April 17, 2009
Bankruptcy is the new M&A
Posted by Usha Rodrigues

At least, so says Rick Chesley, head of Paul Hasting's bankruptcy practice, in today's WSJ.  The article describes a "heated auction" for the remains of Polaroid Corp, an exciting story about 28 bids and counter-bids, and victory snatched from the top bidder by the bankruptcy judge.   

I still remember the magic of the polaroids of my youth--click a button, hear a whirr, a odd-sized, thick piece of paper comes out, you wave it and maybe blow on it, and await an image snatched from just minutes ago.  Today's digital cameras offer more instant gratification, but polaroid anticipation was a large part of the fun.  The WSJ eschews such nostalgic indulgences in favor of couture-commentary worthy of People magazine, describing the auction as follows:

"The 49-year old Ms. Tilton, sporting a 13-karat yellow diamond ring and four-inch Alexander McQueen stiletto heels, hardly looked the part of a Wall Street vulture....And the 5-foot-5-inch Mr. Salter is no sartorial slouch either. Dressed in a Dolce & Gabbana suit, Ferragamo loafers and a Brioni necktie, he carried a Louis Vuitton briefcase."

But I digress from my topic:  What does it mean that bankruptcy is "the new M&A?"  According to the article, 67 deals in 2009 have come from bankrupcty courts.  At my old firm the M&A attorneys were Masters of the Universe, swooping into tense situations, taking stock and taking charge, subsisting on Diet Coke for weeks at a time as they leapfrogged from deal to deal.  One told a fellow associate, "When I walk into a room, I know I can dominate everyone else there, physically and mentally."  Bankruptcy lawyers generally had a more conciliatory personality, part-counselor, part-bulldog.  I wonder whether Chesley was trying to claim a little of that old M&A lustre for himself?  If bankruptcy really is the new M&A, there will be lots of M&A lawyers looking for a piece of the action.

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