Cadwaladers scores UK first

The London office of Cadwalader Wickersham & Taft has won its first major new client by being appointed to advise bondholders in the rescue of troubled UK telecom company Ionica.

The appointment, after a beauty parade of several top firms in the US and UK, is a vindication of the New York firm's heavy investment in a UK insolvency law practice.

The London office opened last spring by recruiting some of the biggest names in restructuring from City firms, including Clifford Chance's Andrew Wilkinson.

The deal also supports Cadwaladers' London business plan. The firm predicted it would not have to rely on clearing banks to pick up insolvency and restructuring work, since an ever greater proportion of debt is in the form of bonds rather than bank loans.

But Wilkinson said his firm had been lucky in certain respects: “Who could have foreseen this wave of turmoil in financial markets?”

Cadwaladers in the US has also been involved in advising on the bail out of troubled US hedge fund Long Term Capital Management. It is likely to pick up more work from smaller hedge funds that are predicted to go bankrupt as creditors demand collateral.

The bondholders in the Ionica deal are largely US-based and Cadwaladers New York partner David Frauman is advising them on US law.

The Financial Times reported last week that Ionica, which lost £173m last year and had to pay bondholders £21.3m in interest, hoped to bring in a new, as yet unnamed, investor to avoid bankruptcy. The investor may buy all or part of the company.

Ionica is using its long-standing lawyer Olswang to advise it on the deal and Latham & Watkins in the US.

Olswang is in danger of losing its principal telecoms client if a new majority shareholder takes the helm at the troubled Ionica.