Bankruptcy Group of the Year: Kirkland & Ellis

Kirkland & Ellis LLP's restructuring group counseled several clients reorganizing massive debt loads toward successful emergence from bankruptcy in 2010, including hundreds of General Growth Properties Inc. affiliates holding $15 billion in debt, earning the firm a place among Law360's Bankruptcy Groups of 2010.

The group's other notable achievements in 2010 included work for Flying J Inc. and chemical companies Chemtura Corp. and Tronox Inc.

The practice group's co-leaders, Rick Cieri and James Sprayregen, attributed Kirkland's ability to juggle so many large-scale, complex restructurings to its deep bench of talented bankruptcy professionals.

"Our mantra is quality, quality, quality," Cieri said. "We bring hard work, client service, creativity and quality from top to bottom."

Kirkland's 105 restructuring attorneys are spread across the firm's Chicago, New York, Munich, London and Hong Kong offices, but they operate as members of one unified practice.

"We have no Chicago fiefdom, or New York fiefdom or London, we're just one practice group," Cieri said.

Sprayregen said the firm's restructuring attorneys collaborate closely not only with one another but with lawyers from the firm's other practices, and identified this multidisciplinary approach as a key ingredient in the "secret sauce" that keeps the group effectively delivering results to clients.

One of the group's most noteworthy achievements in 2010 was the November emergence from bankruptcy of General Growth Properties, the owner and manager of more than 200 regional shopping centers and other properties across the country. Under the company's final plan, all creditor claims were paid in full, and equity holders also walked away with a substantial return.

Serving as co-counsel alongside Weil Gotshal & Manges LLP, another Law360 Bankruptcy Group of the Year, Kirkland represented 382 GGP affiliates in Chapter 11 cases.

Kirkland helped the company confirm and consummate plans of reorganization for 262 project-level GGP debtors, a feat that involved restructuring $15 billion in debt and included 108 loans across 144 properties — all in less than one year.

The successful restructuring of GGP's project-level indebtedness paved the way for the ultimate confirmation and consummation of the reorganization plan for the company and its remaining debtor affiliates by reorganizing the balance of the company's indebtedness.

In connection with the confirmation of GGP's final restructuring plan, Judge Allan Gropper praised the debtor's professionals for doing an "incredible job," and for having "performed tirelessly night and day." He singled out Kirkland's role in restructuring the project-level indebtedness as an "extraordinary achievement," according to the firm.

Sprayregen told Law360 that while Kirkland's work on the GGP case might have grabbed the most headlines because of the sheer size of the bankruptcy, the way the practice group handled the case was a typical example of how it operates on most issues: by coming up with creative ideas and using talented attorneys to implement them.

"It required creative, out-of-the-box thinking on how to handle $15 billion in commercial mortgage-backed securities that had never been restructured before, especially with that amount of money, and ideas about how to facilitate that and how to get negotiations done with creditors. And then we went and worked our tails off and executed them," Sprayregen said.

The firm's work for GGP was considered cutting-edge in the real estate restructuring arena, but Kirkland can point to restructuring solutions its bankruptcy group devised in prior years that had the same innovative effect in other industries, according to Cieri.

"We're not industry experts, we're restructuring experts, and we'll apply that to whatever kind of business comes to us," Cieri said.

Kirkland's bankruptcy group handled matters for clients in the media, manufacturing, construction, communications, financial services, gaming and airline industries, among others in 2010.

The firm also represented two chemical companies, Chemtura and Tronox, both of which emerged from bankruptcy protection in November.

With Kirkland's help, Chemtura shaved its debt load from $1.3 billion to about $750 million while resolving complicated environmental liabilities and streamlining its operations. The company's unsecured creditors were paid in full.

Tronox, which claimed in its December 2009 bankruptcy filing that Anadarko Petroleum Corp., its former parent company, had saddled it with large environmental liabilities unrelated to its chemical business, managed to reorganize around its existing operating businesses. According to Cieri, Tronox's creditors ended up with a large recovery that "no one had predicted."

In the automotive industry, Kirkland represented Visteon Corp., once the second-largest U.S. automotive parts maker, and 31 affiliates in 2010.

The Ford Motor Co. spin-off emerged from Chapter 11 in September, having trimmed $2 billion in federal debt from its balance sheet.

Kirkland also advised oil company Flying J, one of the 20 largest privately held companies in the U.S.

The company emerged from bankruptcy in July, winning confirmation for a plan that enabled the company to repay in full the $1.4 billion owed to its creditors, and to reinstate old equity. The plan allowed Flying J's shareholders to retain $840 million in value.

The firm also helped Flying J sell off substantially all of its retail operations to Pilot Travel Centers LLC in exchange for $515 million in cash and a share of the equity in the combined service station business in the course of its bankruptcy.

Kirkland also helped creditors score major victories in 2010.

The firm advised a consortium of senior lenders led by Apollo Management International LLP, TowerBrook Capital Partners LP and York Capital Management in connection with the lender-led restructuring of the Monier Group, a provider of building materials currently owned by French private equity firm PAI Partners.

Upon completion of a financial restructuring that includes a reduction in cash pay debt by more than half and a commitment from the consortium and other senior lenders to provide a new €150 million credit line, the participating lenders will control Monier and become the new shareholders.

Kirkland also found itself a leader in bankruptcy filings in 2010, helping put clients like Innkeepers USA Trust, Japan Airlines Corp. and Local Insight Media Holdings Inc. on the path to reorganization.

While the firm has beefed up its restructuring group by about 30 percent over past three years, enabling it to handle many major bankruptcies at a time, the group's leaders told Law360 they planned to wait and see before deciding whether to seek even more talent moving forward.

"It's more where the market takes us, so we don't have a goal per se of just hiring more lawyers," Cieri said. "Our goal is to be the best restructuring group in the world, and we've done relatively well at reaching that goal, which has led to our having increasing amount of market share, so we've needed more attorneys."

But whether the practice grows or not in the immediate future, Sprayregen said the restructuring group is prepared for what the future holds.

"We're well positioned ... for the next couple of decades," Sprayregen said. "We've got a pretty young group, and that holds us in good stead for the long-term future."

Methodology: In mid-November Law360 solicited submissions from more than 300 law firms for its practice group of the year series. The more than 400 submissions received were reviewed by a committee of four editors. Winners were selected based on the number of significant wins the group had in litigation or the size, number and complexity of deals the group worked on in 2010.

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