It did not take long for Kirkland & Ellis to replace European restructuring head Lyndon Norley. Speculation about where Norley will land is rife in the City. But as their competitors wonder about his next move, new London-based heads Kon Asimacopoulos and Partha Kar are convinced that Kirkland can survive without Norley.
Kirkland is, of course, a formidable debtor-side restructuring force in the US, led by partner Jamie Sprayregen – a veteran in the field. With more than 100 lawyers across the Chicago-headquartered firm’s US practice, Kirkland is a leader. In August this year Sprayregen led a team from the firm advising on Reader’s Digest’s $1.6bn (£980m) debt-for-equity restructuring.
Indeed, Kirkland’s European restructuring group was Sprayregen’s brainchild – it was he who recruited Norley from Cadwalader Wickersham & Taft in 2002 to help him achieve his transatlantic dream.
“He did a great job,” admits Sprayregen. “It was a significant challenge for us because restructuring is a different game in Europe – it’s not debtor-in-possession. But we knew at the time that many of our Chapter 11 mandates had European elements and this is where we could start to build a team across the Atlantic.”
And that is exactly what Norley and his team did. In 2006 he led a transatlantic team with Chicago-based partner David Eaton advising Sea Containers on its Chapter 11 filing. He then led the firm on the European elements of United Airlines’ Chapter 11 proceedings in 2006.
But despite Norley’s integral role in Kirkland’s European restructuring group, his departure is by no means cataclysmic. For years he represented the brand in Europe, but the practice has moved on, with younger partners rising up through the ranks.
Norley recruited new head Asimacopoulos from Cadwalader and Kar from Linklaters in 2006 and 2003 respectively. These relatively new members of the team are now the driving force behind the practice.
“Yes, Norley was very important, but that doesn’t mean Kirkland can’t survive without him,” says one magic circle restructuring partner. “If Partha and Kon left that would really be a problem, and Kirkland would have to address it quickly.”
Today Kirkland has a 15-strong European restructuring group, with seven partners and eight associates across its London and Munich offices. In Germany partner Leo Plank joined from US rival Bingham McCutchen’s New York office, while Berndt Meyer-Lowy was recruited from Linklaters’ Cologne office in 2006.
“There aren’t many firms that can do those international Chapter 11 deals,” says Sprayregen. “But it’s not just that. We’ve got a huge private equity client base that
has really pushed forward the European practice.”
Kirkland’s relationships with private equity giants such as Bain Capital, Apax Partners and TowerBrook are well-known. And Norley led the firm in putting those relationships to good use in a European landscape.
“But it’s not just one person,” argues Sprayregen. “This is a global team effort that goes way beyond the individual partner.”
While Kirkland does not have formal partner ties for its restructuring client base, its London and Munich-based partners have developed individual relationships with particular clients.
Asimacopoulos works closely with Oaktree Capital Management, Kar with US hedge fund Och-Ziff and Munich-based partner Erik Dahl with TowerBrook. During the downturn relationships with distressed investor groups are extremely valuable for restructuring groups, making these ties all the more vital for Kirkland.
Indeed, Dahl led a team from the firm advising a consortium of investors – TowerBrook, Apollo and York Capital on French building company Monier’s $2.1bn debt-for-equity restructuring.
But while it seems Norley and Sprayregen have assembled a crack restructuring team this side of the Atlantic, not everyone is convinced. Kirkland was something of a latecomer to the European market, competing with Bingham and Cadwalader, which had both succeeded in building bondholder practice groups based in London.
Bingham secured its own Cadwalader hire way before Kirkland at the tail end of the 1990s, when partner James Roome was brought in to lead the European restructuring group. Roome, together with partner and London head of financial restructuring Barry Russell, has led the firm on a number of international and European mandates. Last year Roome advised the creditors of Lyondell Basell following its Chapter 11 proceedings, while Russell led a team advising a bondholder group on the restructuring of Icelandic banks Kaupthing, Landsbanki and Glitnir.
“Kirkland are in a funny position in Europe,” says one rival. “They have a very good debtor-side practice in the US, but not so much in Europe. It’s hard to muscle in on relationships over here. They rely much more heavily on the international aspects of US Chapter 11 mandates than Bingham does. They have some good lawyers in Europe, but I don’t think they’re really a match for Bingham.”
Yes, Bingham is a solid rival, but Kirkland is in no way trailing behind. Indeed, both firms have been seen on high-profile European restructurings in the past few weeks – Kirkland’s Dahl on Monier and Bingham’s Roome advising mezzanine lenders Park Square and ICG on Gala Coral’s £2.7bn debt-for-equity swap.
“Bingham is the rival for Kirkland, not UK firms,” says one magic circle restructuring partner. “UK firms have the corporate ties in Europe, and I think the likes of Bingham and Kirkland know they’d be crazy to try to compete on that level.”
Inevitably the magic circle firms have cornered the corporate market. In fact it was Allen & Overy global restructuring and insolvency managing partner Mark Sterling who advised Monier on its recent restructuring via its close ties with its private equity house owner PAI. Clifford Chance partner Mark Hyde advised senior lenders BNP Paribas, GE Commercial Finance, RBS and Société Générale on the same deal.
Of course, there are other US players. Like Kirkland, Weil Gotshal & Manges has a powerful restructuring practice in the US. Led by legendary Weil partner Harvey Miller, the New York team is advising on Lehman Brothers’ bankruptcy. In the UK the firm hired Cadwalader restructuring partner Tony Horspool in 2008. But even Weil admits its practice is not focused on Europe.
“To be honest it’s much more about New York,” says one Weil London-based partner. “We benefit from being the best in the US, but really that’s were the activity is.”
For Kirkland, Bingham remains its key rival in Europe. And there is no doubt about it, Norley was instrumental to the firm’s impressive catch-up after its late 2002 start. No doubt Bingham is secretly pleased about Norley’s departure. As one City-based partner puts it: “It’s Bingham that stands to benefit from Norley leaving.”
Despite this Sprayregen is not fazed by Norley’s departure. Quite the opposite, in fact – he seems to be embracing the opportunities it presents.
“We’ve worked hard at making sure our partners are at the forefront of European restructuring,” he says. “There’s no doubt in my mind that Kon and the team are ready for this.”