Distress work
After the storm has passed, the clean up begins – and it has been largely Sydney lawyers who are wielding the broom. Babcock & Brown, Allco, Macquarie and Challenger are just some examples of institutions that have generated restructuring or insolvency work in Sydney.
However, Sharon Cook does not agree that insolvency and restructuring work necessarily has an inherent Sydney bias, pointing to Octaviar and ABC Learning as two examples of matters which had a strong Brisbane component. “A lot of the work is done out of Sydney, but I think clients are attracted to the expertise rather than the location of a firm,” she says.
Restructuring can take many forms – for example, negotiating with banks and selling off assets and management rights and also fixing legacy issues for the buyers of those assets. CP&S, for example, has acted for Babcock & Brown on its disengagement from its power, infrastructure and real estate satellites and has acted for HNA Group in its acquisition of the Allco aviation business and is now advising on the legacy issues associated with the purchase of that business.
“Allco proved to be a difficult receivership because it was a highly financially structured business – it was difficult to work out what assets were actually saleable. It was difficult for the receivers as well as the buyers,” says Danny Simmons. He also commented on how the legal work on distressed disposals has evolved: “When I first started out, distressed disposals were typically done by insolvency lawyers – there’s now a trend towards that work being done by corporate and M&A lawyers.”
Whether or not the present round of insolvencies and distress will be capped off by extended litigation remains to be seen. Sharon Cook says that this kind of work has a long tail and there could conceivably be “at least a couple of years” left to run. Still, Henry Davis York is anxious not to put all of its eggs in the counter-cyclical basket and has taken the uncharacteristic step of making lateral partner hires in the public sector, environmental planning and IP spaces
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