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We sent Johnny out into the wild this week and after hobnobbing with restructuring professionals in a variety of settings he’s reported back with some takeaways:

📍LME, LME, LME.
📍LME, LME, LME. Haven’t you heard? There’s a lot of LME going on.
📍LME, LME, LME. We mean, like, a LOT. And the train shows no signs of slowing down. See, e.g., Radiology Partners, Apex Tool, Cumulus Media, and more.
📍Seriously, people won’t stfu about LME.
📍In non-LME land, everyone is tired of talking and hearing about sh*tty sale cases — especially those sans a stalking horse bidder on the petition date.
📍There continues to be a lot of cash remaining on the sidelines, including lots of potential private credit solutions. This is going to continue dampening the number of filings to come — well, unless you’re a dumpster fire of a sh*tco in which case you’re still f*cked (see below for a publicly-traded example).
📍Professionals have time on their hands. There’ve been a variety of industry boondoggles over the last couple of weeks and virtually every single one of them has been at or above capacity. Interestingly Fitch Ratings currently pegs the TTM default rate for leveraged loans at 3.4% and 2.79% for high yield, both as of the end of January ‘24. “Fitch has forecasted 2024 default rates of 3.5%–4.0% for leveraged loans, and 5.0%–5.5% for HY, up from 2023 default rates of 3.280% for leveraged loans and 2.79% for HY. We are forecasting 2025 default rates of 2.0%–3.0% across both markets.” This would suggest that people should get a little busier deeper into the year. This week’s inflation data suggests that the Fed will hold rates “higher for longer” which should, in theory, contribute to higher default rates too.

All of which is a good segue into our February review. The month’s largest chapter 11 filings by funded debt were:

1. Invitae Corporation ($1.4b);

2. Cano Health Inc. ($1.2b); and

3. Hornblower Holdings LLC ($1.15b).

Our winners of the month include: 

Jurisdiction: Delaware’s re-emergence continued with several filings in the district (InVivo Therapeutics Inc., DMK Pharmaceuticals Corporation, NanoString Technologies Inc., Cano Health Inc., Burgess BioPower LLC, and Sientra Inc.). Still, Kirkland & Ellis LLP continues to make the District of New Jersey a thing (Invitae Corporation, Thrasio Holdings).

Law Firm of the Month: Kirkland & Ellis LLP for filing three debtor deals during the month including the largest by funded debt. Honorable mention goes to (i) Gibson Dunn & Crutcher LLP for representing the lender groups in Robertshaw US Holding Corp., Thrasio Holdings and Cano Health Inc. and (ii) Sullivan & Cromwell LLP for representing Deerfield Partners in Invitae Corporation, Sientra Inc. and NanoString Technologies Inc. A hat trick!

FA of the Month: AlixPartners LLP for filing four company side cases. Alix has grabbed this “award” two months in a row.

IB of the Month: Guggenheim Securities for filing Robertshaw and Hornblower Holdings LLC.

And now on to the aforementioned sh*tco…