During the most recent Distressed Investing Conference hosted by Beard Group, Inc., a panel featuring restructuring experts discussed the current role of independent directors, private equity firms, and creditors. The panel discussion, moderated by Didier Siffer, a managing director at Riveron, featured diverse viewpoints and a healthy debate that offered a robust look at the role and challenges independent directors face in today’s market.
Read the full article at riveron.com »
While 2021 is fast approaching the finish line as a solid year for investors across most asset classes, distressed players generally expect slim pickings in 2022. But there are already pockets of opportunity for them to put money to work, and a lot can happen next year to expand those pockets.
While the COVID-19 pandemic outbreak year of 2020 was notable for a remarkably rapid fall and recovery of both debt and equity markets, 2021 offered far less drama. Though it seemed all year as if asset prices just went up and high-yield option-adjusted spreads just came in, in reality, there were plenty of bumps along the way. In the end, 2021 was marked by records and near-records in a wide swath of investing categories, including historic highs in equity market indices and near-record tights in high-yield spreads.
Read the full article at spglobal.com »
Did you miss any of the 27th Annual Distressed Investing Conference? You can watch recordings of each panel discussion on the Beard Group YouTube channel. This year's videos are embedded below. Supplemental materials for each panel can be found on the agenda page.
Year in Review and New Opportunities
Steve Gidumal provides his thought-provoking analysis to review the year in distressed investing and forecasts what to expect in the coming year.
Retail Investing and Restructuring in Tumultuous Times
Retail as we know it has changed dramatically over the last five years. And that was pre-pandemic! With technological disruption and an unclear end to COVID-19, to restructure and see a return on an investment in any retailer is a challenge to say the least. But that is not to say it cannot be done. From Sears, to Neiman Marcus, JCPenney and Tailored Brands, there are many examples of successful restructurings to provide relief for overburdened balance sheets. A panel of experts from the investment and advisory community have come together to shed light on retail distress and successful strategies for investing in, and restructuring, retailers in this ever changing marketplace.
Subchapter V and Opportunities in the Pandemic
This panel will discuss both the policy imperatives and the legislative history of the Small Business Reorganization Act of 2019 (the “SBRA”), as amended by the CARES Act, and how the SBRA relates to other provisions in the Bankruptcy Code. The panel will also discuss the elements and core provisions of the SBRA and what has happened to date with the implementation of the SBRA and, as well, how the COVID-19 pandemic has affected the practical application and implementation of this new section of the Code. Further, the panel will briefly discuss what investment opportunities may have been created in small to mid-size businesses by the passage of this act.
Harvey R. Miller Annual Award
Beard Group will present the Harvey R. Miller Outstanding Achievement Award for Service to the Restructuring Industry to Lisa Donahue, Managing Director and Joint Global Head of Turnaround & Restructuring at AlixPartners. This year's winner will be interviewed by Tim Coleman, Global Chairman of the Restructuring and Special Situations Group at PJT Partners.
Bringing Certainty to Distressed Deal Outcomes
Challenging times can present opportunities for those professionals looking in the right places with the right valuation and risk controls in place. In this session, our speakers will examine how businesses can leverage insurance capital to secure distressed transactions and unlock funds. This session will include an overview of the distressed M&A market and the use of representations & warranties/warranties & indemnities insurance to enhance asset values that no longer need to be purchased on an “as is, where is” basis. We will also look at how contingent liabilities for pending litigation, tax obligations, or other contingencies transferred to insurers to eliminate or reduce reserves and otherwise shore up balance sheets. Further, we will demonstrate how insurance instruments can help you through the life cycle of an insolvency proceeding, including providing certainty for the impact of a potential revocation right of an insolvency administrator in the case of a pre-insolvency transaction, securing a “prepack” solution in the case of a business sale within a self-administration in the insolvency procedure, and how synthetic warranties agreed with the insurer can minimize deductions for risks in comparison to an “as is, where is” transaction.
Volatility in the Oilpatch: Where Did All the Value Go?
In this cycle again, massive asset valuations are being suffered on oil & gas reserves. The write downs far exceed price reductions. How can something worth so much, so recently, suddenly become worth so little? Our panel of experts explain the valuation swings, along with recent successful plans for operating profitably in the current environment.
There's a high probability that you'll want to call your broker with a buy or sell order following this roundtable discussion.
Underwriters and Covenants in the Pandemic
For the last decade, the prevailing wisdom was that a historic bull-run had precipitated a shift in the high yield credit markets towards financings on increasingly borrower-friendly terms. At the outset of the COVID-19 pandemic, many market observers speculated that the ensuing economic dislocation might spell an end to this era of “cov-lite” lending. This panel will explore whether and to what extent this has come to pass with respect to new deals executed in the wake of the pandemic, as well as discuss the consequences that a decade of cov-lite underwriting has had on today’s workouts and restructurings.
