Notable Restructuring Deals in 2021
As you can imagine, restructuring deal flow was quite subdued in 2021 relative to 2020. However, that doesn't mean that restructuring bankers have been twiddling their thumbs for the past year (although, to be fair, hours have certainly returned to a more normalized level).
One important thing to keep in mind is the distinction between when mandates are announced - and reported on in the press, etc. - and when deals actually get done.
For example, LATAM Airlines was the second biggest Chapter 11 filing in 2020. It was a classic pandemic-related case; an over-levered airline that was already in a relatively precarious situation beforehand. However, given LATAM's organizational complexity, sprawling capital structure, lack of concentration among key creditors, etc. it dragged on and the Plan of Reorganization (PoR) didn't end up getting announced until November 26th of 2021 (which is actually relatively speedy for such a complex free fall Chapter 11).
So, even when new mandates are harder to come by, it doesn't mean that there's not still plenty to do on some pre-existing mandates. Rest assured that there were some poor analysts and associates at PJT - the debtor-side advisor on LATAM - who were kept frustratingly pre-occupied throughout 2021 on LATAM.
Note: For interview purposes, it's entirely acceptable to talk about a deal so long as the consummation of the deal (closing of the out-of-court transaction or exit from Chapter 11) occurred in the past six to twelve months or so. So, you could certainly talk about LATAM in interviews at PJT (because they were debtor-side) or at Evercore (because they advised a critical ad hoc block of creditors). However, I always recommend trying to steer clear of complex free falls that drag on for over a year given the amount of twists and turns that occur during the process.
With all that being said, in this post I'm going to briefly go over a few deals that you could dig into a little more and talk about during restructuring interviews. What I've tried to do is pick some deals that are notable, timely, not overly complex, and that had banks on the debtor- and creditor-side (so you can use one deal through multiple interview processes and save yourself some time).
Restructuring Deals (2021)
Below are some notable restructuring deals for some of the larger restructuring shops that have occurred recently. Of course, each bank mentioned has advised on many more deals in 2020 and 2021 than what I'll briefly go through below -- these are just some deals that are notable, interesting, and would be good to learn more about for interview purposes.
As you'd expect, PJT picked up a number of the largest and thorniest debtor-side mandates during 2020. The two most prominent would be LATAM Airlines, which filed their PoR in November of 2021, and Intelsat which had their PoR confirmed in December of 2021.
While LATAM is a bit too thorny to talk about in an interview, Intelsat is a bit more straightforward (plus it's a very notable deal).
It's certainly important to know that PJT had some of the largest mandates of 2020, but it'll be a bit easier to talk about some of their creditor-side mandates from 2021.
For example, PJT advised an ad hoc group of creditors on the Washington Prime Group deal (they filed in June of 2021 and confirmed their PoR in October of 2021). As you'll see throughout this post, WPG isn't a bad deal to talk about in interviews because quite a few other banks were in the mix as well.
PJT also advised a crossover lender group in Belk, who did a pre-pack Chapter 11 in early 2021 and notably got in and out of Chapter 11 in a day. Belk is a great deal to talk about because it's a pre-pack, so you just need to read the Restructuring Support Agreement to see what's going on. This allows you to avoid having to worry about what battles occurred through the Chapter 11 process. Instead you can just walk through what everyone agreed to pre-filing (what classes of debt existed, who was impaired, what their recovery values are, etc).
Further, Belk demonstrates one of the core themes of restructuring over the past few years: pre-packs occurring more frequently and the amount of time pre-packs are taking to finalize in-court lessening. Like with WPG, Belk also has the benefit of having quite a few other banks involved as well.
As is almost invariably the case, when notable restructuring deals occur you'll tend to find the same mix of banks advising different groups.
So, in LATAM Airlines, Evercore was creditor-side and advised the Parent Ad Hoc Group - led by Sixth Street, Strategic Value Partners Global, and Sculptor Capital - which would have been a very time intensive mandate (much more than most creditor-side mandates).
