IFLR 1000
The Guide to the World's Leading Financial Law Firms

CONTEXT AND TRENDSIn the opinion of some observers and analysts, the type of transactions undertaken in traditional bank lending may have an uncertain future as private equity firms develop plans based on highly flexible financing models and vast capital reserves and as the regulatory stranglehold tightens around banks domestically and abroad. The same regulations that protect banks may limit their competitiveness against the growing "shadow banking system" in years to come....

CONTEXT AND TRENDS

In the opinion of some observers and analysts, the type of transactions undertaken in traditional bank lending may have an uncertain future as private equity firms develop plans based on highly flexible financing models and vast capital reserves and as the regulatory stranglehold tightens around banks domestically and abroad. The same regulations that protect banks may limit their competitiveness against the growing "shadow banking system" in years to come.

Many lawyers at firms active in bank lending have commented on the relative quiet prevailing in the first half of 2012, with banks under pressure to raise capital and meet Basel III requirements without having to issue equity. Some of the larger banks, such as UBS, have looked to securitisation schemes to move risk-weighted assets off their balance sheets. The Federal Reserve and the OCC (Office of the Comptroller of the Currency) brought out guidelines on leveraged lending in Spring 2012, further diminishing the banks' willingness to take risks. Re-financings have pushed out new money deals. Large European banks with significant US operations, such as BNP Paribas and Société Générale, have had to rescind some of their traditional lending lines amid uncertainty about Greece and Spain.

In these circumstances, the "shadow banking sector" - entities like Centerbridge, Highbridge, TBG Capital Advisors and the major pension plans - may be poised to take over many of the riskier transactions. Whether banks will sustain the traditional long-lending model in the face of a hedge fund and private equity sector with more choices as to how it deploys its capital will be interesting to see. In the meantime, no one looking over some of the most significant deals in this sector over the past year can fail to notice how much private equity firms are taking advantage of banks' willingness to lend, as in KKR's debt financing for its $7.2 billion acquisition of Samson Investment Company, detailed below.

MAJOR LATERAL HIRES

Robert Rabalais
From: Vinson & Elkins
To: Simpson Thacher & Bartlett

John Cobb
From: Dewey & LeBoeuf
To: Weil Gotshal & Manges

Gabriel Gregson
From: Proskauer Rose
To: Weil Gotshal & Manges

MAJOR LEGISLATION CHANGES

JOBS Act
Signed April 2012

CONTEXT AND TRENDS Many law firms have dynamic capital markets practices and some of them have a particular strength when it comes to launching IPOs or multi-billion dollar secured note offerings. One reason our first tier is not crowded is that even firms that are clearly extremely capable at what they do may lack the wide-ranging abilities and the international reach of the very top firms....

CONTEXT AND TRENDS

Many law firms have dynamic capital markets practices and some of them have a particular strength when it comes to launching IPOs or multi-billion dollar secured note offerings. One reason our first tier is not crowded is that even firms that are clearly extremely capable at what they do may lack the wide-ranging abilities and the international reach of the very top firms. Nor are all firms as adept at innovation and creative solutions as they are at plain vanilla deals. Firms that stand out in this year's rankings are those that can execute a range of transactions globally even in markets where the appetite for the product or service in question may have cooled markedly.

The disappointing results of the widely anticipated Facebook IPO on May 18 2012 – shares traded in the $20 range in the days following, private equity shops such as Knight Capital losing up to $35 million and Nasdaq offering only $40 million in compensation then reluctantly upping it to $62 million – put a damper on IPOs for months. But the universe does not revolve around Facebook. The day of that IPO, Intelstat Global Holdings, the world's largest satellite operator, filed for a $1.75 billion IPO with Paul Weiss Rifkind Wharton & Garrison as its counsel. The ability of certain law firms to continue to engineer IPOs after the Facebook fallout is testament to the strength in the market. Altogether there were 27 IPOs in the second quarter of 2012, with registration filings continuing briskly. The resilience can be seen in the rush by private equity sponsor-backed companies looking to access the market. European firms are increasingly moving into the breach in defiance of the Sarbanes-Oxley Act – whose corporate governance requirements understandably had turned foreign firms off – and taking advantage of a US legal process allowing them to keep filings of registration statements confidential. The JOBS Act, which President Obama signed on April 5 2012, also encouraged companies to go public by relieving some of the perceived compliance burden.

