Cadwalader Wickersham & Taft has hit the headlines more than usual in the past few months. This may have something to do with the high-profile recruitment of banking partner Stephen Mostyn-Williams but it is also likely to be because of the constant barrage of restructurings which have come knocking on Andrew Wilkinson's door.
Now that we are at the peak of restructuring in the latest economic cycle it is easy to congratulate Cadwalader on securing such a successful role in this market. However, it must have been much harder to anticipate the market and take the plunge into the unknown territories, which involved advising distressed debt investors.
When a company restructured 10 years ago, the negotiations were between the company and the banks. The pattern was predictable and the banks were advised by either Allen & Overy, Clifford Chance, Wilde Sapte, Cameron Markby or Lovells. But in the late 1990s the high-yield market spread to the UK. While the likes of Latham & Watkins and Shearman & Sterling were busy advising the issuers, Wilkinson and his partner at the time, James Roome, decided that Cadwalader needed to come up with a new business plan. Way before the telecoms and IT bubble burst they forecast that there would be huge potential to restructure high-yield debt. When bank debt is restructured, the banks tend to use the same lawyers that structured the original deal, but distressed debt investors want to go elsewhere; a plan was hatched.
The high-yield debt market gathered momentum quickly. In 1996 the total value of high-yield debt in Europe was $10bn (£6.85bn) and by the beginning of 2002 it had risen to between $60bn (£41.1bn) and $80bn (£54.8bn). So yes, there was potential for massive restructuring, but without the knowledge of the impending telecoms crash it was a risk to target the work. At the time there was little support in the market and the restructuring experts for the banks claimed that they would also advise on high-yield. It is only in hindsight that it is acknowledged that the strategy was lucrative and it was agreed that the bondholder required separate representation.
Wilkinson and Roome joined Cadwalader in 1998, but it wasn't until 2000 that the crisis began. All of a sudden there were groups of distressed debt investors and bondholders looking for representation and Cadwalader devised a model and put together a scheme of arrangements.
To date it has an impressive deal list including NTL, Telewest, Polstar, Netier and Versatel. The only firm that comes close as a competitor is Bingham Dana, where Roome took his practice at the end of 2000.
In the US, Bingham Dana has a large share of the market in distressed debt, but in the UK it also tends to advise large institutional investors. Admittedly, it is advising the bondholders in Marconi and Energis, but its other high-profile restructurings are in different sectors and include Somerfield, Booker, Tiphook and John Laing.
Despite having a list of deals with a broad geographical spread across Europe, Cadwalader is another US firm which denies any intentions to expand in Europe. According to Wilkinson, the firm has no problem using European firms with UK best friends and frequently instructs Gleiss Lutz Hootz Hirsch and Stibbe. Wilkinson dispels any myth that clients might want Cadwalader to develop an international network. It is his commitment they are hankering for.
Although known for its bondholder practice, Cadwalader's London office also has a sponsor-driven project finance practice and, following in the footsteps of the mortgaged-backed securities work it does in the US, it offers capital markets and structured finance. There are eight partners in the London office but only two – maybe three if you include litigation partner Michelle Duncan – focus on restructuring. Yet this is the practice which has given the firm its name in London.
Last week, The Lawyer reported that Lyndon Norley is leaving to join Kirkland & Ellis, while James Douglas is joining from White & Case. It may appear that the practice has a one-in, one-out policy, but that only goes to strengthen the case that it really is Wilkinson's practice and he is in it to stay.