ABI Journal Article Explores Whether the Distressed Industry is Shrinkingor Shifting
Contact: John Hartgen
ABI JOURNAL ARTICLE EXPLORES WHETHER THE DISTRESSED INDUSTRY IS SHRINKING—OR SHIFTING
July 28, 2011, Alexandria, Va. — An article in the July/August edition of the ABI Journal finds that the turnaround industry is changing more in focus rather than size. In “Is the Distressed Industry Distressed,” author Kenneth R. Yager II of MorrisAnderson (Chicago) writes that despite rumors that the distressed industry is shrinking, “the overall distressed industry is still growing, albeit heavily fueled by international growth.”
The biggest change that Yager identifies since the Bankruptcy Code was implemented in 1978 has been the change in focus from plans of reorganization (POR) to the new era of transactions. “While for decades hardly anyone was interested in buying a broken company, today competitive § 363 sales are common, as are debt sales or trades and asset sales,” according to Yager. Rather than trying to fix companies so that they can be sold, Yager pointed out that turnaround professionals are increasingly facilitating or managing a distressed company through a sale or liquidation transaction or alternatively to maximize value on behalf of a new owner. “This shift is pushing crisis managers to become much more like performance improvement consultants,” Yager wrote.
With less of a focus in bankruptcy on PORs, Yager said that the turnaround industry is evolving to become more open to other skill sets. “Turnaround firms have two main options in positioning themselves within the changing field: seek to become larger, or adapt to a particular niche,” Yager wrote. While larger firms continue to grow internationally and focus on large company work, Yager said that smaller firms “need to compete instead on expertise by developing a narrower focus, building a reputation for specific types of services in a small number of key industries.”
The shift in focus from PORs to transactions will have a permanent impact on the turnaround industry, according to Yager, by calling for a new level of specialization. “The jack of all trades [bankruptcy practitioner] is becoming a low card in the industry’s deck.”
To obtain a copy of “Is the Distressed Industry Distressed,” published in the July/August edition of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected].
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.