The high-yield sector of the capital markets is booming, though it remains highly specialised with not all firms having the capability to execute deals at volume. Although many attorneys will describe the market as having a cyclical character, with windows of opportunity opening and closing, there is a perception that the market is robust compared to the second half of 2011, when not many deals were completed. Private equity sponsors remain one of the primary forces driving transactions, with Apollo Global Management, for example, completing eight high-yield deals and two exchange offers, using the counsel of Weil Gotshal & Manges, in the first half of 2012. The market has aligned with its historic patterns with re-financings moving from five and six year bonds to the more traditional eight to ten year ones. Another factor behind the strength of the US market is the simple fact that products that don't get a resounding reception in the UK may end up getting pitched in the US, as happened with one of 2012's biggest deals: Cable & Wireless' $400 million Rule 144A/Reg S offering of senior secured notes due 2020. The absence of registration rights did not preclude a deal that flopped in the UK from getting done in the US and Cable & Wireless' status as a dollar-based issuer did not hurt.

Considered highly efficient for issuers and for corporations and equity sponsors looking to undertake acquisitions, high-yield remains a bright spot even for firms whose overall position or share in capital markets transactions may have declined due to attrition at the top levels of personnel or the unevenness of the IPO markets after the Facebook fiasco. To the extent that all areas of the financial world are interrelated, the strength of the high-yield market benefits other areas such as project finance, as banks invite specialists to come and give presentations to their senior staff and to investors about project bonds. According to one practitioner, there is a trend among the banks toward de-risking commitments by putting them in escrow, removing them from powerful currents in the global markets.

MAJOR LATERAL HIRES

Jonathan DeSantis
From: Dewey & LeBoeuf
To: Shearman & Sterling

Rod Miller
From: Weil Gotshal & Manges
To: Milbank Tweed Hadley & McCloy

Michael Schiavone
From: Shearman & Sterling
To: O'Melveny & Myers

CONTEXT AND TRENDS Most firms that perform a significant volume of structured finance or derivatives transactions per year are innovators in one way or another. So complex is this area of finance generally that it would be hard to find attorneys engaged in it daily who do not possess a certain amount of intellectual curiosity, expertise, and aptitude....

CONTEXT AND TRENDS

Most firms that perform a significant volume of structured finance or derivatives transactions per year are innovators in one way or another. So complex is this area of finance generally that it would be hard to find attorneys engaged in it daily who do not possess a certain amount of intellectual curiosity, expertise, and aptitude. The market itself is still throwing up new products. One example is covered bonds, a type of product long popular in Europe that has had a difficult time penetrating US even though it essentially involves mimicking in private markets what Fannie Mae and Freddie Mac have long done with RMBS. Canadian banks are the issuers of roughly 50% of outstanding bonds, but all U.S offerings have gone the route of private offerings under Rule 144A to avoid SEC registration and so only qualified institutional buyers could purchase them. Now after a few groundbreaking deals, the investor base for this product is set to grow rapidly. At the beginning of 2010, there were zero US dollar-covered bonds outstanding, but today the figure is $80 to $90 billion with $100 billion expected by year's end as the product becomes more widely accepted among US regulators and investors and European banks seek to diversify their funding base.

The first half of 2012 has also seen a range of work related to CLO securities at a fast clip driven in part by their continued popularity with JPMorgan Chase and big insurers. These products performed well compared to asset-backed CDOs in the darkest days of the global meltdown, offering tranches and a generally risk-averse capital structure, lacking a requirement to put up cash for a valuation margin, and trading at 60 cents on the dollar even in poor bank markets.

