Bankruptcy and Restructuring Trends: Further Insights on 2009 - 2010

Other trends we're seeing in bankruptcy and restructuring aren't just about numbers and deals but the people who are working on them.

31 July 2009

Earlier this week, we announced the bankruptcy and restructuring trends we're seeing here at Intralinks in the first half of 2009. The numbers show a huge surge in overall bankruptcy and restructuring engagements over the same period last year. This may seem like a natural extension of the growing number of bankruptcies observed earlier this year, but the story behind the new data sheds light on both the current situation and what we may be able to expect in the rest of 2009-2010.

From my unique perspective at Intralinks - which was used in more than 70% of the top restructuring situations in the first half of 2009 - and based on conversations with our diverse group of clients, we'll likely see a decrease in the number of bankruptcy filings in the end of 2009 and into 2010 as equity and debt markets stabilize. But don't think for a second this means reduced activity: The true restructuring process goes on far beyond the initial bankruptcy filing (and beyond the "exit"). That said, a large number of businesses that filed in the last quarter plus will be executing on the details of their plans throughout this year and beyond as they transform and revive their businesses.

Speaking of bankruptcy filings, there's been a lot of talk in the press and on many blogs about the auto industry. The question on many people's minds: "Have these situations changed the face of bankruptcy as we know it?" Yes and no. I am not going to comment on the legal, economic, and political implications and ramifications, but I can say these situations (and others we have seen as a solution provider) certainly set a precedent around preparation and coordination. As before, the process pre- and post-filing - involving huge volumes of documents - and the ongoing execution of reorganizations takes significant dedication, time and resources to "right the ship."

Other trends we're seeing in bankruptcy and restructuring aren't just about numbers and deals but the people who are working on them. We are seeing advisors (like law firms, crisis management firms and investment banks) stepping to the forefront, more actively organizing and managing coordination efforts on behalf of their clients-setting the proper tone for communications much earlier on. Critical information needed during these engagements is being controlled and shared more effectively and these focused processes are typically less stressful and more successful in achieving the objective of key stakeholders involved. Additionally, there have been some recent announcements of restructuring firms starting up like CoreView Advisors and other firms increasing their groups - applying unique perspectives, varied experiences and especially lessons learned in the current environment.

We'll continue to look at trends in bankruptcy and restructuring on a quarterly basis. Meantime, keep your eyes out for details from the Intralinks Deal Flow Indicator, which provides perspective on M&A related transactions and deal flow trends in the market.

For more background information, check out my original blog on Bankruptcy & Restructuring.