Our restructuring attorneys provide distressed companies with leadership, stability, business advisory, and crisis management skills. We are proactive, creative team leaders. We identify issues, identify alternative approaches to solving those issues, and assist the company in adopting the solution that best meets the company’s needs. We do not wait for the client to identify issues. In distressed situations, time is of the essence. Your restructuring counsel must be a leader, not a follower. And, your restructuring counsel must be the calm hand at the wheel. As your restructuring counsel, we will be proactive, fully engaged counselors and advisers.
Our clients include public and private companies, large and small companies, and companies engaged in various industries throughout the country and the world. We have represented companies with complex capital structures, complicated securities, numerous tranches of debt obligations, varying and competing claims and priorities, and heavily negotiated agreements. We have represented publicly traded companies with “investment grade” debt structures, involving both senior facilities and funded bond indebtedness.
In distressed situations, we strive to implement an out-of-court restructuring. If a restructuring only can be implemented through a court-supervised proceeding, we consider a “pre-packaged” or “pre-arranged” solution, which is aimed to reduce the expense and uncertainty inherent in court proceedings. Although an out-of-court restructuring is our goal, a court-supervised Chapter 11 proceeding provides tools and protection that may be advisable to implement a consensual restructuring or required to implement a nonconsensual restructuring.
In today’s restructuring environment, liquidity is critical and cash is king. Sources of debt or equity financing are difficult to find, so we assist our clients in crafting creative solutions to address liquidity constraints, debt maturities, principal and interest payments, and capital constraints. We interface with employees, customers, creditors, critical vendors, governmental and regulatory agencies, and other stakeholders and constituents. We employ exchange offers, refinancings, debt for equity swaps, equity and asset sales, and other creative ways to solve financial distress. We draw on the experience of attorneys in Winston & Strawn’s tax, finance, corporate, securities, mergers and acquisitions, intellectual property, environmental, and litigation groups, as necessary, to assist us in evaluating the alternatives available to our clients.
General Issues in Chapter 11 Filings
If a Chapter 11 filing is necessary, and if a pre-packaged or pre-arranged filing is not possible or practicable, a well-choreographed, smooth-landing into Chapter 11 is critical.
Prior to filing a Chapter 11 case, we will work with a company and its advisers to evaluate a superior venue for filing and the impact of a filing. We design our approach to mitigate any adverse consequences of a filing. We will consider the impact of a filing on: management, employees, customers, key vendors, counterparties to contracts, other constituents, the company’s tax attributes, and the company’s enterprise value. We will determine the financing needs of the company and how a filing will impact those needs. In conjunction with the company’s advisers, we may craft a communications package for employees, customers, suppliers, and the press containing a consistent, plain, clear, and concise message that explains why a Chapter 11 case was filed, what we will accomplish in the filing, and how the filing will impact our key stakeholders and constituents.
General Issues for Officers and Directors
Directors and officers must understand their fiduciary duties of care, loyalty, and good faith. Directors and officers must know who they owe their duty to and how insolvency impacts the scope of the beneficiaries of such duties. We are available to and provide in-house educational programs regarding directors and officer duties.
Observations About the Restructuring Process
The restructuring industry includes a myriad of professionals and angles—operational advisers, turnaround firms, investment bankers, distressed securities traders, asset purchasers, financiers, and media. The industry can overwhelm a management team and an operating business. Virtually everything becomes a matter of “public record,” and the company essentially operates in a fishbowl in Chapter 11. Chapter 11 is time-consuming and distracting, and it is often an expensive proposition. A distressed company should “shoot for the best” (i.e., an out-of-court restructuring), but it must prepare for the worst (i.e., a “traditional” Chapter 11 filing where there is no prearranged exit). Chapter 11 must be considered as an alternative by all distressed companies; however, it does not necessarily represent the only or best path.
Chapter 11 is not a “silver bullet” that brings constituents to their senses. However, sometimes the supervision of a Chapter 11 case (by a judge) causes parties to deviate from positions that otherwise were intractable. The filing of a case provides a “breathing spell” against creditor remedies, which can act as a cooling-down period for constituents who were not able to achieve a consensual out-of-court restructuring. A Chapter 11 case also provides the tools to restructure contracts and agreements on an adversarial, as opposed to consensual, basis.
We have successfully accomplished Chapter 11 reorganizations in bankruptcy courts located in California, Nevada, New York, Delaware, Illinois, Indiana, Tennessee, Texas, and many other states.