Another noticeable feature of 2012 has been the re-emergence of securitisation as the functional equivalent of a secured loan. A company will take advantage of a long-term supply contract to securitise the credit rating and/or reputation of the bigger and more stable counterparty, marking the return of a method of borrowing that was widespread in Latin America some 15 years ago. Moreover, through 2011 and continuing well into 2012 we have seen a gradual increase in CMBS. This increase cannot be considered a spike but rather an incremental change. The auto sector is also robust on the prime and subprime side. With the average age of vehicles on the road estimated at 11 years, strong auto sales can confidently be expected to drive rates of securitisation next year and beyond.

Generally, the appetite of investors for smaller and more esoteric asset types is on the rise, including work in areas like film and lottery revenue financing.

MAJOR LATERAL HIRES

Michael Philipp
From: Winston & Strawn
To: Morgan Lewis & Bockius

Larry Abrams
From: RBS
To: Morrison & Foerster

Brad Berman
From: Sullivan & Cromwell
To: Morrison & Foerster

James Schwartz
From: AIG Financial Products
To: Morrison & Foerster

CONTEXT AND TRENDSIn recent years, all major financial law firms have had to devote increased resources to help banks, investment banks, corporations, exchanges, fund managers and advisors and investors understand and adapt to the most significant changes to US financial regulations since the 1930s. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by US President Barack Obama on July 21 2010, is a sweeping but, at best, half-understood federal statute....

CONTEXT AND TRENDS

In recent years, all major financial law firms have had to devote increased resources to help banks, investment banks, corporations, exchanges, fund managers and advisors and investors understand and adapt to the most significant changes to US financial regulations since the 1930s. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by US President Barack Obama on July 21 2010, is a sweeping but, at best, half-understood federal statute. In the name of staving off conditions that lead to financial meltdown, the act established the Financial Stability Oversight Council and the Office of Financial Research. Banks that represent an unacceptable risk in the eyes of regulators – in other words, those that come to resemble Lehman Brothers in 2008–may be subject to liquidation by the Federal Deposit Insurance Corporation (FDIC). A provision of the act, known as the Volcker Rule, expressly forbids banks to engage in proprietary trading, without providing a useful definition of the phrase. As one senior partner at a white-shoe law firm lamented in a discussion with IFLR, it is easy enough for to a bank to abolish its proprietary trading desk when the operation is clearly so labelled, as was the case at Goldman Sachs, but the complexity of investment strategies throughout the financial world makes ending proprietary trading in the abstract almost inconceivable.

In the context of Dodd-Frank, the summer of 2012 contained a milestone for international banks with US operations. By July 1, the banks had to submit to federal regulators their living wills, which are documents typically running from 2,000 to 3,000 pages, breaking down in elaborate detail a bank's operations, its assets, reserves, and overall liquidity, and what would happen if the bank went into crisis mode. A living will must reconcile the different laws and protocols of multiple international jurisdictions and must satisfy the regulators that the bank does not pose an unacceptable risk to the stability of the global financial system. It also contains provisions for an emergency federal takeover of the bank. While the practicality of the living will as a document can be questioned there is no doubt that is a significant undertaking.

Beyond these rules, the Dodd-Frank Act also requires extensive regulation of OTC derivatives dealers and forces such products into a clearing framework. Regulators are moving aggressively ahead on this point. On July 24 2012, the CFTC (Commodities Futures Trading Commission) came out with a schedule for compliance with mandatory clearing requirements for swaps as set forth in Title VII of Dodd-Frank. Documentation between dealers and customers must correctly represent what kind of dealer is involved and what types of swaps are being performed. The frustration of dealers and customers in the derivatives space compares with that of investment fund managers hit with undreamed-of form ADV registration requirements.

