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It’s a Gift: Kathleen Aiello

Kathleen Aiello | ©2020 Drew Noel Photography, drewnoeldesigns.com

How did you gravitate into turnaround and restructuring work?

Aiello: Before I became I lawyer, I worked for a Big Four accounting firm, and I developed a financial services background from that. I did a lot of corporate investigations and fraud investigations, anti-money laundering reviews, anti-terrorist financing—all of those kinds of processes—so I had some familiarity with reviewing companies and their financials.

I left that job to go to law school and graduated in 2008. I like to say bankruptcy chose me because, much like it is right now, there was a lot of bankruptcy work during the Great Recession. It was baptism by fire. I had been a summer associate the previous summer at my first firm. I had done a lot of bankruptcy work, and I enjoyed it more than I thought I would because I hadn’t really been exposed to a lot of it before.

One of my first cases at the accounting firm was a bankruptcy case, so I had some level of understanding of bankruptcy, but not to the degree required at the law firm. I tried to do both commercial litigation and bankruptcy, straddling two departments, at the beginning of my career, and I ended up having so much bankruptcy work that it drove me to do more and more of it. Ultimately, I became much more familiar with it, and I liked it.

I always thought I wanted to do litigation, but the combination of litigation and transactional work that you find in bankruptcy creates other variables and factors that drive the cases forward with much more momentum, which I really enjoyed. I enjoyed the strategy behind it, and ultimately, bankruptcy became 100% of my practice.

A financial background is great to have for pivoting into law.

Aiello: It’s my secret weapon.

What have been some of your most gratifying, favorite, or important engagements?

Aiello: I’ve had a lot of them. I’ve done a variety of different types of representation, from trustee and fiduciary representation to debtor and creditor work, as well as cases in different industries, such as retail, restaurants, and real estate. I think the ones that were personally the most rewarding were those in which we achieved results and overcame challenges that the company couldn’t overcome on its own outside of bankruptcy.

One of the cases that comes to mind is the real estate case we had for H&H Bagels, made famous by Seinfeld, in New York City. I was representing the bankruptcy trustee. There were a lot of insider disputes between the different principals of the company. We were able to overcome those and make a nearly 100% distribution to unsecured creditors, which in a Chapter 7 case was really a win.

I did something similar in a real estate case for a development project in Brooklyn. It was not a family situation, as in the H&H Bagels case, but partners were fighting and just couldn’t agree on anything. The court and the United States Trustee appointed an independent fiduciary to overcome those disputes. We represented the fiduciary and were able to create a global settlement that returned a substantial distribution to a large number of parties without exhausting the proceeds of the sale of the building for administrative costs.

It’s very gratifying to me when you can overcome those challenges and obstacles the company faces and make a very promising and unexpected return or distribution to the creditors to make sure they’re getting value from the case. That’s when the bankruptcy process is working.

What key milestones in your career have helped make you the professional you are today?

Aiello: It is maybe not necessarily a milestone per se, but one thing that really framed my career was being entrusted by the clients that I represented and also by my mentors to get outside of my comfort zone sooner than I might have elected to do so on my own—getting into court, taking depositions, doing things out in front of the case at a very junior level.

It was always intimidating to me early in my career as a junior attorney, but it ultimately was much more rewarding at that time and something that I think has enhanced my value as an attorney now. I was always frontward facing, and that was something my firm was very supportive of in my early career. They encouraged me to get out in front of clients, in front of the court, and in front of adversaries. I was making the arguments directly and serving an integral role in the case instead of being just a bystander.

You learn by doing. It’s helpful to see it done, but after that, you have to dive in and experience it.

Aiello: I was lucky enough to have cases that afforded me that opportunity and felt appropriate for me, as well as being exposed to other cases where I could be more of an observer. If you had asked me at the time, I probably would have given you a different answer because I would have been more trepidatious about everything I was doing then. But in hindsight, I think it made world of difference for me.

One reason I chose to work at the firm I did coming out of law school and made some of the other decisions I did early in my career was because I didn’t want to be on the bench, so to speak, for the next 10 years. I really wanted to get out in front and do things right away. The mentors I had at the time and the firm that I was working in really promoted that for me and supported me in it. I think I was able to use those opportunities to build my skill set and become a better lawyer.

Did your background in financial services give you a head start on some of your colleagues who didn’t have that kind of background?

Aiello: Perhaps in some ways it did. I found that having worked in a professional services capacity and having learned how to interface with clients and bill time in increments and all of those things that come with professional life were very valuable in starting my career.

In terms of career milestones, becoming a partner within a fairly short amount of time of practicing law was especially rewarding for me. It was something that I had worked toward from day one, and when I finally achieved that, it was very satisfying. It was also the turning point into yet another phase of my career and provided another challenge, which is to build my client base and my network and take on a different role moving forward in my career.

