What does this practice area consist of?
Restructuring is a type of corporate action taken that involves significantly modifying the debt, operations, or structure of a company as a way of limiting financial harm. The Covid-19 crisis has given way to a huge wave of work for restructuring lawyers. Insolvency is defined as the period where a person or business is unable to pay its debts.
Understandably, this work typically runs on a counter-cyclical basis. Before a company or individual gets involved in insolvency proceedings, they will probably be involved in a restructuring arrangement with creditors.
Insolvency and restructuring proceedings typically involve two parties: the debtor and the creditor. A debtor is a party that owes money, while a creditor is a party that extends credit to a debtor, on the condition that this is paid back.
Insolvency and restructuring can be split into contentious and non-contentious work, with the roles of lawyers varying based on whether they represent the debtors or creditors in a transaction.
What are the tasks of lawyers on these transactions?
Due to the different tasks on each side of the transaction, this section shall be split into two parts. Importantly enough, lawyers should be expected to keep on top of any developments within the insolvency sphere and have keen economic minds.
Debtors’ lawyers can be expected to:
- Highlight the options available for a company, so that they can advise on a course of action.
- Advise an insolvent company in the reorganisation of its finances, to assist with restructuring.
- Work with administrators and accountants to achieve the insolvent company’s goals.
- Explain the company’s duties to creditors to the director of an insolvent company.
- Advice on distressed M&A.
- Assist clients in insolvency litigation.
Creditors’ lawyers can be expected to:
- Assess the validity of a creditor’s security over an insolvent company.
- Negotiate with debtors and administrators.
- Represent their clients in litigation.
- Assist in the valuation of a debtor’s assets.
- Provide training to clients regarding dealing with insolvent companies.
What are the realities of the job?
- As expected with big-ticket law, hours can be expected to get excruciatingly long when proceedings heat up. Though, when a proceeding is finalised, the emotional payoff may be euphoric.
- To ensure a company does not “perish on the operating table”, the rapid deployment of a legal team is required, with lawyers often asked to deliver answers and documents overnight.
- Documents will eventually become mountains of paperwork. Though this is true for a legal career, organisational skill is of the utmost importance, as is strong attention to detail.
- City firms almost exclusively deal with large-scale proceedings. If the idea of aiding a household name in continuing to be profitable is intriguing, a seat in restructuring and insolvency may be ideal.
- The area is incredibly varied, consisting of a mix between employment, banking, property, corporate, and litigation work. Though, lawyers may eventually find themselves needing to refer to a specialist in one of these areas. Knowing when to refer these matters to specialists is a skill.
- Lawyers must be able to hold their ground, to show they are not intimidated by difficult parties in a tense situation.
Ten firms with a noted presence in this area:
- Akin Gump
- Clifford Chance
- Freshfields Bruckhaus Deringer
- Hogan Lovells
- Kirkland & Ellis
- Latham & Watkins
- Linklaters
- Milbank
- Weil
- White & Case
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