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December 12, 2008 2:54 PM

Restructuring Roundup: The Happy Holidays Edition

Posted by Brian Baxter

Looking for some seasonal cheer?

One might be hard-pressed to find it in this economy, unless of course you're a bankruptcy lawyer. The long-awaited "tidal wave of work" we've been hearing about for the past 24 months finally is here.

That has some restructuring lawyers longing for the days when they had more time on their hands.

"If we could just ever spread this out more evenly over the year the year it would be so lovely," says J. Gregory Milmoe, a cohead of Skadden, Arps, Slate, Meagher & Flom's restructuring group.

Milmoe has been swamped in recent weeks handling refinancings for Harrah's and Realogy--both are owned by private equity giant Apollo Advisors, a longtime Skadden client--and now he'll have to cope with the loss of fellow restructuring group cohead Timothy Pohl to Lazard.

But Pohl's defection is a sign of just how valuable bankruptcy and restructuring work is these days with other transactional pickings slim.

Besides Skadden, Weil, Gotshal & Manges has kept up the pace as well, advising Atlanta-based Simmons Bedding on a possible restructuring and Spartanburg, S.C.-based Extended Stay Hotels in talks with its lenders. (Weil also may have picked up the biggest bankruptcy client of all, once General Motors confirms it has retained the firm.)

But there's more than enough work to go around. The Am Law Daily has it all in our bankruptcy and restructuring roundup:

Nortel Networks

It's a tough time to be North America's largest manufacturer of phone equipment. Saddled with debt, Toronto-based Nortel's stock price has sunk to 40 cents and the company is being urged to file for bankruptcy.

The New York Stock Exchange has reportedly told Nortel that the telecommunications company faces de-listing if it cannot bring its stock price above $1 in the next six months.

Bloomberg reports that Nortel has turned to Cleary Gottlieb Steen & Hamilton bankruptcy partner James Bromley to advise it on a potential Chapter 11 filing. Bromley was part of a team from the firm that advised the SEC and Federal Reserve Bank of New York during the collapse of Lehman Brothers.

A source familiar with the matter tells The Am Law Daily that Osler, Hoskin & Harcourt has been retained as Canadian counsel. A former partner with the Toronto-based firm, David Drinkwater, serves as Nortel's chief legal officer.

KB Toys

The economy must be in bad shape if a toy company is having trouble staying in business. Pittsfield, Mass.-based KB Toys announced on Friday that it was filing for bankruptcy and closing nearly half of its 1,200 stores.

It's the company's second such filing in four years. Wilmer Cutler Pickering Hale and Dorr and Delaware's Young Conaway Stargatt & Taylor have been retained as bankruptcy counsel. The same two firms also handled KB's first Chapter 11 filing in Delaware in 2004.

Wilmer bankruptcy partner Mitchel Appelbaum, who advised KB during its initial bankrutpcy proceeding, is advising the company once again along with bankruptcy and financial restructuring group vice chair Philip Anker and counsel Nancy Manzer. The two are working with Young Conaway's Joel Waite and KB general counsel Scott Hochfelder on the matter.

KB was bought out of bankruptcy by New York-based private equity firm Prentice Capital Management in 2005, but the struggling toy retailer has been unable to overcome lackluster sales and increased competition from Target, Toys "R" Us, and Wal-Mart.

Iceland's Bankrupt Banks

The land that gave us Bjork and Sigur Ros has been buffeted by the global economic crisis. (Click here for a Q&A that The Am Law Daily conducted with an exhausted Icelandic lawyer at the height of the crisis.)

Iceland nationalized its three largest banks after they amassed an estimated $61 billion in debt, which Bloomberg reports is 12 times the size of the country's economy.

Morrison & Foerster is representing two of those banks--Reykjavik-based Glitnir and Landsbanki--in Chapter 11 filings in federal court in Manhattan. Glitnir filed for Chapter 11 in late November and Landsbanki did the same on December 9. Both banks are seeking protection from their U.S. creditors, listing assets and debts in excess of $1 billion.

Gary Lee, cochair of MoFo's bankruptcy and restructuring group, is working on both matters along with bankruptcy partner Karen Ostad and senior counsel Kathleen Schaaf. All are based in New York.

The firm was introduced to the banks when it represented Barclays and Nomura as underwriters' counsel in a financing for Glitnir in 2005.

But those days, it seems, are over.

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