Hello, and welcome to the Credit Edge, a WEEKI Monkets podcast.

My name is James Grumby.

I'm as senior editor at Bloomberg.

And I'm Steve Flynn.

I'm a team leader and senior credit analyst for Bloomberg Intelligence and I cover the communications sector.

This week, we're very pleased to welcome Scott Greenberg, Global Chair of the Business Restructuring and Reorganization Practice at Gibson Dunn.

How are you, Scott, I'm good, Thanks for having me in, Thanks for being here.

Scott is a partner in Gibson Dun's New York office, Global chair of the firm's Business Restructuring and Reorganization Practice Group and a member of the firm's executive Committee.

Scott focuses on representing debtors and creditors in court and out of court restructurings.

Chambers USA described Scott as an excellent lawyer and deal maker that is brilliant, super connected, and great at managing adversaries and clients.

Prior to joining Gibson Dunn, Scott was a partner at Jones Day from twenty thirteen to twenty nineteen, where he also served as co head of the Jones Day business restructuring and reorganization practice.

Scott has received numerous awards and accolades from industry associations and publications, including deal Maker of the Year from The American Lawyer in twenty twenty one.

Scott has recently represented lenders in a number of large restructurings, including for Altese France, which was the first large scale liability management exerciser l and E in Europe, Comscope, and Diamond Sports Group.

So thank you, Steve, for as we say every week now.

Credit markets are hot and companies are taking advantage, raising tens of billions of dollars in new debt over the last few weeks.

There's also more distress.

Rates are staying high for longer than most people had expected.

There's a large pile of debt coming due.

At the same time, Trade wars and a whole load of other US policy uncertainties are pushing companies to the brink.

They are trying to stay alive by using ever more creative, some would say overly aggressive tactics to write down debt and delay repayments.

So Scott, let's start there.

You are the perfect guests to discuss this.

Where do we go next with the lemes.

Otherwise there haven't been that many recently.

I all we hitting some kind of a wall, given potential for reputational risk and the longer term damage to the investor base.

I don't think so.

I mean, I do agree that there was probably a small pause.

I think some of that was candidly just over the summer, people taking a break, maybe our lender base having enough of the lemies they had their fill.

But I don't think the overall playbook has changed.

I think, you know, particularly in the stressier situations where you continue to have borrowers and sponsors with flexibility in their documents, and particularly in a situation where they have time, meaning there's not a catalyst, liquidity or maturity that's going to limit their playing field.

I think you'll continue to see the lemy played book rolled out.

You know, whether or not it's going to be to the level of volume we've seen over the last year or two, I guess remains to be seen.

I think you're starting to see some companies just kind of tip over and go the traditional way here in the US, you know, a chapter over season, a different type of process.

But don't I don't think you've seen a real material slow down in Leomi.

I think it will continue.

Skins often asked who really benefits from an lem as a lot of companies and ultimately end up in bankruptcy.

There was an interesting article the other day on the Terminal about a report from Edward Altman and Eric Rosenthal that talked about the number of companies that file for bankruptcy within two years of executing a large scale ANLUM.

Right, I mean, my honest answer to that question is, and it's a good question, is always the same, I think, particularly in a private scenario, of the sponsors almost always benefit because if you step back and look at the situation, presumably there was some financial crisis that they are staving off where there may have otherwise been a change of control or a more traditional process which would facilitate a transfer of ownership.

The sponsors continuing to stay in their seat through these lemies.

So I think while they may be giving up document flexibility and other things as the trade with the paribial lenders, in the long run, even if it files for bankruptcy in two or three years, right, they bought those extra two or three years, and whether or not obviously result in what they want.

It is a different question, I think.

Apart from that, obviously you need two to tango, so to speak, and you need willing lenders to participate in these transactions.

And I'm sure we'll talk about this, but I think historically what we've been seeing, particularly in the US and most see what happens in Europe has been, you know, the larger institutions, the ones with more exposure, are obviously better situated at the negotiation table to do better for themselves gosh.

And then lemies are typically more successful if they're in conjunction with a company doing some sort of turnaround.

Correct.

Like, I cover the communications sector, and I've seen cases where that works, in cases where it does, and a great one was lumin Technologies.

They did at a very large scale l ME a couple of years ago, and then they turned around and they signed some high capacity network deals for AI capacity that brought in a lot of cash up front, really helped turn their business around.

They turned around, they're selling their consumer five operations to AT and T and you've seen a significant increase in their bond prices, a lowering of their bond yields.

So it has worked.

But there was in conjunction with something helping turning it around.

The other side of the story could be a company like iHeart.

They just did a rather large restructuring lemy within the past year.

But you know, the industry still faces a challenge.

So a lot of those bonds are yielding well over eleven percent, so there's still difficulties there, right.

I mean, look, some of these are play for time.

If you think about kind of traditional commodity driven businesses where you have cycles and maybe it's the wrong time in the cycle for the business and they're the sponsor and the owner just looking for more time for that cycle to come back.

There seems to be more receptivity because the people and invest in these businesses seem to understand that.

In leemy for the sake of an enemy, which I think is kind of the other end of the spectrum where lenders are just taking discount and hoping for a better day without a real game plan, as you said, whether it's M and A or something else, or a change in the industry or macro change like we've seen with some of the terrific issues that have impacted the trading prices of these credits.

I think that's probably where you're seeing a little bit of a slowdown of the desire on the lenders part because again, you need two parties to do these, to engage in analomy, right, there needs to be a bigger selling point.

We're doing this because, right because there's a change that ultimately is going to result in the company doing better and therefore, as lenders to the company, your recovery is being better.

There's also some concern around the kind of legality of these, you know, given that they are getting very aggressive and some people getting a bit aggrieved.

We had you a recent event in LA when you were alongside Cuxton Ellis to find his point of David Nemchek, who said that these tools for allowing creditors to band together for greats and negotiating leverage against borrows could be illegal.

He's calling them anti competitive.

What do you make of that?

I think, with all due respect to Dave, who I know and respect, I think you should stay in his lane.

I don't think on this particular subject he's right.

I mean, we've spent a lot of time with our anti trust experts internally and my competitors who also put out cooperation agreements in the market I'm sure have done the same, right, we don't do anything without doing our work on the front end.

And I think the punchline is we don't feel that they are now.

You know, within the current construct there may be constructs where people overreach and say and this doesn't exist at least to the best of my knowledge.

But you know, for example, if XYZ sponsor comes to the market, we're all going to band together in any future financing and not give them financing for less than you know, S plus one thousand.

Like that definitely has some anti competitive overlay, but that's not what these documents do.

So I think they thread the needle.

I understand why if you're you know, and they clearly are, you know, the dominant player on the company sponsors side, why you don't like them because they're taking away some of the flexibility that you would otherwise have under the document.

So I get the chessboard.

We all play chess for a living.

But I think as it relates to legality, I think we feel very comfortable that they're fine.

But do you feel that the smaller lenders might litigate?

I mean, as our ACE reporters, Reshmi bas who puts it private equity is dumping angry lenders in the cheap seats.

There's a class system developing, there's a whole you know a load of examples of smaller investors getting burned.

I think it depends, right, and this is kind of the the art, not science, to these enemies on a one by one basis, right in.

What you're talking about is kind of the textbook elemy where there's a deal with the sponsor and there is a disparity in treatment, usually from and it's usually just the function of the largest lenders to the small slenders.

To your point, then obviously, if you're the smaller lender and you're not getting the same deal, you're not very happy.

I think the question becomes is the deal good enough where those lenders, while they may not love it, will participate because the alternative is not great, Or do you end up in a situation where the deal is so aggressive that people just say, you know, why not just litigate?

Right at this point, I've been put to your point all the way up in the nosebleeds, and it's worth hiring a lawyer and fighting the fight, I would say, at least, And we've had a couple that have had some litigation, but at least in most of the lme's there's very high participation and take up, which I think is a sign that you know, collectively, the company and the lenders and the advisors kind of thread the needle in the right way where it's kind of good enough, where everyone's going to participate, even if it's not equal treatment.

So if we take a step back, when you think about forming a group or representing debt holders, so how early do you get involved and how quickly do you try to form a group with a cooperation agreement?

Two different things in my mind, and group formation, you know, comes in many flavors.

I think the reality is, and I think everyone understands this.

There's there's a lot of movement early on the on both sides of the transom, on the lender and on the borrowers side.

But I think on the lender side, and I think a lot of credits are probably coming into people's visibility, probably you know, sooner than is obvious, meaning you know, we'll be talking to a very large lender in a particular credit.

It's on their internal watch list.

Maybe it's still trades in the nineties, it's got some macroheadwinds, you know, and dependent candidly with the lum environment.

Depending on who the sponsor is, people may say, as soon as this trade's off, we need to organize because we're worried the sponsor may be aggressive.

So there are different catalysts, but I would say generally speaking, organization comes early.

The reality is by the time something hits you know, your guy's news wire or you know, bankruptcy rags or whatever, you should assume that deal has been staffed for a very long period of time as an advisor, and so I think that has been the case for a while.

Cooperation agreements, I do not think, despite everyone probably feels like you know, in every deal we're out peddling a cooperation agreement, it's not one size to it's all.

There are plenty of deals where a cooperation agreement doesn't make sense because it may limit your optionality in terms of what you want to do and without going too far down the transmit.

But like we did Tropicana earlier this year, and we never had a cooperation agreement in that deal, and that wound up being an enemy with a multi tiered approach like we've talked about in other situations where you have you know, long dated maturities, which by definition means that the company has more time to play the games and needs to play and lose documents.

And perhaps a sponsor who's known for not being afraid to use the room and their documents and cooperation rooments makes more sense.

But it is not.

It's not as easy as a decision as I think maybe the outside thinks it is.

It's something that people ponder and debate as a group.

I mean, we're having a couple of debates on it this week on different credits, whether or not it makes sense.

So and when forming a group, do you try and reach certain thresholds as far as owning a certain amount of principle and whether in different parts of the capital structure right so that you have the term loans, maybe secured bonds on secured bonds, hold co OpCo or do you look at some of the biggest bonds there and try and get a obviously over fifty percent would be great, But are the certain percentages where you feel you have enough to go to the company and yeah.

I think you hit.

I mean, this goes back ten years, long before the world of alomy.

Just in the world of like amendments and forbearance agreements and waving defaults when we actually had covenants.

The fifty percent, particularly in the TLB market obviously, is usually the magic number that were aiming for.

I think sub fifty percent.

You have to think about it from the company's perspective, like what do you really have to offer?

Right, So in a traditional environment, you know I could wave, I can forbear, I can amend, I could do things to help the borrow or if they get in a tough spot from a financing perspective, In a document that you know doesn't have things like support nation protection, I could provide new money on a super senior basis with fifty one percent.

And then in the LME environment, you can provide amendments that may be necessary to the documents to implement the LME.

So look, when you first start, a group might might be thirty five or forty like sure, but I think realistically for you to have bargaining power from the other side's perspective, you should probably have north of fifty percent.

Do you tend to represent these DICO or the restructuring group?

Oh, that's a great question.

So usually the way it happens is there will come together first.

It It should be the largest lenders by definition, right, because they are the ones picking advisors, bankers and lawyers, and usually at least in my deals.

Right Because to the point you were making earlier, a lot of these things form early and kind of sit around for a little while.

A STEERCO really only gets constituted at a time when things are starting to move.

So companies advisors reach out, they send across an NDA to us and our banker they're ready to talk.

That's the time usually where you'll solidify a steerco.

It doesn't usually make sense early on in an engagement to create that dichotomy because it's you know, some of these deals some may just get refinanced and nothing ever happens.

Right, So there's not there's no point.

Right, Okay.

In general, valuations are coming down, you know, the economy slowing their headwinds.

How is that changing the restructuring tools?

I think I'm seeing that, you know, despite maybe some pressed to the contrary, like what I'm seeing actually is a decent amount of traditional restructuring uptick.

Again, I don't think LEM is going anywhere.

I think that tool will remain a great tool for candidly for sponsors and to a lesser extent for our clients.

But I have seen both, you know, new deals that need to go traditional restructuring because the problem is too big to solve through an lemy, or there's a liquidity crisis that no one's going to fund without fixing the balance sheet.

And I've candidly had you know, multiple of my old lems, and this will be you know, to your earlier point the test of time.

I've had some old lem's come back that you know, we did the lemy and the band aid kind of slipped off in this environment, and it's probably going to need to be a real restructuring this time.

On the sponsor's side, are you seeing more than by a bat that debts.

Certain sponsors, I think certain sponsors that are more credit savvy, like without naming any names, like some of the big sponsors that are also big credit players in those situations, we tend to see them be more astute too, you know, particularly if they think things are just mispriced, you know, going in and buying up a lot of you know, sometimes a lot of the junior in debtedness, which obviously is gonna be trading at the discount the most discount.

And then I've had situations some of which I'm involved, now are you know?

Unknowingly to us, the sponsor got involved in the capital structure, and then when we came to the table to negotiate a deal, they used it as a leverage chip, right, like I'll take this debt and subordinate it if you'll do X, Y and Z.