On the enforcement side, there is always more than enough shady activity to keep white-collar criminal lawyers busy, with or without Dodd-Frank. But cases with hedge funds at their centre are particularly common now that Dodd-Frank has made commodities trading laws applicable to insider trading by modifying the Commodities Exchange Act to include a provision resembling SEC Rule 10b5. Federal prosecutors are bolder and more willing to chase down hedge fund managers and advisors, which is one factor driving the financial law firms to hire not only regulators but former federal prosecutors in large numbers. To give some recent examples, Cadwalader Wickersham & Taft added Kenneth L Wainstein, former general counsel at the Federal Bureau of Investigation, as a partner in its Washington office in March 2012. Davis Polk & Wardwell lured Kim Harris, a former senior counsel in the Department of Justice's Criminal Division, to its New York office last May, after re-hiring former federal prosecutor Greg Andres as a member of its New York litigation team in February.

Even as certain types of litigation and prosecution rise sharply, some companies engaging in mergers and acquisitions are building the costs of settling lawsuits out of court into the economics of their deals. They would rather settle, pay off the lawyers and make cases go away than divert time and resources for years to come settling the lawsuits that follow an acquisition whose target company shareholders inevitably disagree with the valuations written into the deal.

MAJOR LATERAL HIRES

Kenneth Wainstein
From: O'Melveny & Myers
To: Cadwalader Wickersham & Taft

Michael Krimminger
From: Federal Deposit Insurance Corporation
To: Cleary Gottlieb Steen & Hamilton

Kim Harris
From: Department of Justice
To: Davis Polk & Wardwell

Nathan Muyskens
From: Shook Hardy & Bacon
To: Loeb & Loeb

Bradley Wine
From: Dickstein Shapiro
To: Morrison & Foerster

Christopher Garcia
From: US Attorney's Office
To: Weil Gotshal & Manges

CONTEXT AND TRENDS Although the Dodd-Frank Act is undoubtedly having an effect on the investment funds space, firms have generally managed to keep their practices buoyant with new fund formation work in addition to the inevitable regulatory consultancy advice sought by clients. This fact attests to the vibrancy of the investment fund markets in 2011 and especially in 2012, marked by resurging investor confidence....

CONTEXT AND TRENDS

Although the Dodd-Frank Act is undoubtedly having an effect on the investment funds space, firms have generally managed to keep their practices buoyant with new fund formation work in addition to the inevitable regulatory consultancy advice sought by clients. This fact attests to the vibrancy of the investment fund markets in 2011 and especially in 2012, marked by resurging investor confidence.

In the years following the financial crash of 2008, many hedge funds had pushed their investment strategies to the limit and with many investors likewise feeling overexposed to alternative investment generally, funds faced a credit contraction. Paying out redemption proceeds could be as hard as finding capital to launch new funds. Nowadays, investors are happily taking advantage of liquid strategies, allowing them to assess on a quarterly or monthly basis whether to continue investing their publicly traded securities in a given fund. Interest in quantitative fund strategies, which purportedly offer more transparency to investors, is on the rise. For some investors, the bottom line is that fund managers must register with the SEC and may be less likely to engage in shenanigans with the regulators looking over them.

Although we are in the midst of a surge in private equity fund formation, the process takes longer than ever before as investors negotiate each and every point, striving to gain oversight of the workings of funds and to push down management fees and performance allocations from the old '2 and 20' model to 1.5% and 17%. Investors demand more frequent and detailed risk reporting and direct feeds to third-party risk aggregators. Nevertheless the surge continues, particularly in real estate fund formation and in the launch of single-strategy, non-household-name funds, which have no scandals or failures scarring their reputation.

Funds with a focus on emerging markets are also hot this year, as evidenced by Debevoise & Plimpton's work on the $1 billion Carlyle South America Buyout Fund, Cleary Gottlieb Steen & Hamilton's work for TPG Capital in China and for Helios Investors II, which held its final close in June 2012 with over $900 million in commitments and Weil's work on Credit Suisse's investment in Victoria Capital Partners II, a buyout fund specialising in investments in South American firms.

