Retail Apocalypse and Amazon Effect have become common vernacular over the last few years. The catchphrases certainly grab the attention of not just the general public but of the finance and turnaround communities as well. In an article headline, they serve as surefire clickbait. And as panel topics, these terms are a great way to draw a crowd. But a deep dive into recent retail industry trends and bankruptcy filings reveals that what’s happening in the retail industry, like most things, is more complicated than simple catchphrases can convey.

The general narrative goes like this:...

The availability of capital for private companies is at an all-time high. According to Preqin’s Q3 2018 Fundraising Report, global private equity dry powder currently sits at approximately
$1.1 trillion, while global private debt dry powder was at a record $281 billion as of September 30, 2018.

With the exception of 2014, private debt dry powder has increased each year since 2009, when it sat at just above $100 billion. Fundraising for U.S. middle market direct lending is also at record levels, with $61 billion raised in 2016 and $69 billion raised in 2017; 2018 is expected to...

Distressed investors may see value in individual assets held by a distressed company or pledged to its lender, rather than in the company as a whole. These investors see opportunity in these assets, but realize significant risk in acquiring them. To assume this risk, they seek a certain level of return. They are skilled in what they do, just as turnaround professionals are skilled in advising those suffering distress.

So, how is it that after things have gone horribly wrong and landed a company in distress, they sometimes go terribly wrong again when it comes to asset disposition?...

So many times, turnaround professionals are engaged in situations involving companies that have little or no liquidity or that appear to lack access to capital. Frankly, businesses that lack liquidity are one of the main reasons the turnaround industry exists. As such, it is imperative that turnaround professionals are creative in finding the possible various sources of liquidity and capital to turn around companies in these types of situations.

In many instances, this requires that turnaround professionals find or develop “internal” and “external” sources of capital and liquidity....

Since the great financial crisis of 2008, direct private credit investments outside the banking system have grown exponentially. Both regulation and competition have forced the traditional regional banking model to consolidate and focus on larger borrowers, which are easier to service than smaller borrowers. This has left smaller borrowers without access to bank financing because of the higher costs and resources required for diligence and monitoring in servicing them.

The demand for capital by smaller borrowers is being met in the non-bank, private credit market (Figure 1...

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...