Joining my current firm as a partner has also been rewarding. I hope to provide that same value to another organization.

What role has your TMA membership played in your career?

Aiello: Early in my career TMA provided a forum for getting outside of my office and making sure I understood the bankruptcy and turnaround community in a larger way. I attended events early on in my career, but as I developed and thought about the direction in which I wanted to expand my career, including the growth of my professional network and the way it could enhance my general practice, TMA became a standout to me as an organization.

It’s really helped me to expand my network significantly. I’ve been exposed to different people I might not have been on my cases, so I’ve learned different facets of the industry. Becoming more involved beyond my local chapter, in TMA Global, has made the broad geographical reach of TMA feel much smaller. It offers a strong sense of community, and I’ve always felt very welcomed in it.

I think the professionals really make this organization. Everyone is very supportive of one another. I enjoy spending time with them outside of work. It never feels like a chore to me. It feels like an enhancement of my career, and the relationships I’ve developed have been very valuable to me.

How has the pandemic affected your TMA experience?

Aiello: I’m programming chair for TMA New York City this year. We had to make a pretty dramatic shift in terms of our programming calendar once this all happened. We always have a mix of social and educational programming planned for the year, but typically even the educational programming ends up having some social component, because at in-person events you’re sitting at a table with someone or running into them on the way in or the way out. That, of course, has changed.

We’re trying to enhance the social aspects of our virtual programming now that we have a footprint created by the transition of our educational programming to a virtual platform. For our educational programming, we’ve been able to do a lot of webinars, and we’re bringing content to the members that otherwise has not necessarily been our focus in years past. I’m proud of how that’s developed over the year.

I agree that there is something missing in terms of in-person versus virtual programming, but there are things being added in other ways that were not necessarily at the forefront in years past. For next year, we’re splitting the programming committee into two factions, one based more on in-person programming and the other focused on online programming. We are doing our best to combine the social and educational components to both platforms, but we’ll have to see how long the pandemic lasts.

It took time, but I’ve been impressed with how people have taken to the virtual confines in which we find ourselves.

Aiello: In the beginning, it all felt like a snow day, where this is canceled, that’s canceled, and this is not happening. Some of that was probably a relief for the interim, aside from the overwhelming concern about the broader issues. What’s happened, though, is as it’s progressed, everyone’s started to say, “This isn’t changing. Let’s make a new normal.”

I spoke with a client this morning who is thinking of filing bankruptcy for his company. I’m preparing him for potential testimony and other things he’ll have to do with the court, and all of that is going to be virtual. It is as seamless now. The court is familiar with it. The practitioners are, too, and the clients are becoming familiar with it. It’s also probably saving them money because there’s no travel time to court and in-person meetings.

Some of it is great, but on the other side, you’re missing those courtroom hallway conversations with your adversary, where you actually get a deal done a minute before court starts. Those are harder to have now. It’s definitely a new world, but people are adjusting.

What advice would you have for someone who was new to the industry or was thinking about getting into it?

Aiello: Keep your eyes and ears open all the time. Don’t stop learning or be too afraid to say that you don’t know things because things are changing all the time. It’s not a fixed situation, and you have to keep growing and expanding with it and to trust your instincts for being a good professional within the industry. Certainly, the relationships that you develop can be helpful to you in your career and in your practice. We see a lot of the same professionals in a lot of the different cases. It ends up being a small industry if you get out there and take advantage of it. The more people you know, the more engaging your career can be.

What are you passionate about outside the office?

Aiello: I love to travel. I love to spend time with family and friends. I have family and friends pretty much all over the country, and in some cases, all over the world, so I really like to spend as much time with them as I can. In the past few years, I’ve gained a lot of nieces, nephews, and godchildren, and that makes the visits to my friends and family even more rewarding because
I like spending a lot of time with them.

What would people who only know you professionally be most surprised to learn about you?

Aiello: What people don’t really know about me is also something I’m able to live out in a professional way through TMA, which is that I love planning events. I do this a lot for family and friends, where I plan parties and add a design element, like flowers and décor.

I also love gift giving. If I were to spend a lot of free time, it’s usually buying gifts, getting gifts, making gift baskets, things like that, for my friends and family. I really love doing that.

Kathleen Aiello | ©2020 Drew Noel Photography, drewnoeldesigns.com

It sounds like you put a lot of time and thought into the gifts you give.

Aiello: I’m not like those people who like to just check it off. I like to really think about the person and what they would really love, what might be special and unique to them. Gift giving for the kids in my life has added a whole other element to gift giving for me, too. I think it’s fun. I’m thinking about starting a social media site for gift ideas, but we’ll see.

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