Why did United Airlines file for Chapter 11? How did the airline restructure itself to recover from bankruptcy? These points and more were addressed during the opening keynote address at the February 23 Turnaround Symposium by three of the key professionals who handled the largest airline bankruptcy ever recorded.
Todd Snyder from Rothschild kicked off the panel discussion by outlining the reasons behind the Chapter 11 filing. He explained the financing structure of United Airlines at the time of bankruptcy. Stephen Presser, whose firm Monomoy Capital Partners represented United’s pilots’ union during the restructuring discussions, then touched on issues related to labor discussions before James Sprayregen from Kirkland & Ellis took the lead in sharing the plan which eventually led to United’s emergence from bankruptcy 48 months later.
Asked what they would have changed if they were to re-live the process, Sprayregen, who was voted one of the “Dealmakers of the Year” by The American Lawyer in 2004, responded that there were 10,000 judgment calls at each stage and he believed, “Under the circumstances, we were perfect.”
This year’s turnaround symposium focused on creating value in distressed companies. Mark Patterson, the Chairman and co-founder of MatlinPatterson, presented the second keynote address on the turnaround of Anaconda Nickel Limited, which at the time of restructuring was the 10th largest nickel producer and the fifth largest cobalt producer in the world. Brutally and refreshingly honest in his assessment of the industry, he minced no words in reminding us how distress situations usually involve “a lot of blood on the floor.”
An impressive list of lawyers, bankers and turnaround consultants formed six other panels addressing everything from the first 100 days of a turnaround to Wall Street’s role and turnarounds in SME and international situations. The common themes should come as no surprise. The success of turnarounds boils down to cash, accuracy and honesty of records and management mettle but the lively examples brought out by the panelists made the message that much more memorable.