In today’s world, the ability to move money around the globe with relative ease, combined with increasing competition among investors who require double-digit returns, has made Europe—and more specifically, Germany—an attractive venue for purchasing assets. Due to Germany’s large industrial base, many buyers—in particular, private equity firms—often look in Germany for add-ons to their existing portfolio companies in the U.S. or simply for new investment opportunities.

Germany is Europe's largest economy and for many years has been stable, both in economic and political terms. To...

The past few years have brought a number of large rights offerings in bankruptcies in the energy, healthcare, and retail sectors. Between January 1, 2015, and December 1, 2017, more than $5.5 billion was raised through rights offerings or private placements in more than two dozen large bankruptcy cases. 

In 2017 alone, seven companies raised $300 million or more through rights offerings. The largest offering was completed by Peabody Energy Corporation, with the company 
raising $1.5 billion through a
 $750 million rights offering of common stock and a $750 million private placement...

The distressed investor considers investing in securities of companies that are either in bankruptcy or are approaching bankruptcy. Typically, these companies have outstanding claims greater than the value of the assets and are experiencing difficulty in servicing their debt. There is a real possibility that the company will be liquidated or will be reorganized as a going concern.

The investor may be looking to acquire distressed debt or other securities in the hope that these securities will either increase in value following a liquidation or reorganization, or convert to equity...

In the robust financing environment of 2017, commercial bankruptcies leveled off from credit-crisis highs. Through the first three quarters of 2017, commercial bankruptcies totaled 17,371, a significant decline from the 2009 peak year, when 45,510 commercial bankruptcies were filed in the first three quarters of the year.1 As commodity markets have risen significantly from January 2016 lows, the energy and production cycle has come to a halt. But not all sectors have been so lucky. Despite increases in consumer spending since the recession, brick-and-mortar retailers, in...

Corporate distress is rarely a surprise to participants in the capital structure, and it usually rears its ugly head over a series of unfortunate events. Customer losses, an unfavorable shift in industry dynamics, delayed G&A cuts, covenant breaches, and dwindling liquidity are just a small subset of the many adverse outcomes that can lead a company to a rocky landing at the gates of the zone of insolvency.

In this zone are found frustrated vendors, nervous management teams, impaired lenders, fatigued equity investors, and anxiety-ridden employees jostling for the dwindling...

The law surrounding distressed acquisitions has been evolving rapidly for the past decade. The loan-to-own strategy, in which a would-be buyer purchases existing debt at a discount as a tool to achieve ownership of the target company, has been one of the favored strategies of value investors. During the same period, it has been the subject of significant scrutiny. 

In the past several years, a number of issues regarding loan-to-own strategies have been resolved by the courts, and new decisions provide fresh guidance for distressed buyers.1 Accordingly, the time for an...

It has become increasingly common for foreign companies subject to pending insolvency proceedings abroad to utilize Chapter 15 of the U.S. Bankruptcy Code to achieve their global restructuring goals. However, despite the growing number of Chapter 15 cases, uncertainty remains as to the role of Chapter 15 when the rights of creditors vary in different jurisdictions.

A series of recent rulings by Judge John K. Sherwood of the U.S. Bankruptcy Court for the District of New Jersey in the Chapter 15 case of Hanjin Shipping Co. (Case No. 16-27041) is indicative of the challenges...

Investing in distressed assets can be a highly profitable modus operandi. However, whether distressed investors realize value can be predicated on a variety of factors, including transaction price, assessment of operations and achievability of the business plan, management execution, capital markets, and exit opportunities. Additionally, strategic buyers or existing platform companies must also take into consideration challenges that include achievability of synergies and growth expectations, cultural implications, and integration execution.

Distressed companies represent complex...