Kirkland & Ellis restructuring partner Jonathan Henes had his qualms about waking up federal bankruptcy court judge Prudence Beatty's pregnant clerk at 10 p.m. on a Sunday in late February. But he had no choice: Henes had just reached a deal with three banks that would stop an ongoing trial in its tracks. The deal would provide his client, Solutia Inc., with the funding it needed to exit bankruptcy, and with the financing deadline just a few days away, he needed to cancel the next day's closing arguments and make sure the judge was available for a Tuesday hearing on the proposed settlement.
A month earlier, the banks-Citigroup Global Markets Inc., Goldman Sachs Credit Partners LP, and Deutsche Bank Securities Inc.-had claimed that an adverse market condition clause in the commitment letter with Solutia permitted them to walk away from a $2 billion financing agreement, prompting Solutia to file suit [see Big Suits, page 49]. The following two weeks of expedited discovery generated more than 3 million documents and 20 depositions.
Judge Beatty had been pushing hard for a deal. As trial testimony came to a close at 9 p.m. Saturday, Solutia CEO Jeffry Quinn told Henes to contact his counterpart at Skadden, Arps, Slate, Meagher & Flom. Henes jumped in a cab and sped from lower Manhattan to Skadden's Times Square office but ended up talking on his cell phone to restructuring partner Jan Baker from outside the building. Rather than meet that night, the two agreed to convene their teams at Kirkland the next day.
By the end of the Sunday negotiating session, Henes's team had convinced the banks to drop their claim. According to Skadden lawyers, new terms in the lending agreement satisfied the banks that they would be able to find buyers for Solutia debt on the secondary market.
But even after reaching a deal with the banks, Henes's job wasn't done. His team still had to get Solutia's creditors and equity committees to sign on. It wasn't until the moment Judge Beatty walked into her courtroom Tuesday morning that Henes got the final clearance from the creditors-and the judge's approval.
Then, after a celebratory lunch, Henes headed back to the office to learn that he had still more work to do. Skadden corporate partner Seth Jacobson called and asked if Henes, who had led the Solutia bankruptcy team for four years, would close the deal.
The next two days were a whirlwind. On Thursday at 3 a.m. the financing deal was completed-in time for money to be sent to Solutia's European outposts during European business hours. The money finally flowed into Solutia's coffers at 5:30 Thursday morning.
Lawyers from both sides say they are still stunned that they pulled off a deal that met with the approval of so many constituencies so quickly. But Henes, who likens that last push to a Hail Mary in a football game, says that after years of working on Solutia's restructuring plan, lawyers received an adrenaline kick from the last-minute trial.
"We had done all this work to get there," says Henes. The end almost "seemed a little anticlimactic."
REPRINTED WITH PERMISSION FROM THE MAY 2008 EDITION OF THE AMERICAN LAWYER © 2008 ALM PROPERTIES, INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED