Legal Business Quotes James Roome on State of London Restructuring Market

Legal Business has quoted Akin Gump financial restructuring partner James Roome in the article “The 500 View: Restructuring hires are in vogue but is there enough work for everyone?” The article assesses the busy London restructuring market and notes that, in most instances, UK firms have held the key roles for corporates and bank lenders, while U.S. firms are most often on advising other credit funds or bondholders.

Speaking of Akin Gump’s practice, in particular, Roome said, “Traditionally a lot of our work is driven by the PE process – they come in and buy businesses, leverage them up and give them a few years to achieve ambitious earnings projections. In the past, a significant number would fail within a couple of years, but low interest rates mean that many now survive as zombie companies, sustained by just enough cash to avoid default.”

The danger in that, Roome added, is that by the time companies get to the point of no return, and are unable to refinance mounting debt piles, there is little left to save. That, in turn, could mean more companies going into compulsory liquidation.

“Companies are getting to a point where they have so much debt and need so much new money to save them that it’s inevitable,” Roome said. As an example, he cited the case of Thomas Cook, which was “so far over the cliff that it was impossible to save.”