Turnarounds & Workouts Publishes Schultz, Block Article on Changes in Restructuring Industry Wrought by Pandemic

“Virtual-Centric Environment Here to Stay,” an article by Akin Gump financial restructuring partner Sarah Link Schultz and counsel Rachel Biblo Block, has been published by Turnarounds & Workouts.

The article discusses changes that the restructuring industry has had to make in response to the COVID-19 pandemic. In the category of short-term changes, the authors note that bankruptcy courts and judges “have gone to new lengths and granted new relief, in an effort to help already distressed companies during an unprecedented financial crisis,” using Pier 1 Imports, Inc.’s bankruptcy case in the EDVA as an example. They note that courts have also extended workdays and workweeks to accommodate debtors and their stakeholders, but state that both courts and restructuring professionals face difficult-to-answer questions that cannot be as easily addressed involving feasibility, timeframes and uncertainty.

In the category of long-term changes, the authors discuss how the pandemic has “accelerated existing trends that have forced retailers with significant retail footprints” to file for Chapter 11. Schultz and Block note that the virtual environment in which one counsels clients and deals with adversaries requires more work and planning in engaging with both sides. However, they also note that the pandemic has presented the industry with opportunities as well, by way of increased access to the court and the restructuring system for parties thanks to technology and reduced costs, increased access to the industry for diverse talent “previously deterred by the endless work-related travel required of restructuring professionals,” and increased interactions for lawyers at all levels with team members and with clients.

The authors close by noting that “past financial crises have shown us the real likelihood of an eventual return to normalization…We have to ponder, however, whether it is best for the restructuring industry to return completely to pre-pandemic times.” Although they miss the face-to-face interactions with clients and colleagues and the courtroom appearances, they believe “the flexibility, compassion, increased participation, and creativity that have marked the restructuring industry this year should stay and facilitate systemic change that brings greater access, diversity, understanding, and ultimately, success to the industry.”

To read the article in its entirety, please click here.