It's a world of passion and pain out there. The restructuring world, that is. And the most passion has been generated from two sides which fight against each other on virtually every major case. The battle lines are these: Ernst & Young and Slaughter and May on one side, and KPMG and Cadwalader Wickersham & Taft on the other.
It's impossible to grasp the current state of the insolvency and restructuring market without understanding the individuals involved. Ever since Cadwalader's Andrew Wilkinson turfed E&Y off the Barings administration in favour of KPMG in 2001 on behalf of the bondholders, there has been a personal tinge to the professional antagonism. The two sides embody entirely different approaches, and are personalised by two men – which is highly convenient from a narrative point of view, of course. They are the driven, pugnacious Wilkinson, and the urbane Alan Bloom at E&Y.
The friction – to call it enmity is overstating the point, although it rather looks that way from time to time – has its roots in two traditions. Cadwalader's client base of activist bondholders have a quasi-institutional hostility to UK senior lenders, while E&Y's practice has been built on the banks. Like some warped magnets which simultaneously attract and repel, the two – usually trailing Slaughters and KPMG in their wake – keep finding themselves on opposite sides.
There's not much love lost between Cadwalader and Slaughters, either. Not only did the Barings creditors (egged on by Cadwalader and KPMG) insist on scrutinising Slaughters' mammoth fees on the administration, but the two sides clashed again over Colt Telecom last month. As Mr Justice Jacob criticised Cadwalader and its expert witnesses from KPMG, E&Y and Slaughters must have relished their victory.
Cadwalader and E&Y are currently locking horns again, this time on Cenargo. Cenargo currently has the entire insolvency market agog, with its heady mix of transatlantic jurisidictional questions, contempt of court and a rather cross US bankruptcy judge. Cadwalader, advising the company, put Cenargo into chapter 11, while E&Y batted back on behalf of the banks with a UK administration.
Put all this together with TXU, where E&Y is, er, concerned at Cadwalader's information barriers, and you have a needle match worthy of Itchy and Scratchy We just can't wait for the next round.