Note: Just as a note, apropos of nothing, whenever you see Apollo in the mix as a creditor you'll often see them hiring PJT (if they hire bankers at all). Likewise, when you see SVP Global in the mix as a creditor you'll often see them hiring Evercore.
In 2021, Evercore was also creditor-side (along with PJT) in the Washington Prime Group case. Evercore solely advised SVP Global (who did incredibly well off of the WPG deal and put up great returns in 2021). Likewise, in Belk Evercore advised an ad hoc 1L group.
Just as a point of reference, Evercore also advised on two of the largest and most complicated Chapter 11s of 2020: Diamond Offshore Drilling and Frontier Communications. Neither of which I'd probably advise talking about in an interview, but it's worth being aware of their involvement (I wouldn't recommend talking about these in interviews because Diamond is quite complex from an organizational and capital structure perspective, and Frontier has an absurd amount of regulatory nuance to it).
Houlihan has been debtor-side on some of the most notable deals of 2021 in terms of overall press coverage.
They advised Seadrill - one of the largest Chapter 11s of 2021 in terms of size - which filed in February and had its PoR confirmed in October.
Further, Houlihan got engaged by Evergrande, which is probably the restructuring transaction that has received the most media attention in 2021 (Moelis is advising a creditor group). In a prior post I covered the dynamics surrounding restructuring offshore bonds, which is at the heart of Evergrande's restructuring (and the restructurings of all the other troubled China property developers).
As per usual, HL has also had a large number of creditor-side engagement. But keep in mind that not all creditor-side engagements are the same. For example, HL had a creditor-side mandate on LATAM, but this just involved advising Knighthead on a DIP proposal (which ultimately resulted in an in-court tussle and created a bit of a mess).
More recently, in November of 2021, Houlihan was debtor-side on CWT's pre-pack Chapter 11 (Evercore and Rothschild advised different groups of creditors on it).
Lazard was the debtor-side advisor on Belk's pre-pack. So, if you wanted to talk about Belk you could do so for Lazard, PJT, and Evercore. This is also a deal folks at Lazard would love talking about given that Belk was able to get in and out of court in a day (with a lot of wrangling beforehand to get an agreement with creditors put in place, of course).
Lazard also worked on a classic out-of-court solution for Peabody around a year ago (Lazard has worked closely with Peabody for years on their various restructurings).
Like every restructuring shop, Lazard also got some notable mandates in 2020 that dragged on into 2021. For example, they advised Valaris which was one of the largest Chapter 11 filings of 2020 (HL advised a creditor group). They also were creditor-side on Garrett Motion (advising the Unsecured Creditors Committee).
It's certainly true that 2021 was a quieter year in the world of restructuring. However, that's largely a reflection of how many deals were pulled forward into 2020 when the pandemic began, and how many deals were pushed back due to the incredibly hot credit markets that existed in late-2020 and throughout 2021 (the hot credit markets allowed many relatively unhealthy companies to extend out maturities and kick the can down the road for at least another year).
What we've gone over in this post are just a smattering of interesting deals at a few restructuring shops. Of course, I've left out a large number of deals and many shops in the process. For example, TRS Advisors (recently acquired by Piper Sandler) advising GTT on their pre-pack, Guggenheim advising on the debtor-side of WPG and advising creditors on Intelsat, Moelis advising CBL & Associates (which was a 2020 filing that just exited Chapter 11 in early-November), etc.
Remember that being asked to walk through a deal is just one of the questions you'll face in a restructuring interview. It's definitely an important question to have a good answer for, but don't get too in the weeds reading up on deals to the detriment of practicing classic restructuring interview questions. Also, if you haven't yet read the very long restructuring investment banking post - where I briefly go through the restructuring of Neiman Marcus and talk about various forms of restructuring solutions - it will likely help you when reading up on deals.
This year - if I can find the time - I'll try to put out more in-depth case studies on a few recent deals that have interesting features (like I did for the case of Serta and the rise of non-pro-rata uptiers, which is contained in the members area).