Kenneth Noble, Co-Chair of the firm’s Bankruptcy and Creditors’ Rights Practice, was recently quoted in an article in Law360 with respect to expectations for a record number of bankruptcies in 2009. “I’m already seeing a number of large banks attempting to hire professionals in their workout groups in order to have the capacity to handle the increase in corporate loan defaults,” Mr. Noble said. He was also quoted as saying that the broad scope of expected bankruptcies is due to a systemic lack of financing throughout most industries. Previous economic downturns, in contrast, were more sector-based. “You have to go back to the 1930s to find something that is comparable across all sectors and asset classes. The contraction is a lot different than we’re used to,” he added. Furthermore, after changes to the Bankruptcy Code in 2005, more planning is required to file for bankruptcy. “I won’t be surprised if a lot of managers are taken by surprise in the first quarter and don’t have the financing lined up to take action, which forces them to spiral quickly into a liquidation scenario,” Mr. Noble said. (“Outlook for Bankruptcies in 2009,” December 19, 2008)