So I think it's it's definitely a play.

I don't think it's all sponsors though, I think it's a subset of sponsors.

What about sponsors stress more broadly?

Are using situations where there is stress spreading across the portfolio and how does that affect sponsor's choice and what to do.

You mean like one particular sponsor having a lot of distressed names?

Yes, yeah, I mean I think we probably know who all those are.

But yeah, I mean I think the ones that have had a lot of distress in their portfolios to deal with tend to be the ones that are doing more of the leemy stuff, right because they're trying to figure out a way to punt things forward and give themselves a lifeline.

Just thinking through the things we have in the pipeline, Like, yeah, we have the flip side of that is also true, though, as I say it out loud, I mean, we have some sponsors that are like you know, white shoe sponsors that everyone knows, that have several troubled names in their port co in their portfolio that historically have not engaged in lemy and don't seem to be interested in engaging in eleme.

So it's really a mix bag.

So the investors you work with, I think you mentioned this earlier about putting new money in so just you know, question is how willing are they often to invest more money?

Is it throwing good money after bad?

I mean I can think of a recent example where it's worked.

Echo Star Yeah great, right, Like so they well they did two things, trying to do something with the DBS bond holders, which they fought back on and that seemed to be the right move.

Give one of those DBS bonds traight now.

But the Echo Star convert holders not only did they roll over their convert but they invested a lot of new money with a large new bond.

And now with the recent spectrum sales, those bonds are up.

You know, I've done very very well.

So it's just the willingness for lenders to invest more money in a situation like that.

Well, I mean Echo Store obviously was a great result, and we know a lot of folks in that they're very happy with the way that turned out.

I think in these situations, I do think, Look, all of our clients are very savvy.

They're not just going to pour good money after bad for the sake of doing so.

And it's a function of in sometimes defensive capital right, protecting your existing investment.

I will say I feel like on a personal level, just in the stuff I'm working on, I've definitely seen more situations where investors have tapped the brakes on writing the new check because they're concerned that tier point they're just putting good money after bad.

And again, I think in those scenarios you got to look for context, meaning, well, if we don't fund, what does that mean.

And if the answer is it means a desperate sponsor is going to move whatever valuable collateral we have to fund it and rip it out of our system, then it may bring us back to the table, right, because the alternative is not very great for us if it means you're putting pressure on junior creditors in the structure or two, well what have you and the sponsor to protect themselves because the alternative is a bankruptcy where they get wiped out.

Then that's okay result if you're the senior lender.

So the playing board is set.

I do think, I mean, I don't think anything's changed, right.

I think all of our clients are extremely savvy and intelligent.

They wouldn't just write a check for the sake of writing a check.

I do think people are pressing back more though, on situations where the company just comes and expects that the senior lenders are just going to solve the problem for them.

Yeah.

And I guess there's certainly example where investors refuse to take the haircut, right because again we go back to Echo Star Wars, a very complicated situation, but they were trying to I think that an agreement to sell Dish dbs to direct TV for a dollar, but the bond holders were required to were offered to swap into a direct TV debt, which obviously would be a big improvement and credit quality, but they were required to take some very large haircuts depending on the bond and they were refuse.

I guess with certain cases will lenders be like, hey, we're willing to take our chances if this goes bankrupt, well restructure and we'll own it throughout the process ourselves.

Yeah, I think that's very much the case.

I mean, obviously, without getting into any specifics, viv a situation now where we've been there for a while.

There's been on again, off again discussions with the company and the sponsor.

We kind of hit pause on an ELM that we were talking about months ago.

The business has continued to deteriorate, and I think the sponsor still is expecting the clients to take a haircut.

And I think that's a situation where it's like, I know what the alternative is.

It's not great, but it also doesn't make sense for me to give back forty cents in my face claim if I think this thing is headed towards the bankruptcy.

So yeah, I mean that's a live deal I'm working on at the moment.

So I do think you're seeing some of that pushback.

I'll want you look at the secondary market's got I mean, in terms of co op versus non co op trading.

Is that a signal that you look at.

I mean, we're aware of it, and we have to be cognizant of it and candidly when we draw drop some of these co ops.

You know, sometimes you got to spend time with the trading desks on the phone just to kind of get them familiar, because obviously the clients want liquidity, and so if the co op is strangling liquidity, that doesn't help our clients.

