds. Headed by investment banker Steven Rattner, the team also included seasoned labor negotiator and current senior presidential adviser for manufacturing policy Ron Bloom.
Feldman got the call to serve on a Friday afternoon in March from Bloom, whom he's known professionally and faced off against across more than a few boardroom tables. Feldman, who has handled restructuring assignments for Greatwide Logistics, PG&E National Energy, and Petroleum Geo-Services, knew it was a once-in-a-lifetime opportunity.
"It was just too exciting not to jump on it, and they needed someone to accept quickly," says Feldman, noting that Willkie chairman Jack Nusbaum supported him taking the assignment. "The one caveat was I had to go home to Connecticut and tell my wife."
Telling his wife that he was moving to Washington, leaving her with four kids, and giving up 98 percent of his income to work for the government would be somewhat akin to negotiating with a group of unruly bondholders. But Feldman's better half acquiesced, and within a few days he would have a ringside seat for the fight to save the American auto industry.
"The government of this country had a decision to make in where it sees its future in terms of whether we're going to continue to have a manufacturing base," Feldman says. "And both the Bush and Obama administrations voted in favor of it in the sense that they were willing under the right conditions to provide financing to the industry at a time when the capital markets were unavailable."
For Feldman, debates over the merits of the government's bailout of Big Auto can continue ad infinitum, but conceptually it was necessary to preserve the economic stability of the U.S. Feldman's less convinced by critics claiming that the Chapter 11 cases of Chrysler and GM shredded the bankruptcy code.
"These were unique situations and I don't think we really made any new law," he says. "Perhaps GM, more than Chrylser, pushed the envelope a bit in terms of when its appropriate to use section 363. And Chrysler is a precedent-setting case in the sense that the objectors took it all the way up to the Second Circuit, giving the court a chance to reaffirm its position on 363 sales."
Being part of such a high-profile government team did have its perks--such as White House visits and seeing the president give a speech on issues the task force talked about--but Feldman's highlight was being involved in intense negotiations with creditors and labor unions in a condensed timetable.
"Watching that dynamic unfold in a high-profile and high-pressure situation, really reaffirmed for me that I'd somehow found my way into the right profession," he says.
That's not to say the majesty of the legal profession always shone through in the often combative negotiations over the future of Big Auto. In an e-mail exchange regarding White & Case insolvency cochair Thomas Lauria's representation of a dissident bondholder group in the Chrysler bankruptcy, Feldman likened Lauria to "a terrorist." Feldman regrets using the term in the heat of battle.
"I do think Tom was in typical bankruptcy fashion trying to hold us up, and the government wasn't going to be held up, resulting in my e-mail at 4:30 in the morning," he says. "But that's what happens when you haven't slept in a few days."
Feldman worked closely with Treasury's outside counsel at Cadwalader, Wickersham & Taft, which was led by the firm's restructuring cochair John Rapisardi. The Cadwalader team drafted financing documents for the various deals on the corporate side and the firm also advised on bankruptcy litigation along with Justice Department lawyers from the Southern District in Manhattan.
But on the in-house side, Feldman was essentially a one-man show. He did receive help from Paul Nathanson, an ex-Baker Botts associate and former clerk for Chief Justice John Roberts, who couldn't work as a lawyer on the deals because of Treasury rules. (Nathanson had not been hired through the general counsel's office at Treasury and Feldman says he straddled the business and legal side.)
By late summer, the spigot of Big Auto bankruptcy work had begun to run dry. The Chrysler sale closed in June, the GM sale on July 10, GMAC had already been approved for federal funds, and a court approved an agreement on Delphi at the end of July. Feldman stuck around for a few more weeks but by then the task force had begun to dissolve. (Rattner quit in July and was replaced as "car czar" by Bloom.)
Feldman says that after leaving Treasury, he finally had time to contemplate his future. It wasn't a foregone conclusion that he would return to Willkie.
"I'd been a partner for 12 years, so this was my moment to assess whether I wanted to be doing something else or wanted to go somewhere else," he says. "After I got back from a vacation with my family, I started thinking about the things that were important to me, what my goals are, and all roads led back to Willkie. The firm has been great to me."
And the work by Feldman and company helped turnaround an auto industry headed for disaster.
Chrysler and GM have given rise to new entities that have sped away from bankruptcy court, leaving behind old assets in Chapter 11 cases that are now in wind-down mode. Delphi exited bankruptcy after it was split up in a sale to its lenders and GM, while GMAC is accessing the last of its federal bailout money to pass stress test standards.Make a comment