😎Notice of Appearance -- Nicole Greenblatt, Partner at Kirkland & Ellis LLP😎
This week we welcome Nicole Greenblatt, a Partner in the restructuring group at Kirkland & Ellis LLP.
PETITION: Welcome Nicole. Let’s dive in. M&A was bananas in Q1 this year and the capital markets are, to put it plainly, open AF. There’s a lot of dry powder out there. All of these factors have contributed to a dramatic drop-off in restructuring activity thus far this year. What’s your take on the rapid rebound from Q220 and what’s your prediction for Q221?
Nicole: Thanks for having me! Yes the markets are indeed white hot — and wide open. So there’s plenty of (cheap) money to throw at whatever problems a company may be experiencing, and we restructuring professionals may be feeling the drought for a while. There’s no question the pandemic triggered a major acceleration of chapter 11 filings that cleared most of what was in the pipeline for 2021 and even 2022. And given the intensity of last year, I’m sure many of us are grateful for the reprieve (its nice to have time to devote to conference panels, pro bono work — and family of course!). Your guess is as good as mine as to whether it’s a bubble and when/ if it will burst. But in the meantime, even when macro conditions create a slow restructuring environment, there’s always something unexpected - within an industry or within a particular business - that drives demand for our work. So don’t despair friends!
PETITION: You recently worked on the Town Sports International LLC bankruptcy filing. The company filed in September 2020. Talk to us about administering that case in the heart of a pandemic that obviously completely disrupted gym chains all across the country. Specifically, we’d love to hear some war stories about (i) the competing DIP proposals and (ii) whatever the hell happened with the company’s ultimate DIP lender and original stalking horse bidder? Why did the initial transaction fall apart?
Nicole: Wish I had something juicy to share with you guys but the reality is what you read in court papers is the whole truth and nothing but the truth. We were brought into the situation very late in the game — and well into the financial impact of the pandemic. Unfortunately there was a lot of bad blood between (and among) the lender group and management. Bottom line - they were engaged in a fairly typical restructuring dispute (over how much new money was needed; to support what footprint and capital improvements; and whether that new money would soak up all the value in the business) in a very atypical and unpredictable operating environment (given ever-changing rules and restrictions on gym openings and varying consumer protection mandates across relevant operating states). Ultimately, “requisite lenders” banned together and used that contractual power to block the larger DIP/sponsored restructuring path the company might have preferred in hopes of locking in some modest recovery through a quick sale. Needless to say, prevailing/worsening market conditions and the cost of the proceedings hampered the Buyer’s own fundraising efforts, and the principal decision makers shifted as the case progressed. But in the end, the funding came through for the company, the sale closed, jobs were preserved and we were able to cover all administrative costs of the case and confirm our plan on a critical timeline. That was no small feat and is a testament to the extraordinary efforts of everyone involved, especially the CRO team and independent directors who jumped into the case and worked through it every step of the way.
PETITION: Similarly, what was the biggest challenge in the Lakeland Tours, LLP d/b/a WorldStrides case? Clearly students weren’t engaging in “educational travel experiences” in 2020. How did you overcome it?
Nicole: Worldstrides was a shining example of “collaboration in crisis” where the lenders, sponsors and management worked together towards an optimal solution. The company was directly hit by the pandemic during its peak travel season, meaning costs had already been incurred for a significant volume of trips that had to be canceled — and customers wanted their money back. So it was a double whammy: revenue came to a halt and the company needed serious cash to comply with its refund policy and otherwise bridge to a return to travel. The sponsors and certain lenders ultimately both stepped up to fill the hole in a manner that effectively preserved their relative priorities in the capital structure. Those negotiations were fraught with the typical challenges, which were only exacerbated by the uncertainty of when worldwide travel would resume and the compressed timeline. But the most critical driver of case strategy was getting everyone aligned on one thing: how important the customer experience would be to preserving the long term value of the business (and how damaging and widespread negative consumer publicity could be in a pandemic environment where social-media is rampant). That meant prioritizing (unsecured) customer refund claims over all other recoveries — and getting those checks out with no delay (i.e., early access to a large DIP). This critical business objective posed legal and practical challenges in any bankruptcy scenario, and simply would not have been achieved without broad support among the secured lenders. The partnership reached among the sponsors and secured lenders to deliver committed financing for a ‘DIP to prepackaged exit’ was the key to our success. Starting the case with a comprehensive solution (the target end game) provided essential direction for the case and gave us greater flexibility to get the new money where and when it was needed most. The case was a terrific experience for our whole team (of all women at Kirkland!) who saw first hand how valuable consensus can be in driving an efficient bankruptcy process to solve real world problems. It’s certainly worth fighting for!
PETITION: What do you make of the narrative that the “Yield Baby Yield” fervor the past few years is doing nothing more than propping up zombie companies that ought to have restructured by now? That this trend doesn’t translate to economic optimization of resources?
