Restructuring & Insolvency
Carrying on with the subject of Restructuring and Insolvency, Lawyer Monthly speaks to Chad Griffin, Senior Managing Director and Simon Kirkhope, Managing Director at FTI Consulting.
The restructuring and insolvency market has evolved radically over the last few years. How have you seen the market change recently in your jurisdiction?
- Looking back to the start of the global financial crisis, an extension of existing facilities was a common restructuring solution.
- In our view this option is now becoming less attractive for both banks and their borrowers. Banks are under pressure to de-leverage and capital constraints mean that they often need to consider a debt sale alongside the restructuring options available. Furthermore, as the economy turns, borrowers are increasingly looking for capital structures which provide new money and sufficient flexibility to fund growth and investment.
- The high yield bond market continues to remain active and companies are seeking to take advantage of this where they can as an alternative to traditional bank financing.
- Continuing balance sheet pressures often mean that traditional lenders no longer have the risk appetite to finance companies which are stressed or distressed – instead hedge funds and alternative investors are an increasing source of capital in restructuring situations. With fresh capital to deploy to fund restructurings this can often be to the ultimate benefit of the company – simplifying existing capital structures, de-levering and providing new money to fund working capital, cost reduction and investment.