Insolvency favourites cash in on closed market in Germany
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It was just as well that German lawyers always did their own litigation, because until recently there were few counter-cyclical elements to most law firms’ practices. Insolvency and restructuring were the preserves of specialist firms best known for their administration work.
Wellensiek Grub & Partner, Kübler and Schultze & Braun are three of the specialist firms which have dominated the market since the huge wave of work after reunification, the vast majority as court-appointed administrators.
Administration is very much the preserve of lawyers in Germany. With few exceptions, the courts prefer to select lawyers for insolvency work for little reason other than tradition. The administrators have stayed in their own firms rather than be swallowed up by multidisciplinary partnerships or large international law firms. It is very much an individual’s game, with courts being famously picky about who they appoint, with some regions - Berlin is the most infamous example - being a closed shop to all outsiders. This has meant that large law firms find it difficult to enter the administration market as a strategic move, as there is no guarantee that they would have a steady flow of work from a particular court.
Insolvency firms have, by contrast, grown on the back of strong relations with courts dotted around the country and a map of offices of these most successful firms would suggest little rhyme or reason to their geographical spread.
There are a few exceptions to this rule - CMS Hasche Sigle has a mid-sized practice in the east of the country and Haarmann Hemmelrath has two increasingly well-known administrators in its Frank-furt and Leipzig offices.
But the firm that really sticks out is White & Case Feddersen, thanks to its outstanding Hamburg team led by Klaus Pannen. It has been built up slowly over the years, confounding observers at other firms who saw such a practice as incompatible with full-service firms. It has grown out of its Hamburg base, becoming active in Dresden, then Düsseldorf and finally Frankfurt. Grabbing the mandate for the highly significant Gontard & Metallbank insolvency was the crowning glory.
Even more unusual is White & Case’s success in broadening the practice beyond Pannen, in contrast to a raft of insolvency firms whose reputation is focused on the name or senior partner. Sven-Holger Undritz and Bettina Schmudde have made a name for themselves in Hamburg as well as Biner Bähr in Düsseldorf.
But not only has White & Case broken the mould by building up a strong administration practice, it is also one of the leading restructuring teams in Germany. Here it moves in a more conventional way and has meaningful competition from other full-service firms in Germany. However, it did bag the highest-profile restructuring of the year, that of the Kirch Group, with former managing partner Axel Bauer taking the lead role, even though the firm does not have an office in Munich, Kirch’s home town. It was also heavily involved in the large and complicated restructuring of Mobilcom.
These two cases are typical of the sort of work that the large international firms are going after. Restructuring was previously not a huge part of the leading corporate firms’ portfolio, but the sharp increase in complexity of standard bankruptcy cases has become meat and drink to the cross-border firms. Even Mittelstand restructurings inevitably involve a number of different jurisdictions and the financial framework of such companies, let alone that of the large corporates, is far more demanding than dealing with the traditional house-bank relationships of yore.
The past year saw the first high-yield tranche that had to be restructured in Germany. The restructuring of the iesy cable network in Hessen was symbolic of the fundamental structural change in the creditor-debtor relationship in German insolvencies. The number of creditors is far higher and their composition is far more heterogeneous - the opportunities for lawyers are endless.
It would not surprise anyone to see a firm such as Clifford Chance Pünder acting for banking creditors, and it also has one of the strongest debtor practices. It has been involved in the Authentos-Gruppe and Polyamid 2000 in the past year, as well as advising Columbia TriStar on the Kirch insolvency. Kolja von Bismarck and Heinz-Günter Gondert are the heavy-hitters of the practice. However, it is DLA which has captured the jewel of the market when it set up its alliance with Görg.
Name partner Klaus-Hubert Görg, probably the best-known restructuring specialist in the country, is a formidable figure (one DLA partner likened an audience with him to being summoned into the headmaster’s office at school) and made headlines through being involved in two of the biggest cases of the year. He advised the board at KirchMedia, as well as taking on a board position himself at Babcock Borsig and its subsidiaries.
The Görg practice was strengthened further in the past year by its raid on the Berlin office of Heuking Kühn Lüer Wojtek, gaining Roland Hoffmann-Theinert in the process. It also has some of the fastest improving profitability numbers in the German market, and a strong M&A practice that can kick in when restructuring work is thinner on the ground. Tie the whole thing up with DLA’s banking-led restructuring work and it is a juicy combination - if Görg ever felt like merging. But do not expect to see them leap into DLA managing partner Nigel Knowles’ arms with the same alacrity as Weiss-Tessbach.
German restructuring firms are now among the strongest in Germany, come rain or shine, downturn or boom-time.
Aled Griffiths is editor of Juve
|Germany’s top restructuring lawyers|
|Axel Bauer||White & Case Feddersen|
|Eberhard Braun||Schultze & Braun|
|Klaus Hubert Görg||Görg|
|Heinz-Günter Gondert||Clifford Chance Pünder|
|Alfred Hagebusch||Wellensiek Grub & Partner|
|Hans-Jochem Lüer||Heuking Kühn Lüer Wojtek|
|Klaus Pannen||White & Case Feddersen|
|Wolfgang van Betteray||Metzeler van Betteray|
|Kolja von Bismarck||Clifford Chance Pünder|