And you know, when we did al Tease right for example, I don't think the European traders were too used to or not used to it at all, dealing with you know, co op versus non co op paper.

So we spent enormous amount of time trying to educate the desks to make it as painful as painless as possible.

Sorry painful, but I would say we're cognizant of it.

Again, I mean, I don't know if we're going to get into this, but there's multiple flavors of co ops nowadays.

So in a co op, we're ninety percent, you know, hypothetically of the loan is under co op.

The trading issue is usually not an issue.

In a world in which you have a you know, fifty percent co op, then you have a big trading disparity, and you know, we even have some situations that that we recently and something I'm involved in which was a head scratcher to me.

We had people calling us because there was a trading disparity between the co op and the Steerco paper, which made no sense to me because there was no there's no way to delineate Steerco paper in these situations.

So yeah, I mean it definitely impacts trading.

The punchline is if we're doing it right, we're trying to make sure it's as like what is possible, so it's not a hindrance on our client's ability to trade.

And trading disparity I think is very much a contextualized issue, meaning if or seeing a bifurcated deal coming, then there's a trading disparity.

If everyone thinks that this is a everyone's holding hands and getting the same deal, there should not be a trading disparity.

So talk to us about Europe, Scott.

I mean, I know you spend a lot of time there, and you've built up a team there and you you kind of have good presence there.

When I talked to people in Europe, you know, even not that long ago, you know that general sense is and I'm paraphrasing and probably crudely breaking it down, but Europe is slightly more genteel judges won't stand for the shenanigans that you get in the US.

Management has more exposure to personal liability, there's more concern about reputational risk.

Is that so I definitely think Europe is different.

I don't think you can take the American model and just export it, so I think that's one hundred percent tro and as the American I should definitely refer to the Europeans.

But from my experience, what I've seen is it is a smaller sandbox in the sense of at least on the lender side, right there's just there's less institutions, So it's kind of hard to do one of these bifrikid deals when these folks are working with each other in every single credit historically, So there's less appetite for the lender on lender of violence as it's been coined here.

And I do think there is reputational risk, but that I mean that was the case here as well right ten years ago.

And I think most of the White Chee sponsors, maybe minus one or two, have kind of ripped off the band aid because I think they've discovered that the markets are forgiving and have a short memory.

So what I would say is, do I see the eleemy stuff moving to Europe?

Yes?

Do I see it in the volume that we have here in the US?

Know?

And do I see the more aggressive transactions that have been implemented here in the US, you know, becoming commonplace in Europe?

Probably not, But I do think if you just step back and think about it, same documents in large measure, a lot of them are the same sponsors, right, It's just their investments up versus the US, and what you're seeing is on the same advisors, right, So you're getting the same you know, without naming names.

You're getting the same lawyers and bankers hired in Europe for deals that they do here.

So it's not surprising that they would potentially roll out a playbook that's worked.

So it remains to be seen.

But I don't disagree with your your your intro.

I think that is very true.

Are there places that it works better countries?

Okay?

Now, now we're going to get into my my knowledge of the various geographies and overall lying fiduciary duties.

But I mean it is relevant right to your point about because look, if someone's looking the challenge in element, the first place, you look at the docs, right did did they breach a covenant?

Did they over blast the basket?

Did?

The reality is you have very smart lawyers on both sides of the table.

For the most part, that's usually a no.

You could get creative with an argument, but presumably there was room in the documents to begin with to at least theoretically move an asset for example.

So the second place a lot of people go is okay, is there a state law claim of action like a fiduciary duty type claim or a fraudulent transfer type claim, which obviously will vary by jurisdiction.

So for example, when we did SFRLTAST France and there are a lot of threats, you know, as part of the negotiation about moving assets away from us, my partner, John Pierre Fargus, who runs my French office or my French restruction practice, who's best in class there, felt very confident that from a fiduciary duty liability standpoint, that that was a hollow threat versus here in the US, we would take that threat much more seriously.

So those type of jurisdictional overlay issues are very relevant.

Whether it's France or Luxembourg or the UK or Germany, it varies by jurisdiction.

So yes, that comes into play as well.

I think the US has, you know, the business judgment standards a little bit more protective of the boards here.

But you wouldn't say I'll go to Italy ol Spain and we can get away with more stuff.

For there's not like a target on a particular country where things are loose.

I think there probably is.

I won't speak to it for obvious reasons, but I think there are certain jurisdictions, you know, deferring to my colleagues overseas where they feel there's I mean, we talk about these things with our clients.