When all is said and done, the changed regulations inevitably do demand a considerable amount of expertise concerning fund registration and they do keep lawyers in this area busy. Examples include the CFTC's decision to revoke the 413A4 exemption for funds managed as a BC7 fund limited to qualified purchasers. Without the exemption, thousands of people involved with funds engaging in unlimited futures and commodities trading must now register as a trading advisors or commodity operators. The requirement that the aggregate margin for futures positions must not exceed 5% of a fund's net asset value now applies not only to Exchange Traded Funds, but to a variety of OTC swaps and products.

At the same time, the JOBS Act has lifted longstanding limitations on the public communication of offerings or private funds – though in the absence of something close to a standard, shared definition of "public communication," the limitations for the time being are still for practical purposes in effect.

While the new compliance burdens are unlikely to stem the tide of fund formation, they provide fund managers and advisors with compelling reasons to seek out the most knowledgeable and experienced counsel to ensure that compliance is being achieved.

MAJOR LATERAL HIRES

Kelli Moll
From: Schulte Roth & Zabel
To: Akin Gump Strauss Hauer & Feld

Daniel Lavon-Krein
From: Simpson Thacher & Bartlett
To: Kirkland & Ellis

Udi Grofman
From: Schulte Roth & Zabel
To: Paul Weiss Rifkind Wharton & Garrison

Timothy Clark
From: Covington & Burling
To: Sidley Austin

CONTEXT AND TRENDSThe playing field for M&A; in 2012 is a vast one with law firms of all sizes present. Our first tier features firms that continue to demonstrate a commitment and ability to execute every kind of deal, using resourcefulness and innovation when necessary....

CONTEXT AND TRENDS

The playing field for M&A; in 2012 is a vast one with law firms of all sizes present. Our first tier features firms that continue to demonstrate a commitment and ability to execute every kind of deal, using resourcefulness and innovation when necessary. Weil Gotshal joins this grouping this year following a strong 12 months in the transactional space.

Transformative deals aside, some firms stand out for their handling of the type of deal that drives much of M&A;, namely work in the $500 million to $5 billion range; hence the addition of Gibson Dunn & Crutcher, Morrison & Foerster, and Paul Hastings Janofsky & Walker to the rankings this year.

It's fair to say that the M&A; market is still driven by what could be defined as the mid-market. Private equity firms with excellent credit are the drivers behind many of these technology, energy or life science-related transactions, taking advantage of the availability of covenant packages and of debt financing generally.

Another factor driving M&A; is the increasing popularity of ABS and other types of securitisations as a financing mechanism for acquisitions. (See for example Santander Consumer USA's $4.3 billion acquisition of HSBC's subprime auto loan division.) As in the restructuring space, those firms that have some structured finance expertise are likely to gain a competitive edge in M&A;, at least in the financing.

The importance of a strong financial services regulatory practice is also growing, as the US Federal Reserve subjects M&A; transactions to a degree of scrutiny without precedent in US history. In an effort to flesh out all the issues and consequences involved in a merger, the Fed is holding unprecedented numbers of public hearings, requiring extensive revision and re-submission of transaction documents and generally delaying mergers to a heretofore unknown extent. This is not to say that M&A; teams without experience in the regulatory agencies cannot engineer major deals, but the success of those that have such experience is no coincidence.

If the role of regulators is changing, so too is the role of lawyers advising corporate clients faced with unsolicited takeover bids. Some attorneys are advising clients not to resist reflexively any unsolicited bid, but to look at whether they might better serve the interests of shareholders by reaching a compromise, removing the need for poison pills, which are fading from the scene in any event as their average duration slips from ten years to two or three. With low interest rates, the capital is in place for acquisitions and activist shareholders are grouping together to look for companies whose share price is depressed and whose boardrooms might hold out the prospect of a seat or two.