How to Effectuate Distressed Hospital Sales Where Prior Efforts have Failed
By utilizing lessons learned from leading the Verity Health successful sales processes through Chapter 11 bankruptcy, Dentons, Cain Brothers, BRG, and Milbank will outline a path to competing sale transactions that ensure the future operations of the hospitals even in the most distressed circumstances. Best practices include extending the liquidity runway by utilizing quick hit performance improvement and treasury discipline; leading an efficient bankruptcy process to unlock value; and leading a marketing process targeted to a focused group of buyers.
Award Ceremony - Turnarounds & Workouts' 2020 Outstanding Young Restructuring Lawyers
Honoring the 2020 Outstanding Young Restructuring Lawyers, as named by 'Turnarounds & Workouts'. The master of ceremonies is Stephanie Wickouski, Partner at Bryan Cave Leighton Paisner. The Outstanding Young Restructuring Lawyers include:
Darren Azman, MCDERMOTT WILL & EMERY
Jonathan Canfield, STROOCK & STROOCK & LAVAN LLP
Daniel I. Forman, WILLKIE FARR & GALLAGHER LLP
Greg Fox, GOODWIN PROCTER LLP
Joseph O. Larkin, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
Angela Libby, DAVIS POLK & WARDWELL LLP
Michele C. Maman, CADWALADER, WICKERSHAM & TAFT LLP
Jennifer Marines, MORRISON & FOERSTER LLP
Gabriel A. Morgan, WEIL, GOTSHAL & MANGES LLP
Rachael Ringer, KRAMER LEVIN NAFTALIS & FRANKEL
Eric K. Stodola, MILBANK LLP
Erica S. Weisgerber, DEBEVOISE & PLIMPTON LLP
Read about this year's honorees.
All of the panel discussions from the 26th Annual Distressed Investing Conference are available on YouTube. Watch them below.
Harvey Miller Awardee Tim Coleman of PJT Partners
'Bankruptcy Tourism' and the Globalization of Distress
Selecting and Managing Post-Restructured Boards
Maximizing the Value of Deferred-Tax Assets (DTAs)
Puerto Rico's Oversight Board's Plan for Recovery
Diagnosing PG&E's Wildfire Liability
Crisis in the Oilpatch
Virtus Capital president says markets would sell off big if a ‘socialist’ is elected president in 2020
At the 2019 Distressed Investing Conference, Virtus Capital president Steven Gidumal made predictions about how the upcoming presidential election would affect the economy. Read the entire article here on CNBC.
In 2016 the United States enacted the PROMESA statute to allow territories to declare bankruptcy. That prompted the creation of the Financial Oversight and Management Board for Puerto Rico (FOMB), which in September announced a restructuring that cut the island’s debts by 33% from $129 billion to $86 billion. In Puerto Rico’s complicated maze of debt structures, the oversight board’s plan reflects a compromise between retirees, bond holders, and the public employees’ union.
One likely controversial issue is the latest bonds, which the FOMB argues are illegal because they took the island over its legal debt limit. The issue is still litigated. If bondholders win, they would get 64 cents on the dollar. If they lose (a court decision that their bonds were illegal), they could get nothing.
At Distressed Investing 2019, FOMB presents its plan for Puerto Rico’s recovery.
The panel will be moderated by Andrew Scurria, a reporter who covers financial distress and debt restructuring for The Wall Street Journal and WSJ Pro Bankruptcy, with an emphasis on energy companies, retailers and municipalities.
Make sure you’re in the room when the professionals who designed Puerto Rico’s debt restructuring present their plan for recovery.
Not registered yet?
In the history of insolvency, there are few companies more distressed than California’s largest utility, Pacific Gas & Electric (PCG:NYSE).
PG&E’s previous bankruptcy in 2001 is still the 11th largest corporate bankruptcy by assets in American history. But it will move down at least one notch as its second bankruptcy displaces Enron for the sixth spot with over $68 billion in assets.
Uncertainty abound as shareholders compete with bondholders over the terms of the restructuring, and new wildfires have prompted a public call to bring the company under government control. As the ground continues to shift, one of the biggest variables for how to value PG&E is how much money it will have to pay for property damage, injuries and deaths from wildfires caused by its equipment.
Pacific Gas & Electric recently reached a settlement with insurance companies worth $11 billion for its liability in 2018 wildfires that killed 85 people and destroyed thousands of homes. That provides something of a roadmap for the pending litigation to settle, but there is still enough uncertainty for there to be a spread between current prices and the real value of the company’s securities.
