Restructuring/Corporate Rescue

This subchapter deals with firms where crisis-related legal advice is covered in depth or is relevant to the market due to the size and complexity of cases. Activities arising as secondary work to insolvency administration or surrounding the acquisition of companies are touched upon; more information can be found in M&A. Advisory specialties vary considerably; restructuring is taken to mean predominantly financial advice, while corporate rescue also includes a corporate law approach.

Developments

The expectation of some observers towards the end of 2007 that the number of restructuring cases would explode as a result of the US subprime crisis had not proven justified by summer 2008. Most complex finance structures seem to still be intact and investors have kept companies in crisis afloat by additional cash injections. But large-scale restructuring cases of past years can also land back in crisis if they do not meet turnover and revenue targets. Crisis-ridden companies from the Mittelstand upwards can scarcely still be rescued without the involvement of international creditors. To the same extent, the importance of financial instruments is growing. These were viewed very defensively by a long list of German insolvency experts until just recently.

The market

In the wake of the high-profile restructurings of the past few years, such as Schefenacker (renamed Visiocorp) or Schieder-Möbel, this reporting period has not seen cases on a similar scale. Although the billion-euro crises afflicting a number of public banks provided Linklaters and Freshfields Bruckhaus Deringer with much work, this tended to go to the finance and banking lawyers, supported by their insolvency colleagues when it came to specialist matters.

Only a few firms have increased their manpower. With partner appointments at Latham & Watkins and Linklaters, however, two other international firms have underscored the importance of restructuring advice. Signals such as this demonstrate the strategic relevance that large international firms attach to insolvency – more than a few firms also use it as an acquisition instrument. Interdisciplinary cooperation is important: as a rule, corporate rescue and insolvency experts are not like a state within a state which can also work self-sufficiently at a pinch – although the picture is somewhat different at CMS Hasche Sigle and White & Case, which already have a separate practice with insolvency administrators. Most restructuring issues can only be resolved with tax, employment, finance and capital markets lawyers working together. This does not make insolvency lawyers any less important, but it highlights the limits as far as isolated activity is concerned. Those large firms that create interdisciplinary corporate rescue concepts are at a competitive advantage.