Right, if it's in France, you probably can't do X.

If it's in Germany, you probably can't do Y.

If it's in Luxembourg, maybe you could do this.

So it is part of the conversation when we're thinking about how to you know, roll forward a transact.

It's more case by case than you know you're you are beefing up massively in one country because you see a huge amount of transactions in one place.

I mean, right now, again from from the American practitioners perspective, you know, I'm seeing a ton of distress in France and we, luckily for US, we have a great practice there, so we're doing a lot of it.

So like, are we in France in a big way because there's a ton of distress?

Yes?

Is that because we think it's a leemy friendly environment?

No?

Actually, probably the inverse is true.

So it's also a question of scale.

How much does that act as a deterrent the deal?

The deals relatively much smaller than they are in the US.

Right in the capital structures, yes, yeah, I mean for the for the most part, that's true.

I mean, but if obviously SFR was a massive capital structure.

You know, it's public that we're involved in multis International, it's another massive capital structure.

So there are some big ones, but you're right, I mean, there's less multi billion dollar structures than we deal with here in the US.

And other than the fact that cop agreements work, which you're a big advocate of, what are the lessons do we learned from Maltese?

So, and just to pause on that, I think co op agreements are legal to go to a discussion earlier, and I think they're appropriate in certain circumstances.

I don't think that there and I said it earlier, I'll say it again.

I don't think that they're one size fits all.

I think there are times sometimes when actually our clients want to rush to a co op, where maybe we should let things play forward to see if it makes sense contextually in that circumstance.

In SFR, it made a ton of sense to me.

That was a little bit more of a no brainer.

You had a massive capital structure.

You had a company who came out who basically said telegraph they were looking to capture discount.

And you had lenders within our syndicate who were US holders, Euro holders, you had power holders, You had people that bought in at a steep discount.

So you just had varying degrees of thought processes from their own internal perspective.

And I think had there not been a co op, given the size of that structure, it would have been very easy for the company its advisors to go pick off large holders and do things to pit holders against each other.

So in that one it made a lot of sense to me.

No one was looking to do an enemy off the backs of someone else, and that deal which printed was one hundred percent pro rata.

Everyone in the secured group got the same deal, So that made a lot of sense.

In other scenarios where you have really big lenders, you know, paper straining as deep discount, they may want to put money to work, you know, rushing out with a big co op may cut against their interests.

Just going back to Europe, how's the build out of your business going.

You've hired some people, you're hiring more.

Yeah, it's going great.

In the US.

I mean, we've been plugging away for a while and have been extremely busy for years.

Knock on wood, we haven't you know, we haven't had a lull on a on a personal level.

So two things.

One is, obviously the market has changed.

I've been doing this roughly twenty five years and it's changed drastically in the last five and luckily we were part of that change as opposed to reacting to it.

And that is this whole change to eleemy being you know, a precursor and sometimes a substitute for a change of control type transaction.

So you need more lawyers that know how to do that work.

And it really is finance heavy and not all bankruptcy lawyers, certainly when I started my career twenty five years ago, were heavily trained to focus on every nuance at credit docs at a young age, and so we've really changed our training as it relates to our up and comers, and also are recruiting.

So a lot of the hiring I've done in the last two years have really been heavy finance folks, not people I would call traditional restructuring lawyers, not the folks that throw in a suit and tie and go to court, but the ones that could dig into a credit agreement and come up with a host of options for our clients.

And I'll continue to we can never have enough bench as it relates to people with that skill set.

Separately, a big personal goal of mine was really to build out the European practice because in my mind I could see this work that we do here spreading to Europe again, not necessarily the same level of intensity or aggressiveness that you see in the US, but but versions of it.

And you know, most of our clients that you know we'd rely on here for new work are the same people that play in Europe.

So to us, it was a natural progression to try to continue that relationship overseas.

Historically, we always had a very deep team in places like France, so that was easy.

In Europe, we were good, but we needed more, I mean honestly, and so we went out and we uh and that's a tough market to recruit, and I mean it's just it's a small, finite universe of people that are super relevant and everyone wants those samful of people.

So we were able to pull off a pretty big acquisition earlier this year.

We brought in the leader of senc's restruction former snce's restructuring practice and finance and a host of associates game with them, which was a huge bolster to our group in London.

And I would say, I'm not done there.

There's more to come.

And more in other countries in Europe.

Yeah, one hundred percent as well, And there's one in particular that will be coming soon.