MAJOR LATERAL HIRES

Stacey Anne Mahoney
From: Gibson Dunn & Crutcher
To: Bingham McCutchen

John Gaffney
From: Solyndra (in-house)
To: Gibson Dunn & Crutcher

Jonathan Melmed
From: Chadbourne & Parke
To: Morrison & Foerster

CONTEXT AND TRENDSThe firms that top our private equity transactional rankings are those that are plugged in, so to speak. Firms attuned to what's happening in the markets are hiring new partners and associates to take advantage of an expanding stream of opportunities....

CONTEXT AND TRENDS

The firms that top our private equity transactional rankings are those that are plugged in, so to speak. Firms attuned to what's happening in the markets are hiring new partners and associates to take advantage of an expanding stream of opportunities. As financial markets open up and at least the appearance of stability returns, we are in the midst of an uptick in LBOs and joint ventures. More and more public deals are structured as "dual track," with private equity firms making use of a tender offer for the sake of speed and certainty.

Law firms with private equity practices are also looking far afield to opportunities in Beijing and Dubai, but at the same time are not ignoring possibilities in Europe where an ageing population means lots of opportunities in the health care and pharmaceuticals sectors. Bain's Global Private Equity Report describes an additional factor that may drive private equity transactions in coming months: sovereign wealth funds, which have roughly $4.7 trillion in capital at their disposal globally, draw continuous revenue from sales in the oil-rich regions of the world and have flexibility as private equity investors.

Oil and gas is where much of the action is, propelling deals like KKR, Natural Gas Partners, Crestview Partners, and Itochu Corporation's $7.2 billion acquisition of exploration and production firm Samson Investment Company. In addition the tech sector continues to drive major cross-border deals such as iGate's $1.2 billion acquisition of a majority of the shares of Patni Computer Systems.

MAJOR LATERAL HIRES

Ilan Nissan
From: Dewey & LeBoeuf
To: Goodwin Procter

Christian Nugent
From: Dewey & LeBoeuf
To: Goodwin Procter

Kamran Bajwa
From: EFG-Hermes
To: Kirkland & Ellis

CONTEXT AND TRENDS In the last few years the majority of the top firms in the market have become focused on the booming energy and renewable energy sectors in the US. There are plenty of opportunities to be had: The BP disaster in the US Gulf Coast states beginning in April 2010 and the nuclear catastrophe in Fukushima, Japan, in March 2011, have highlighted the desirability of alternative forms of energy and law firms large and small have jumped into the breach to help corporate clients obtain financing for wind and solar projects throughout a broad geographical swath of the US....

CONTEXT AND TRENDS

In the last few years the majority of the top firms in the market have become focused on the booming energy and renewable energy sectors in the US. There are plenty of opportunities to be had: The BP disaster in the US Gulf Coast states beginning in April 2010 and the nuclear catastrophe in Fukushima, Japan, in March 2011, have highlighted the desirability of alternative forms of energy and law firms large and small have jumped into the breach to help corporate clients obtain financing for wind and solar projects throughout a broad geographical swath of the US.

As European firms see opportunities in their local markets begin to stabilise, they increasingly look to US energy sector projects, in the spirit of Spanish firm NaturEner, which has gotten involved in the Rim Rock wind farms of Montana.

Fracking is another area of interest and is gaining traction in states like Pennsylvania and areas not served by pipelines. State governments with limited funds are looking to banks and private investors to finance the transportation and storage of natural gas.

Whatever type of project today's financiers may be involved in, they are in a better position to obtain financing in 2012 than in past years thanks partly to the resurgence of project bonds. The market for such bonds was exceptionally strong in the 1990s, the decade that saw the birth of many project finance practices at corporate law firms, before losing its position of eminence to the bank market. Nowadays, with stricter requirements for banks' credit reserves and liquidity as Basel III stands poised to take effect, the banks are, understandably, more conservative and are inclined to demand at least 50% equity on a financing deal. Those seeking support for projects are instead turning to export credit agencies, to trade insurers and to investors looking to diversify their balance sheets and the preferred market in which to obtain financing is the project bond market, where a typical loan term is 15 to 18 years, a range that fits nicely with the long-term character of tunnels, toll roads, reservoirs, dams, bridges, and other infrastructure projects.

