Summary
In an interview, James H.M. Sprayregen, partner, Kirkland & Ellis LLP, talked about the recent spate of restructurings, the Bankruptcy Code, and why Chrysler wasn't as earth-shattering as you thought. On why so many companies have become insolvent in this economic downturn compared to previous recessions, Sprayregen said the default rates are at the high end of historical numbers and predicted to climb higher as you get into 2010 and 2011. As a result, you have companies that historically are more levered and have more secured debt on their balance sheets than in the past. On the amendments to the federal Bankruptcy Code enacted in 2005, Sprayregen said he doesn't buy that the companies that liquidated following the amendments would have emerged had the amendments not been passed. On the Chrysler bankruptcy case, Sprayregen said the Chrysler case proves the golden rule: He who has the gold rules.
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Extract
Jamie Sprayregen
Through mid-July, nearly 140 public companies had filed for either Chapter 7 or Chapter 11 bankruptcy protection this year, including companies once thought "too big to fail" such as General Motors and Chrysler. Have you ever seen such an active bankruptcy and restructuring market at any other time in your c...
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