⚡️Notice of Appearance - Andrew O'Neill, Sidley Austin⚡️
This week we welcome a notice of appearance from Andrew O’Neill, a Partner in the Restructuring Group in Sidley Austin LLP’s Chicago office.
PETITION: First, welcome back. After a highly-contested multi-day (6!) confirmation hearing in the Legacy Reserves Inc. bankruptcy case, we understand you took some much-needed R&R. What was it about that case that lent itself to such intense challenge? Do you anticipate valuation will continue to be hotly contested in future oil and gas restructurings given the current commodity pricing environment?
Several factors contributed to the contested hearing, among them an active committee, a dissenting notes class, and as you note the ever-active commodity pricing environment. I’m not sure many cases will lead to a full valuation trial like we saw in Legacy – the disincentives, chiefly cost and uncertainty, will continue to motivate all parties to deal rather than go hammer and tongs. We’ll see, but I’d bet on even more prepacks rather than more valuation trials. Of course, having just said that, we are now observing a willingness by parties to litigate just about everything in the Alta Mesa matter, so who knows.
PETITION: Are we setting up for another wave of oilfield services bankruptcies, including chapter 22s?
That would make sense given the pain on the upstream side, although certain of these companies may be able to do out of court deals initially to avoid filings in the near future – their capital structures were simplified in the first go-around (right?), and may enable such deals without the attendant costs of the bankruptcy process.
PETITION: And, if so (and, yes, the question presupposes an answer), WTF?!?
Well, there is always the Middle East conflict(s) to potentially boost crude prices, and if that happens perhaps there will be more drilling and the services guys can get back in the groove. But I take your point, and no I don’t think it’s true a lack of 1129(a)(11) rigor, but rather an unexpectedly tough business environment (again!).
PETITION: What are some concerns you’re hearing from clients that not enough people are talking about? What themes do you expect to prevail in 2020? Will it be more of the same, e.g., retail and energy, or will other industries be a notable trouble zone?
Are there any more milk producers out there? I think again many of us in the guild are expecting a downturn at some point – will 2020 be the year or will financial engineering/central banking continue to stave off the inevitable? I’m done predicting that THIS WILL BE THE YEAR but have seen those articles about CEO and CFO types predicting recession or significant slow-down cropping up, so perhaps this is the year. As one of my colleagues is fond of saying, the longer the counter cycle is delayed, the bigger the tidal wave will be when it hits. Right now I see a year much like 2019. Lots of chatter about auto and health care, and then there will always be retail (or will there be?) and mass torts. We are seeing more of the latter already to start the year, as you folks have been good enough to report on.
PETITION: What is the best advice that you received that’s helped you in your career? Don’t give us any trite BS: we’re looking for some gems here!
One of my mentors, who happened to retire this year, was fond of saying that if you are going to succeed in the bankruptcy (or what we at Sidley now call the Restructuring) practice, you need to have the 3 Fs: Fortitude, Fearlessness, and Fire in the belly. That’s probably only a 5 or 6 on the triteness scale. In addition to being a nice, catchy saying, I think it’s largely true, but another good piece of advice that I received early on is that it’s a good idea, if you can, to extract something useful out of even the most mundane or seemingly pointless assignment, task or matter. This is really effing difficult when you’re sucking wind at the office late on a weekend on something that isn’t super interesting. However, if you try really hard you can probably learn something new – or perhaps at least look forward to the hours counting towards an enhanced bonus or the enduring admiration of your colleagues. In other words, stay positive! Now we’re ratcheting up on that scale ….
PETITION: Have you read any books or listened to any podcasts that you think our community of investors, advisors, bankers, and lawyers would find interesting? What’s piquing your curiosity these days? Keep in mind: we have a lot of students who read us too.
We’ve all heard of the banality of evil, but how about the sometimes banality of negotiation? Take a read of “Our Man” by George Packer. Terrific eyes-wide open account of the life and times of Richard Holbrooke - the man, the myth, the legend. Reading books is a really good idea for those of us that also have to read credit agreements and indentures from time to time, for sanity’s sake, and I usually have a few going at once. Lately, I’ve taken to reading more non-fiction, which is probably a function of advancing age – I’ll be in the lazy boy watching old WWII movies on the history channel before I know it. What’s a podcast?
PETITION: Here ya go, Andy.
We’ll send you our bill for 0.1 hours (research).