Kirkland Tops Big Bankruptcy Cases as Alum Help Rivals Close Gap

Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at the first-half performance of top restructuring groups. Sign up for Business & Practice, a free morning newsletter from Bloomberg Law.

Programming Note: Big Law Business will be off for about a month as your columnist takes a paternity leave.

Kirkland & Ellis advised on the most major bankruptcy cases in the first half of the year as a group of competing restructuring practices led by Kirkland alum lined up behind the longtime leader.

Data on company-side work in the largest Chapter 11 cases show that competition is consolidating around a group of firms that have invested in the practice, including Sidley Austin, Paul Weiss, Latham & Watkins, and Ropes & Gray. Weil Gotshal, a firm credited with creating the first Big Law debtor-side bankruptcy group, also maintained a position among the top advisers amid some notable departures.

The restructuring practices at Sidley, Paul Weiss, Latham, and Ropes are all led by former Kirkland partners. It’s a sign of the firm’s prominence in the close-knit bankruptcy bar, but also a reflection of the talented and determined competition Kirkland now faces.

Kirkland worked as lead bankruptcy counsel on eight of the largest Chapter 11 filings this year, according to a list of “mega” cases compiled by LexisNexis. The list defines mega cases as Chapter 11 filings involving $100 million or more, 1,000 or more creditors, or that hold a “high degree of public interest.”

Kirkland filed three such cases in mid-June, helping it race into the lead shortly before the end of the first half. The 46 total mega cases filed through the first half of the year was down about 15%, compared to the same period a year ago. Kirkland also topped the list through six months last year, advising on seven cases.

“We are proud to maintain our position as the leading restructuring firm,” Kirkland partners Joshua Sussberg and Edward Sassower said in a joint statement to Bloomberg Law. “The large volume of representations reflects our innovation, client service and effectiveness in handling the most challenging cases in an efficient manner.”

Debtor-side bankruptcy representations are a major business driver for large law firms. They can rack up eight-figure fees before courtroom action even begins. Still, it is far from the only work in the broader restructuring ecosystem, which includes creditor-side representations, litigation assignments, and a rise in out-of-court matters.

More companies are avoiding Chapter 11 filings in favor of so-called “liability management” transactions that restructure debt out of court. That practice has surged in recent years—something I plan to write more about after my leave.

On the Chapter 11 debtor side, Sidley Austin and Paul Weiss ranked second this year, advising on four mega cases each, according to the Lexis data. That was up from two and one, respectively, in the same period a year ago.

Sidley is off to a strong start in the second half, representing Main Street Media Inc. in its Chapter 11 filing on July 2, just a couple days after the end of the first half of the year.

General economic uncertainty in the first half of the year drove an uptick in broader restructuring activity, but the rate of major Chapter 11 filings has remained consistent for the past year and a half, Stephen Hessler, leader of Sidley’s global restructuring group and a member of the firm’s executive committee, said in a statement.

“Our increased market share reflects our intensified focus on our company-side platform, and we expect a similarly robust mix of in and out-of-court restructuring work over the third and fourth quarters,” Hessler said.

Paul Basta, who leads Paul Weiss’ restructuring group, said the firm had an “excellent” first-half performance, and noted that its work spanned the gamut from creditor-side representations to liability management transactions.

“We have positioned ourselves so we have all the tools so depending on what problem is out there, we are able to solve it,” Basta said in an interview.

Latham & Watkins ranked third with three cases. Ray Schrock, whom the firm hired last year from Weil to lead its restructuring and special situations practice, led two of them filed in June.

Latham around that time also hired Andrew Parlen from Paul Weiss to serve as head of US restructuring, and in February added former Wachtell partner John Sobolewski to lead its liability management practice.

The firm has hired almost 20 associates in its restructuring practice during the first half of the year to meet high demand, Schrock said in an interview. He said he sees the “future” of the Big Law restructuring practice as representing both companies and lenders on a range of solutions from Chapter 11 to liability management deals.

“It is more competitive,” Schrock said of the bankruptcy practice. “We’re pretty happy with the market share we’re taking here at Latham, and I have every expectation that’s going to continue.”

Ropes & Gray and Weil were the only other major firms to advise on two mega cases each in the first six months.

Ryan Dahl, who chairs the business restructuring practice group at Ropes, said the first half of the year was notable for the increased acceptance of liability management transactions. As for Ropes, he said the firm was “very happy” with its restructuring performance year-to-date.

“We’re the new entrant in the market. We’re very happy with the progression. We’re not planning to stop there,” he said. “We’ve been getting engagements because the market is responding to the quality of work we do, and not a track record that we didn’t earn, and we’re very proud of that.”

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That’s it for a while! Thanks for reading and please send me your thoughts, critiques, and tips.