Chapter 11 Can
Bring Rough Waters.
Robert Himmel is co-president of Gordon Brothers
Group’s Commercial & Industrial Division. He works
with clients to design and implement comprehensive
solutions across a broad spectrum of the consumer
product and manufacturing segments, including
the implementation of situational operational
initiatives and balance sheet restructuring. Prior to
joining Gordon Brothers Group in 2002, he served
as president of the Malden Ventures Division of
Malden Mills Industries. Himmel is a graduate of
the State University of New York at Stony Brook.
remain in place today. These include
requirements that the city balance
its budget every year, instituted five-year spending plans, and eliminate
poor accounting practices.
What is instructive for asset-based
lenders and restructuring professionals
is that when the city finally reentered
the credit markets in 1978, the banks that
underwrote much of its debt through
their partnership with MAC ended up
being long-term beneficiaries. That
model could be applied today through a
restructuring process that includes new
ongoing operating partnerships with
banks that provide assistance through
dedicated restructuring professionals
to municipalities attempting to
rework their balance sheets.
restructuring professionals should
approach lenders who work closely
with municipalities. Restructuring
professionals can offer a broad spectrum
of private sector expertise, including
cash and expense management, to
public entities on a consultative basis.
This would not only reduce risks in
association with loans and bonds already
made to municipalities, but would also
solidify the financial underpinnings of
states and municipalities going forward.
Let Cooley Help
Steer the Course.
Named “Restructuring Law Firm
of the Year,” Cooley’s Bankruptcy &
Restructuring Practice represents
creditors and debtors in all aspects
of bankruptcy and out-of-court
restructurings throughout the U.S.
Another approach that could be
employed in tandem with those
would be to create more quasi-public
corporations to assume responsibility
for certain key public works with
enhanced accountability to the
various branches of government and,
ultimately, to taxpayers. Two examples
of such entities are Amtrak, the national
railway company, and ConEdison,
the New York utilities provider.
Equally important, lenders and
restructuring professionals could
explore opportunities to work together
to develop a range of creative debt
financing options for municipalities
that involve public assets. The value of
many types of public assets, including
land, buildings, and use rights over
public areas, to name a few, are
currently underused or even completely
overlooked by local governments.
Lenders and their restructuring partners,
with their expertise in assessing and
unlocking asset values, could help state
and municipal governments use these
assets to rework their balance sheets
and find new debt financing options.
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Such entities should be expected to
operate as going concern companies.
Lenders and restructuring professionals
could join forces on a broad basis to
introduce this concept to state and
municipal governments, and then work
closely with them to identify where
they could reduce financial burdens
and streamline operations by housing
certain services and public works
under such quasi-public entities.
After the nation’s votes are cast in
November, the dialogue will almost
certainly focus on what the electoral
outcome means on a macroeconomic
level. One thing is clear: with the
prospects improving for an easing
of the current political gridlock by
next year, lenders and restructuring
professionals who move now to work
together and systematically target
public sector clients could not only
successfully protect lenders’ existing loan
portfolios, but also potentially open a
whole new universe of clients to serve.
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Generally speaking, city managers and
other government employees rarely
have extensive and highly sophisticated
financial engineering expertise, a skill
set that is sorely needed. Accordingly,
In the process, there appears to be a clear
opportunity for lenders and restructuring
professionals, working in concert,
to act as a positive transformative
force within the public sector. J