But the jurisdiction is so small.

Stay away from avoiding.

But again, if I'm sitting in Milano, Madrid or Frankfurt, why why give some done?

I mean, why not just go to my guy that I've been talking to for decades, that you know, speaks my language.

He's been sitting there from the front of.

Me, from an advisor front, or from a client front.

From a you know, if I want to get a little fun to do this sort of why do I need to go to give some done.

Well for this sort of work.

I mean, my honest pitch for that, because I think it rained true, is we've just done more of it than anyone else, and so there's a certain level of sophistication that we have just having dealt with all this stuff for the years.

And I think if you think about you know, deals like Altice, which was an lum in Europe, it was a combination of my French practitioners who are best in class and kind of know that market in the nuances, and then us taking the technology that we've been doing here forever and kind of transplanting it with the with the benefit of our French partner's you know, advice to make sure we're not hitting any guardrails and transplanting it.

So I think that's you know, the pitch, so to speak.

I think it's there.

There's something that is said if you even look at the US market, there's really a subset of law firms both on the company and on the lender side that do all of this.

So I think it's it's a natural progression to take that expertise and to bring it to your clients overseas.

And then when when you're representing debt holders and you're dealing with a company, is there any difference in the type of company, For example, if it's a sponsor private equity held equity for the most part, or it could be a company that's got a very influential founder like we talked about Echo Star with Charlie organ or or dealing with a more widely held public company.

Uh.

Yeah, I mean there's definitely a difference in my mind between public and private.

You know, I don't think you've really seen much of any public style le me right, because if you think about people's motivations to do these transactions, if you're a sponsor of the motivation is pretty obvious to do one of these transactions to get more time, to hopefully get a return to your LPs, to not have to write down an investment, etc.

I mean, obviously, if you're dealing with the company of public shareholders, I mean they're still benefit people are fiduciaries to their public shareholders, but you usually don't have like one united voice so to speak, pushing in this direction.

I do think, I mean, we have some stuff in the pipeline and in the work so to speak that are public, so we'll see if we kind of finally cross that transom.

But I think for the most part, just given you need another party to transact with who's motivated, I do think that most of the stuff will stay on the sponsor side.

I want to ask you it's about the concept of m blockers and omni blockers.

A recent guest, Sabrina Fox Legal, said that they should be on all deals.

Essentially, this is anti lem language and the documentation saying the borrow won't use terms to subordinate lenders kind of umbrella protection against the range of lemies.

Is that a viable option when it catch on to you seeing any of those at all.

Well, there are I mean that's a generic leemy blocker term.

I mean, if you look at deals nowadays, there's things like sort of protection or j crew protection or chew WE protection, some of the more famous lemies that are out there.

And I think it goes to the whole commentary we're having before, is like in the syndication process, how much leverage do folks have on the front end to get those kind of protections in the document.

You're seeing more and more of them.

You're seeing things like J crew protection in documents.

That being said, right, it's a cat and mouse game.

You'll see a version of J Crow protection and then someone on our team will take a look at it and be like, I've figured out a way to navigate around it.

So I think you are seeing some documents on the primary issuing side where some of these protections are getting in.

Where they're really finding their way in is post Lmy.

So people say, Okay, I'm doing this deal because you have leverage against me, because you have this optionality under the document.

However, you know I'm shutting the door, right.

So on the back end of this deal, we're going to close everything off.

We're going to have every protection.

We're going to tighten down your baskets, we're going to tighten down your r peak capacity, et cetera.

And So what's interesting is you're now seeing a lot of people in the secondary market, and I talk to clients all the time that are very interested in buying the post Elmy paper in the marketplace because that they know is protected paper.

Look if on the on the front end of an underwriting process, if if lenders were able to advocate and get in real enemy protections and all these documents, we could just go back to being restructing lawyers.

I'm not seeing a change anytime soon.

And that hasn't died restructing laws.

There was a yeah.

I rolled my eyes a little bit at that.

No, I don't think it's died.

I think the markets changed.

My honest view is what's happened is instead of this being kind of a one step process when you need to recapitalize or fix a business, it's almost become a two step process.

The lemy comes first, and if the enemy sticks, there never is a part two.

So maybe that kills the restructuring lawyer.

But I think what we'll probably see over time and time will tell is that it won't stick in a decent percentage of these and you'll still have the restructure.

So so now I'm not a I'm not a believer in the line.

I thought that restructuring lawyers are dead, But.

