I was delighted to join my partners Tom Alabaster, Jason Kolman and Matt Roose on the latest Ropes & Gray podcast, to discuss and compare recent trends in the credit/distressed space across Europe and the U.S. in the pandemic environment.
It was a wide-ranging discussion but, from a restructuring perspective, key take aways included:
- On both sides of the Atlantic, governments have introduced comprehensive support measures. This, together with lenders generally taking a supportive approach with their borrowers, the re-opening of the capital markets and many credit funds deploying fresh capital into distressed situations, has ensured that many businesses have been able to weather the pandemic – at least for the short term.
- In Europe, we are seeing significant changes to restructuring legislation, most recently with the Corporate Insolvency and Governance Act 2020 coming into force in England & Wales in late June. These changes are timely, and further developments lie ahead, such as forthcoming Dutch restructuring law, commonly referred to as WHOA or the ‘Dutch Scheme’, and expected to come into force later in the year.
- With government support likely to wind down in the months ahead, and business disruption showing little of easing as we move into autumn and then winter, we expect to see more distressed opportunities arising for credit fund clients in Q3 and Q4, and into next year. This will provide opportunities, both in the U.S. and Europe, for credit funds looking to deploy capital in loan-to-own strategies or through new money financing for distressed companies.
These global colleagues share the distinctions and commonalities between both geographies in regards to 1) changes in fund terms and structures, 2) government support, and 3) market predictions.