Cadwalader's Distressed M&A team brings together leading M&A and private equity lawyers and the talents of a prominent full service restructuring group to help analyze and evaluate the possible risks and rewards of various courses of action and to execute on the best strategy for the business, both offensively and defensively.  They also are able to call upon their colleagues with specialized industry expertise, regarding complex financial products and transactions, such as derivatives and credit default swaps, insurance, and real estate, to environmental, antitrust, regulation, tax, and litigation issues.

Offensive Strategies and Advice
As the volatility in the credit markets forces companies into financial crisis, savvy buyers are examining opportunities to purchase businesses at bargain prices. However, the new investment opportunities present a host of legal and financial considerations for the buyer.

Our Distressed M&A Group assists potential investors with assessing such opportunities, including:

• identifying and evaluating distressed company targets, including an analysis of the target’s capital structure and the identification of opportunities and risks in the “fulcrum security.”
• identifying potential value enhancing strategies for the target, including rejection of burdensome executory contracts and the potential for relief from collective bargaining agreements under applicable provisions of the U.S. Bankruptcy Code.
• examining strategic bid alternatives, including consensual turnarounds (operational/structural innovations, legal and financial engineering), rescue financings (PIPEs, converts, debt with warrants), passive discounted/distressed debt investing, loan-to-own, control via purchase of fulcrum security, chapter 11 plan sponsorship, and section 363 sales, as well as evaluating the associated bankruptcy issues and tax ramifications of each option.
• assisting investors in managing the acquisition process by analyzing bid procedures, constructing competing bids, participating in court authorized auction processes, and navigating accelerated sales.
• advising successful acquirers regarding board representation and other corporate governance issues. 

Defensive Strategies and Advice
Companies that face financial, operational and strategic challenges need experienced counsel that understands the industry in which the company operates, the competitive landscape, and the business itself to help create and negotiate an effective strategy that maximizes value for equity holders and creditors alike.  

Cadwalader has developed a proprietary “Distressed Audit” to assist companies that may be in, or potentially face, stress.  The Distressed Audit allows us to provides assistance beginning at the earliest stages, providing preventative and defensive measures before a crisis to sustain value, manage difficult issues, avoid liability and, as appropriate, preserve a company’s independent standing or position it so that it is most attractive to suitable investors. 

As part of the Distressed Audit, our team of lawyers will work closely with management to:

• assess the company’s situation by reviewing credit exposures and documentation, including guarantees, covenants, MAC triggers, contingent liabilities, capital structures, regulatory imposed capital requirements, and near term liquidity; advising on corporate governance and compliance issues; and assessing customer, employee, vendor, and creditor relations.
• insulate the company from liability and its officers and directors from personal liability by ensuring proper documentation of board actions and conducting compliance reviews and audits as appropriate.
• evaluate and develop alternative strategies, including implementing cash conservation techniques, an immediate sale of all or a portion of the business to realize remaining value, a refinancing through an out-of-court transaction, such as an equity infusion or a consensual restructuring to reduce debt or debt services, or a bankruptcy-related process, such as a section 363 asset sale or chapter 11 bankruptcy plan.
• execute a transaction, including structuring and documenting deals, arranging financing, and obtaining regulatory approvals in a way that withstands stakeholder challenges.