Wharton Restructuring and Turnaround Conference

As a result of turmoil in the credit markets, uncertainty in the public equity markets and fears of a prolonged global recession, distressed private equity firms have raised record amounts of capital. These investors now face the challenge of determining which struggling companies will survive. Many of these investors are also dealing with the challenges that the economic slowdown and decrease in available credit have imposed on their current portfolio companies. Panelists will offer their opinions regarding the expected scope and duration of the current economic cycle, and the industries that offer the best investment opportunities. This panel will also focus on ways in which distressed private equity firms can be differentiated, both from traditional private equity firms and from other distressed investors including hedge funds and new market entrants. Finally, panelists will offer insights concerning the future of distressed private equity investing, including expectations for returns amid increased competition.

Falling asset values create substantial opportunities for distressed investors in the current economic downturn. At the same time, there is considerable risk inherent in making investments in companies today that could lose much of their value in the months ahead. Some hedge funds have continued making investments while others have chosen to stay on the sidelines and pursue a "wait and see" strategy. This panel will seek to identify the appropriate time for distressed hedge funds to deploy capital and the industries that offer the most attractive opportunities. Panelists will also compare opportunities in the current cycle to opportunities in previous downturns, while discussing implications of the increasingly competitive investor landscape. Finally, panelists will discuss the impact on the hedge fund industry, and the market as a whole, of increasing investor withdrawals leading to a sell down of investment positions.

Successful turnarounds depend heavily on the management of human capital. How do you right-size a business while retaining the talent needed to implement improvements? What tools work best for aligning executive teams with turnaround professionals and employee communities as a whole? In a business turnaround, human resources challenges may include motivating employees, managing retention plans and layoffs, aligning incentives, working with unions, recruiting additional talent, and allocating limited human capital resources. Drawing from the perspectives of C-level management, labor representatives, industry experts and senior operational turnaround professionals, this panel will explore human resources strategies aimed at revitalizing distressed businesses for near-term viability and long-term improvement. Panelists will discuss both successful and unsuccessful strategies in the nuanced world of human resources.

Decreased consumer spending and recessionary pressures are leading many consumer-facing companies into bankruptcy. Retailers and restaurants were among the first to feel the pain as American consumers scaled back discretionary spending. With credit markets in turmoil and bankruptcies expected to reach unprecedented levels, traditional DIP and exit financing providers have been hesitant to make capital available, forcing a number of debtors to liquidate or seek alternative financing. Changes to the Bankruptcy Code enacted in 2005 are also being put to the test, and a new set of incentives for debtors and creditors are coming to light. With a focus on consumer-facing companies, this panel will discuss emerging trends in financial restructuring. Who will finance the companies worth saving and how will companies be restructured to survive a period of uncertainty? Panelists will compare the current downturn to previous cycles and draw insights from a wealth of experience restructuring consumer-facing companies.

This panel will examine the landmark restructuring of an iconic corporation. The Interstate Bakeries Corporation (maker of Wonder Bread and Hostess snack cake products) emerged from bankruptcy in February 2009. Senior professionals from the financial advisory and law firms, as well as the lenders and new equity investor involved with this complex and nearly 4.5-year bankruptcy restructuring will be on hand to extract lessons learned. Panelists will provide insights into the legal, financial, and operational challenges of a successful turnaround. Among the challenges that will be discussed:

• Coping with volatile commodity prices and industry challenges to develop a business plan
• Securing financing in an extremely challenging economic climate
• Assessing the financial and operational landscape
• Plan of reorganization structure and acceptance
• Working with labor unions toward a consensual solution

The panel is aimed at both those looking for a holistic view of the restructuring industry, as well as those seeking a better understanding of the complexities of a restructuring.

With the increasing globalization of trade and finance, major restructurings are seldom resolved in just one country. In recent years, governments around the world have placed considerable focus on legal frameworks for cross-border bankruptcies. Countries from Japan to South Africa adopted, in whole or in part, the United Nations’ Model Law on Cross-Border Insolvency. The United States adopted the UN Model Law in 2005 with the passage of Chapter 15 of the Bankruptcy Code. Regional bankruptcy initiatives—such as the European Union Insolvency Regulation and cooperative procedures among the NAFTA countries—have also gained importance. As the world experiences its worst economic turmoil in decades, these developments will be put to the test. How will cross-border frameworks impact multinational companies filing for bankruptcy? Whose law will govern, and in what ways will legal systems in various stages of development impact the restructuring process? Panelists with vast experience navigating cross-border bankruptcies will shed light on an area of growing importance.