At the 26th Annual Distressed Investing Conference, four veterans from litigation finance, financial advisory, credit rating and bankruptcy law will present their methodologies in estimating PG&E’s wildfire liabilities.
The panel will be moderated by Edward S. Weisfelner, a partner in Brown Rudnick’s Bankruptcy and Corporate Restructuring practice with 35 years of experience including representing plaintiffs in litigation against General Motors for its ignition switch defect during its 2009 bankruptcy.
These experts will provide an outline for you to value not only the securities of PG&E, but other distressed companies facing complex legal liabilities.
Not registered yet?
Arik Van Zandt of financial advisory Alvarez & Marsal will join our panel that will present methodologies about how to estimate PG&E's wildfire liability.
The amount PG&E (NYSE:PCG) is ordered to pay will have a direct impact on how much its equities are worth. With a roadmap for estimating its wildfire liabilities, distressed investors can develop a model to value its stock, making this a potentially profitable panel.
Arik Van Zandt is a Managing Director with Alvarez & Marsal Valuation Services in Seattle. He specializes in the valuation of closely-held businesses operating in a variety of industries for purposes of litigation support (shareholder disputes, post M&A disputes, employment matters, marriage dissolutions, lost profits claims and others), acquisitions, sales, buy-sell agreements, ESOPs, incentive stock options and estate planning and taxation.
Mr. Van Zandt also assists clients and counsel by providing expert witness testimony in matters involving complex commercial disputes and allegations of fraud, performs economic analysis for personal injury claims, wrongful termination and wrongful death actions.
With a broad base of experience, Mr. Van Zandt’s primary focus is to support clients in business disputes that concern the valuation of a business or economic loss.
Mr. Van Zandt completed the American Society of Appraisers Business Valuation Course, Levels I-IV. He also completed the Association of Insolvency and Restructuring Certification in Distressed Business Valuation Courses I-III.
Arik will join Philip Smyth of Fitch Ratings and Emily Slater of Burford Capital on this panel.
Not registered yet?
Philip Smyth, a senior director at Fitch Ratings, will participate in a panel explaining how to estimate the total amount in damages that California utility, Pacific Gas & Electric, will be ordered to pay for their wildfire liability.
The New York Times reported yesterday that about 30,000 people have filed claims against the company for over a dozen fires between 2015 and 2018. The final amount PG&E (NYSE:PCG) is ordered to pay will have a direct impact on how much equity holders retain. Because whatever is left over after paying damages and secured creditors, the ability to estimate the remaining assets to be distributed among shareholders provides a roadmap for valuing PG&E's equities. That roadmap makes this panel's situation report potentially profitable for distressed investors.
Philip W. Smyth is a senior director in Fitch Ratings’ Utilities, Power and Gas group, responsible for credit analysis and ratings for U.S. electric utilities. Prior to joining Fitch in 2001, Philip was director of utility focus at Regulatory Research Associates, with primary responsibility for the company’s equity-based research product. Earlier, he was an analyst focusing on the utility industry at major buy- and sell-side institutions.
Philip earned a BBS at Bernard Baruch College and is a CFA charter holder. He is a member of the Fixed Income Analysts Society, the New York Society of Securities Analysts, and the Wall Street Utility Group.
Philip will join Emily Slater of Burford Capital on this panel.
Not registered yet?
Alan J. Carr, preeminent restructuring advisor and CEO of Drivetrain, will participate in a panel on post-restructured boards at Distressed Investing 2019. According to his bio:
[Mr. Carr is an] investment professional with 20 years experience around financially distressed companies — from the principal and advisor side — including investing in and leading complex financial restructurings through in and out of court-observed processes globally as well as serving on boards of directors of troubled and reorganized businesses in the U.S. and Europe.
A new kind of post-restructuring board of directors will ultimately play a critical role in maximizing shareholder value going forward. How to assemble such boards and the issues attendant to the recruitment of pertinent and qualified directors will be the subject of this timely panel. The participants, with a wealth of experience in these roles, will offer practical advice to anyone involved in distressed debt investing.
Mr. Carr has overseen restructurings as a board member of companies including LightSquared, Midstates Petroleum Company, Tanker Investments and Sears. Mr. Carr is the chairman of the board of Kaupthing, an Icelandic bank.
Before founding Drivetrain, Mr. Carr worked as an investor at Strategic Value Partners and an attorney at Skadden Arps and Ravin, Sarasohn, Baumgarten, Fisch & Rosen.
Haven't registered for the conference on Mon., Dec. 2 in Midtown Manhattan?
Register now at eventdex.com/DI2019.