Wall Street’s Painful Lessons From a Year of Epic Debt Fights

From the collapse of storied retailers to the fall of a prominent hedge fund manager, 2020 offered a harsh reminder of what happens when the economy goes south.

Bankruptcies reached levels not seen in a decade, distressed debt soared to almost $1 trillion and it may take years to repair the damage to airlines, restaurants and hotels. While 2020 may be over, the drama probably isn’t.

“If you don’t deeply cut debt and provide new cash to some of these companies, even restructuring won’t save them,” said Saul Burian, a senior member in Houlihan Lokey Inc.’s U.S. restructuring ...