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‘Uptick’ in Bankruptcy Action Has Sidley Hunting for Lawyers (1)

July 6, 2022, 6:47 PM

Bankruptcy lawyer Stephen Hessler has left Kirkland & Ellis to join Sidley Austin as the law firm’s restructuring practice group leader, Sidley said Wednesday.

Hessler joins Sidley after nearly two decades at Kirkland, where he has worked on major cases involving Hertz, Frontier Communications, and Windstream Holdings, among others.

“As the continued market instability and supply chain disruptions accelerate the restructuring cycle, his addition allows us to stay ahead of the uptick in activity,” Yvette Ostolaza, Sidley’s management committee chair, said in a statement announcing the hire. “It is very much part of our firm’s global strategy to continue to invest in attracting top-tier restructuring talent.

“Expect more announcements,” Ostolaza added.

Tough Nut

One of Hessler’s biggest cases was leading Kirkland’s representation of Frontier Communications, the telecom company that filed bankruptcy in April 2020.

It was the type of major bankruptcy case Kirkland has excelled at winning in recent years. The case generated more than $30 million between the fees the firm received for work leading up to the company’s Chapter 11 filing and later while the case was in litigation, according to court documents.

Major debtor-side representations are the biggest moneymakers for a Big Law restructuring practice. It’s a market Sidley, like most other law firms, has rarely cracked in recent years.

Since 2018, Sidley has represented the debtor in two of the 107 major bankruptcies listed in a database compiled by UCLA and professor Lynn LoPucki. Only three firms have advised more than 10 of those companies: Kirkland (34), Latham & Watkins (13), and Weil Gotshal & Manges (12).

Paul Basta is another former Kirkland partner who left to co-lead a competitor’s restructuring group in recent years. Basta in 2018 joined Paul Weiss, which has advised four of the major bankruptcies on the LoPucki database since over the last four years.

Sidley’s bankruptcy practice lost two key partners in June 2020 when James F. Conlan and Patrick Corr departed to join Faegre Drinker. Conlan had been a co-chair of Sidley’s corporate restructuring practice while Corr was head of its European restructuring and insolvency practice.

Sidley then named two new leaders of the group, only for them to be poached by White & Case just months later. Jessica Boelter and Bojan Guzina joined White & Case in October 2020.

Sidley restocked the high end of its practice last year when it hired Tom Califano, the former global co-chair of DLA Piper’s restructuring group.

Bankruptcy filings have remained abnormally low in the wake of easy money policies enacted after the pandemic. There have been only 10 major bankruptcies filed during the past 18 months, according to the LoPucki database, which would set a record for any single year dating back to 1998.

The tides could turn as the US Federal Reserve raises interest rates to combat inflation, potentially leading to a recession that could drive up demand for Big Law restructuring practices.

Bloomberg Law Automation contributed to this report.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editor responsible for this story: Kiera Geraghty at kgeraghty@bloombergindustry.com; Chris Opfer at copfer@bloomberglaw.com