Nicole: That’s a hard thing to judge. There’s always a subjective element as to what makes a business relevant. And if a company is doing well enough/ generating sufficient cash flow to continue to service its debt and deliver the yield, it must be relevant enough to some demographic. Don’t get me wrong- I’d love nothing more than to see proactive, resource “optimizing” restructurings — but in my experience most companies (and most people) won’t undertake that effort and expense until the need is clear. Which is of course completely rationale.
PETITION: Women constitute the overwhelming minority around the restructuring negotiation table. Up until very recently, you were the only female equity partner in Kirkland’s restructuring group. How did you navigate that reality? What is your advice for the junior associates or law students out there who are questioning how realistic it is to be partner and succeed in what remains a male dominated industry?
Nicole: There is SO much opportunity for women in this profession! I love what I do and the people I do it with, so I’ve never felt that was something I had to navigate. I’ve always been inspired by the many influential, women leaders in our field — and today there are such incredibly talented women moving up the ranks within Kirkland and across the many legal and financial advisory firms we work with. So at a high level, I suppose my advice to them is simple: keep your eye on the prize. Set your intentions, be great at what you do — and stay focused on the work and delivering results for your clients. Don’t waste time and energy worrying about whether or why you’re the only woman in a conference room or courtroom. Trust that you’re there for all the right reasons — and that your distinct perspective, judgment and skill sets are precisely what make you valuable to your clients and colleagues.
And MOST importantly, please stick with it. The long term rewards of this career are abundant and far outweigh the challenges. So the best practical advice I can offer is to use all resources at your disposal to set yourself up for success. Outsource ALL non-essential tasks (yes, throw $ at your problems — without apology). Prioritize your health and wellbeing (I struggle with this one but its essential to staying on top of your game; No excuses). And finally, surround yourself with positive energy and people who are rooting for you and will always show up for you. You will need them. NO one does this alone - it takes a village...or at least a few of your very own cheerleaders.
PETITION: As we’re sure you’re aware, a book recently came out about the Caesars bankruptcy. You worked on that case. What are 2 or 3 primary lessons that you walked away from that case with? Be candid with us here: what was one thing that was a big win from your perspective and what was one thing that your side could have, maybe, done a bit better?
Nicole: Yes I lived the Caesars case for several years and as acrimonious as it was, it will always be one of the top professional experiences of my career. The case presented every category of complexity you can imagine — from intense corporate governance and litigation related analysis, to novel corporate finance, valuation and structuring issues, to legislative and regulatory issues — and of course just managing the wild ride and larger than life players. I witnessed and learned a lot about so many things, including the influence and importance of the (often unpredictable) rule of law and the relevant inputs to predicting legal outcomes; how deals are made (or not) and the people, negotiating styles and motivations behind them; and the simple truth that not everything is black and white — and what is “right” or “just” can be highly subjective. It’s hard to say what our “side” could have done better — mostly because the question implies everyone in the case was on one side or another of some hypothetical battlefield. We acted for the company so the goal was to get the case done (I know, typical debtor lawyer response - but it has the benefit of being true!) So for me the biggest “win” was getting to the end and executing the exit: an incredibly complex exercise requiring coordination among many sophisticated advisors across multiple disciplines at many of the firms reading this. They are the unsung heroes of the Caesars story - at least in my book.
PETITION: Speaking of books, what are some books or podcasts that have helped you get to where you are today?
Nicole: I’ve admittedly never been a big pleasure reader (or podcast listener) —do too much reading and listening on the job — so can’t claim that any inspirational words lit my path. I find my escape in films or TV series (thank you Netflix!) so I’d credit my passion for law to an early obsession with the West Wing... But I have been trying to read more and recently discovered Untamed by Glennon Doyle. It really hit home for me at this stage of my life and career — and is a must read for every woman and mother out there! The general theme is to live “untamed” - true to yourself and free of the cages society places on us (women in particular). It’s filled with such raw truth, observations and practical guidance - it’s like a modern reference book for life (I wanted to bust out my highlighter on so many passages!). The author has an amazing way of putting the exact right words around the feelings and sentiment we all experience but can’t necessarily define or articulate for ourselves. So many golden nuggets in those pages. Good for the soul - and so motivating.
PETITION: Finally, what is the best piece of professional advice that you’ve ever gotten and why?
Nicole: This is a hard one - I’ve gotten so many pearls from so many wonderful, well intentioned people over the years, including the ever important maxim of “done is better than perfect” (thank you Sheryl Sandberg) - words I’m feeling in trying to finish this Q&A. 😊
But for me the rule I live by is to always be your authentic self. I’m a firm believer that you can learn something from absolutely everyone. But it’s never effective to try and mimic what works for others - especially if it means trying to ‘tame’ the parts of yourself that are uniquely you. I’ve been told so many times to be “less sensitive” (it can be a curse...) but now I embrace my sensitivity as a gift that provides insight into what others need; Observations that influence my approach and recommendations. At the end of the day clients rely on us for our experience and judgment — and they want advice from a trusted source. When you share your true and distinct perspective it should be a reflection of your authentic self - the culmination of your very personal and ever evolving experiences. That’s how you make genuine connections. And that’s where the magic happens.
PETITION: Interesting stuff. Thanks Nicole!