The real Senate would just say it's another way of the lawyers getting paid twice.

I mean that it's a cynical look at it, but it happens to be true.

I mean, it's it's two bites at the apple, so to speak.

If it's required, so talk about the pipeline.

You do expect these things to come back lemies, you know, is it coming back strong in the in the in the fourth quarter, does it continue into next year?

Do you see a good you know, wide range of sectors involved in times of businesses?

Yeah, so I would say it's it's definitely ticking up a bit.

I think everyone kind of took a deep breath, candidly, because I feel like so many of our clients and again it's the same players, and all of these deals just had one after the other after the other and probably had enough, so to speak.

I don't think from talking to my own clients that they've gone anti eleemy.

I do think perhaps sponsors have to make a better case to the lender community as to why in a particular credit it makes sense for them to engage on lem I don't think it's just because the debt's trading off, So I think there's maybe a little bit more of a dance that needs to happen on both sides of the table.

Yeah, I think there will continue to be, you know, a large amount of enemy rolling into twenty five.

I don't think that's going to change.

I don't know that it's sector specific per se, but certain sectors which are struggling, whether it's chemicals or what have you at the moment, are more prone to it just because their securities pricings are trading off.

Right.

So if you have a bunch of companies in the same sector and they're all trading in the sixties, I think you might see a lot of enemy in that particular sector.

But I don't.

I think it has more to do with the trading volumes and the trading prices than it has to do with you know, advisors, you know, at targeting a particular sector.

But rolling into twenty six you said twenty five.

I'm sorry, yeah, finish twenty fifth.

It's been a long year.

Yes, I mean, I think realistically it'll it'll continue to roll in.

And it's the US, it's Europe, it's.

I think so I mean, I I us I think is is you could take for granted that you'll continue to see high volume of enemies here.

I think everyone's used to it, and sponsors are kind of gotten used to it as well, maybe less concerned about the reputational hit.

Europe.

I think you've seen a couple posts SFR, not on the same scale or size, So I think think you'll continue to see them in Europe again, you know, for all the reasons we discussed earlier.

Do I think it becomes the snowball that is the US now?

Do I think you'll see more of them with some of the same players in Bob, Yes, but.

You are global, why not Let's time?

Why not Africa, Middle East?

Asia?

We don't have offices in all those places, so that could be the next thing venture Why Yeah, I think I think we'll probably we'll stick to to Europe for the time being.

In the US, I mean, we'll see if this becomes becomes a trend anywhere else.

But I think, you know, in certain of those jurisdictions, it's just restructuring per se is not as much of a developed practice as it is in US and Europe.

And basically the aggressive you know, the enemies in the US just get more aggressive, do they more cut throat?

And Europe joins in.

So I think the opposite is true.

I think the enemies in the US have actually tried to be more inclusive.

I mean, you know, without getting into it because we're involved in some of them.

But if you look at like the twenty twenty type transactions during COVID of like sort of and Trimark and board riders that were truly non Parada, I think the market had shied away from those.

They've tried to create a a a structure where everyone's incentivized to participate.

And you know, from our perspective, you know, a good enemy is obviously one that staves off a change of control in the long term into your you know examples of ecro Store and these other ones where on the back end there's a recovery and our clients do very well economically, that that's the best enemy.

But I think in the short term, because none of us have a crystal ball when when we think about what's a good enemy that we just closed, you know, having very high take up and participation is is good in our minds as advisors at least because it means we created a mouse trap that worked that people you know, kind of played with.

If if you have a huge amount of holdouts, probably not a great enemy, and.

The client understands that and respective that they're don't just trying to get every last dollar rounds, but they actually see.

Oh, they one hundred percent understand the playing field.

I mean, if you think about it, if fifty percent of you know, talking about the fifty percent figure before, fifty percent of people just went in the room, cut a deal and took all the goodies for themselves, you'd have forty nine percent not participating, right, even though they theoretically got a better deal.

That that's all of our clients are smart enough to know that's not that's not a win, that's a litigation or even worse, you know, a company just faltering and falling down into a bankruptcy.

So yeah, clients, clients totally get that.

You know, you might be able to do a little bit better, but you know you need to leave enough where people want to participate.

Great stuff, Scott Greenberg with Gibson done.

Many thanks for joining us on the Credit.

Edge, Thanks for having me, Thank you, and.

Of course very grateful to Steve Flynn with Bloomberg Intelligence.

Thank you for joining us today.

Great to be here.

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