😎Notice of Appearance: Jeffrey Cohen, Partner & Chair of Bankruptcy & Restructuring at Lowenstein Sandler LLP😎
PETITION: Welcome Jeffrey. Let’s kickoff with UCC representations generally. You’ve done a lot of retail work. There’ve obviously been a lot of cases — particularly those involving private equity sponsors — where the UCC had to step up and do combat with the debtors, the debtors’ private equity sponsors, and the debtors’ “independent” directors. What do you make of this dynamic? What of the cottage industry that’s formed around “fiduciary services”?
COHEN: I’ve always relished being the underdog. I’ve never minded battling from behind or overcoming obstacles. I view this dynamic the same way. Most cases start with the deck substantially stacked against unsecured creditors, generally, and the UCC, specifically. The debtors, private equity sponsors, lenders and debtors’ “independent directors” spend months devising a strategy to box in the UCC and unsecured creditors and we get weeks and sometimes days to fight back. I think it’s unfortunate to treat your vendors, landlords and trade partners that way, but it is what it is. I am intimidated by nobody and will back down from no situation. I’m about getting dollars in creditors’ pockets. Along with my team, we’ll roll up our sleeves and surgically dismantle most well devised plans when given the chance.
As far as the “cottage industry” you have referenced … over the last year we’ve all adopted new terminology in our daily vernacular including, most notably, “WFH” for “work from home.” We should just call these guys “DFH” for “director for hire”. Honestly, there are so many wildly talented and bright individuals that have become the usual suspects in these independent fiduciary roles that it’s really a shame the nature of the business (i.e. keeping the parties who hired them happy) prevents them from doing their job to the best of their ability sometimes. Thankfully most judges see right through the charade and let the committees do their job anyway, despite protests by the debtors that their “independent director” has already performed their investigation and found no basis for a claim.
PETITION: Let’s talk about the recent mini-trend of hyper-expedited prepackaged bankruptcy cases. Belk Inc. and several other cases come to mind. Surely the aversion to longer more expensive cases is a “credit negative” for practices like Lowenstein Sandler LLP that represent official committees of unsecured creditors. Do you see these types of cases becoming more and more common and, if not, why not? What do you make of the manufactured venue that’s been leveraged to help make these cases happen?
COHEN: A lot of work goes into these expedited prepackaged cases in advance of their filing, so the professionals involved aren’t really hurting for work. Does it shorten and sometimes eliminate opportunities for a committee to be appointed and, in turn, for Lowenstein or one of our talented competitors to represent the Committee? Absolutely. But our goal remains focused on putting dollars in creditors’ pockets. In Belk, we represented approximately a dozen separate vendors, all of whom will get paid 100 cents in the ordinary course of business. In the long run, our clients’ happiness is good for business. So while I would have loved to represent the committee in Belk had there been one, the outcome for unsecured creditors was worth the tradeoff.
With respect to venue, the first large and notable chapter 11 case in my career was Enron, so venue selection or manipulation is nothing new to me or our industry. Remote appearances at hearings is certainly making venue selection even easier as armies of attorneys, financial advisors and bankers do not need to board planes and stay in hotels to appear around the country right now. I think this will lessen as cases start pivoting back to in-person hearings. Hopefully someday soon, we’ll all be on the Acela to Wilmington again, avoiding the bathrooms at the train station and eating granola bars for dinner.
PETITION: You represented the committee in the Blockbuster Video case. Tell us a crazy story about that company and/or that case that isn’t commonly known.
COHEN: Fun question. There are actually a few stories that put a smile on my face, but the one that sticks out the most is when, during a large meeting between the Committee and the company, I asked the company’s new CEO if I could see his Blockbuster card (I showed him mine) and he admitted to not being an active member but rather being a Netflix subscriber. At the time, Netflix was still delivering DVDs by mail and wasn’t the behemoth digital content provider they are today. Seriously dude?!?!
PETITION: What surprised you the most about the short-lived cycle that transpired over the course of 2020?
COHEN: The speed and growth of the technology we used to run our cases and represent our clients. For example, my first cross examination of a witness during COVID involved having to dial-in by phone, login to a designated court platform and then separately have my litigation partner and witness connect by Skype. Just months later, court hearings were run much smoother and generally on one video platform, auctions were run with numerous bidders and hundreds of attendees without too many hiccups and driving value in virtually the same manner as in-person auctions.
Also, how quickly all case parties came together to work collaboratively to try to figure out a solution. When all stores were closed, it made it impossible to run store closing sales if you couldn’t physically access the locations. But this wasn’t a debtor-specific problem. This was a problem for all parties involved and, to the credit of our industry, we saw a lot of collaboration to get parties to the best result possible.
PETITION: Where do you think there’ll be activity in 2021? Is there something hiding under some rock somewhere that people should be paying more attention to?
COHEN: I don’t look under rocks, although I am a big fan of Dwayne Johnson.
I think there are some obvious possibilities including lodging, entertainment, travel and fitness, but it really depends on the level of stimulus funds these industries receive and whether they successfully bridge them to the other side of Covid or not. Unfortunately, your guess is as good as mine here.
PETITION: What is the best piece of professional advice that you’ve ever gotten and why?
COHEN: I was lucky to have several mentors, both personal and professional. One common piece of advice I received was that it’s about the long game and not the quick fix. As a result, I have continued to hold myself and my team to a high moral and ethical standard that I won’t compromise to get hired as counsel in a single case or resolve an isolated case-specific issue. I want clients to hire me, and the Lowenstein bankruptcy group for years to come, because we’re loyal, smart and qualified. We never want to be the flavor of the month.
PETITION: What are some books or podcasts that have helped you get to where you are today?
COHEN: “The Long Run,” by Matt Long. It’s the only book I’ve ever read multiple times … by choice! If you’re not inspired by a New York City firefighter who had less than a 20% chance of survival after getting hit by a charter bus during a MTA strike, not only surviving, but relearning to walk, then run, then train for and attempt to run the NYC marathon and a full Ironman triathlon, you aren’t capable of being inspired. His grit and determination is something that gets me through case challenges, long hours, party disputes and dirty litigation tactics by adversaries. Keep pushing. Don’t stop.
PETITION: The fact that you’re analogizing restructuring practice with a firefighter who got hit by a charter bus, had to fight to walk again, did so, then ran 26.2 miles on one of the harder core marathon courses and then for sh*ts and giggles, did a full Ironman …. is … probably not that confidence-inspiring for MBA and/or law students considering a career in restructuring. Juuuuuust sayin, homie. 😂
Anyway, thanks, Jeff, for participating. Cheers!
PETITION is a digital media company that provides edgy and irreverent analysis, commentary and curated links about financial markets, distressed investing, restructuring and bankruptcy. We discuss disruption, from the vantage point of the disrupted. You can find us here and follow us on Twitter here.