US based law firms are also extending their reach and helping with financing arrangements for hundreds of projects in Colombia, Brazil, Peru and other countries with developing infrastructure.

MAJOR LATERAL HIRES

Paul Kaufman
From: EDF/enXco
To: Chadbourne & Parke

Evelyn Lim
From: Element Power
To: Chadbourne & Parke

Ayaz Shaikh
From: Pillsbury Winthrop Shaw Pittman
To: Sidley Austin

Cliff Vrielink
From: Vinson & Elkins
To: Sidley Austin

CONTEXT AND TRENDS Some restructuring and insolvency practices are focused on relatively straightforward re-organisations and Chapter 11s, while others employ novel structured finance schemes to allay the massive, multilayered debt plaguing a failed bank or corporation. A theme of 2012 saw drawn-out 18-month reorganisations passing into the dustbin of history as the trend increases for stress lenders to step in and push a case forward through a liquidation proceeding or a fire sale....

CONTEXT AND TRENDS

Some restructuring and insolvency practices are focused on relatively straightforward re-organisations and Chapter 11s, while others employ novel structured finance schemes to allay the massive, multilayered debt plaguing a failed bank or corporation.

A theme of 2012 saw drawn-out 18-month reorganisations passing into the dustbin of history as the trend increases for stress lenders to step in and push a case forward through a liquidation proceeding or a fire sale. Secured creditors increasingly recognise that no amount of restructuring and re-financing will turn around a business with an uncompetitive model at its core – hence the speed with which GE Capital placed Borders into debtors' possession after a nominal $600 million loan. But if one is really to understand why restructurings follow such a radically different model from past years, one must look at changes to the Bankruptcy Code enacted by Congress in 2005 which set an 18-month limitation on exclusivity, increased the requirements for deposits and administrative claims, and all but eliminated banks' appetite to lend to retailers who wanted to re-organise.

Now the providers of capital are less likely to be in the banking sector and more likely to be emerging from the so-called 'shadow banking sector': hedge fund and private equity funds looking to do business on a "real time," internet-driven basis, with no patience for the lending-long paradigm of banks. For an example of a firm in the investment fund space attempting to set the agenda for a restructuring, one need look no further than hedge fund manager Paul Singer's urging Treasury Secretary Timothy Geithner early in 2012 to take advantage of the government's commanding share in serial mortgage lender ResCap's parent company Ally Financial to avert a ResCap bankruptcy.

Some firms may find themselves taking a dual approach that acknowledges the possibility of a Chapter 11 filing while exploring every possibility to avoid that outcome. One example is Kodak's last-ditch effort to explore strategies to raise cash, while preparing for a likely bankruptcy. The Kodak example is widely applicable on some levels, but unusual on others, particularly with regard to the company's vast IP portfolio which was available for auctioning.

Another trend is the increased use of the threat, if not the actuality, of a "pre-pack" where lawyers will inform creditors that they are prepared to oversee a restructuring on a specific set of terms, the alternative being Chapter 11. In the restructuring of sandwich chain franchisor Quiznos, completed in January 2012, a group of lenders led by hedge fund Avenue Capital Group consented to the conversion of $225 million of second-lien debt and to the hedge fund's granting of $150 million in new equity capital. Here is a major restructuring where the use of a pre-pack, without its actual implementation, obtained 100% consent from the creditors for the necessary arrangements in an out-of-court settlement.

MAJOR LATERAL HIRES

Jeffrey Krause
From: Stutman Treister & Glatt
To: Gibson Dunn & Crutcher