Firms Hiring Turnaround and Restructuring Specialists Amid Bankruptcy Boom
Total bankruptcy filings in the U.S. soared 31% to 1,117,771 in 2008 – up from 850,912 in 2007, according to the American bankruptcy Institute (ABI), citing data from the Administrative Office of the U.S. Courts (AOUSC). The 2008 tally marks the first time in three years (or the implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) that bankruptcies surpassed the one million mark.
“Today’s numbers confirm what we have reported previously, that bankruptcies are on the rise, and will continue to spike upward in 2009,” said ABI Executive Director Samuel J. Gerdano. “We expect filings to reach 1.4 million or even more this year, especially if Congress changes the law to permit homeowners to modify home mortgages via chapter 13.”
Meanwhile, business bankruptcies recorded the sharpest percentage increase in 2008 with 43,546 business filings - a staggering 54% jump from the 28,322 filings in 2007, according to ABI. To put this in perspective, the group notes the 12-month business filing total for 2008 is the highest in a decade.
Now, amid the bankruptcy boom and surge in corporate defaults, hiring among turnaround and restructuring shops remains robust, according to the WSJ. Moreover, an expected wave of bankruptcies and turnarounds has prompted turnover among specialists in those areas.
The WSJ notes that investment banking firm Moelis & Co is one recent example of the trend. The firm is hiring Steve Panagos, a former Managing Director and National Practice Leader of turnaround firm Kroll Zolfo Cooper, as Vice Chairman and Managing Director of its restructuring group. Started in April 2008, Moelis’ restructuring group now has about 25 full-time employees, adding seven managing directors this year alone, according to the report. The article quotes Panagos as saying, “I think even solid companies will eat through their capital cushions and come under great distress. The number of turnaround situations will outstrip the number of professionals that can do them.” The WSJ adds another investment bank, Houlihan Lokey Howard & Zukin, has also added seven new officers in the past six months.
Bankruptcies these days have become long-winded due to the complex nature of holdings in a corporation, and require professional help with managing the avalanche of documents, according to Reuters. The report quotes Elizabeth Vrato, a Business Development Executive with Garden City Group, as saying that critical issues involving liquidity and covenants have resulted in an uptick in business, ranging from out-of-court restructurings and asset sales to Chapter 11 filings.
Jonathan Carson, President and Co-Founder of Kurtzman Carson Consultants LLC (KCC)- a firm that provides support services and technology solutions to companies undergoing corporate restructuring - is also quoted as saying, “As companies seek ways to navigate and recover from the current economic climate, we foresee continued increasing demand for corporate bankruptcy services over the next few years.” In fact, KCC notes its Chapter 11 business has more than doubled in size over the past 12 months.
Executive search firm, A.E. Feldman, says the surge in bankruptcies is creating opportunities for candidates with expertise in underwriting, restructuring, valuation and loan workouts. Amid the onslaught of bankruptcies, law firms are also seeing a boost in demand for legal services. Legal Times says the legal fees generated for firms helping to clean up the mess could reach into the hundreds of millions. As a result, A.E. Feldman also reports that legal jobs are opening up for candidates with excellent academic credentials and a demonstrable track record as top firms bet that bankruptcy and restructuring work will be one of their most promising avenues of growth.
Are you a turnaround or restructuring specialist or expert in valuation, bankruptcy or forensic accounting? If you want to grow your career or discuss your company’s talent needs, contact A.E. Feldman’s President, Mitch Feldman, today.
