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Orrick Grows Bankruptcy Presence
Law firm's new restructuring head in New York talks to IDD.
August 28, 2008
Raniero D'Aversa Jr. recently joined Orrick, Herrington & Sutcliffe as a partner and head of the law firm's New York creditors' rights and bankruptcy practice.
Prior to Orrick, D'Aversa was co-chair of the global restructuring, bankruptcy and insolvency group at Mayer Brown, where he started in 1993. He spent the previous three years at Kaye Scholer, which he joined after receiving his JD from the New York University School of Law in 1990.
"One of the biggest attractions is that Orrick is clearly committed to growing its global bankruptcy presence," D'Aversa tells IDD.
Raniero D'Aversa Jr.
D'Aversa's appointment comes three months after Orrick hired Mark Fennessy as a partner in its creditors' rights, restructuring and bankruptcy practice in London. Fennessy was previously head of Hunton & Williams' London corporate restructuring and insolvency group. Fennessy's past mandates include the restructurings of the Cheyne Finance, Whistlejacket and Rhinebridge structured investment vehicles (SIVs).
"London and New York are the biggest markets, and there's a lot of emphasis on expanding the practice here in New York," says D'Aversa.
Like Fennessy, many of D'Aversa's clients and mandates come from the financial-services sector. He has represented ABN AMRO, Bank of America and BofA's LaSalle Bank subsidiary in syndicated-loan workouts.
"It's fair to say that my clients have traditionally been large commercial lenders, but over the last several years I've been doing more work with alternative lenders and hedge funds," says D'Aversa. "They've become a more important part of the distressed community and they are focusing resources on distressed deals."
He predicts hedge funds themselves will see more distress. "A lot of commercial lenders and investment banks have significant exposure to some hedge funds, and a lot of it was done on par deals," D'Aversa says. "Hedge funds historically received a lot of leverage by borrowing money from banks or entering into derivative transactions with banks, and as more and more financial products have gone into distress, a lot of [hedge funds] have gone into distress."
D'Aversa currently represents a lender to several Ritchie Capital Management vehicles. The lender "put together a warehouse facility in order to enable securitization, but the securitization was never consummated," he says.
D'Aversa has also advised on restructurings of air carriers such as United Airlines, and expects to see more on his plate going forward. "Most financial institutions with airline exposure are dusting off their files, and that's related to a number of factors," he says. "The cost of fuel is a big reason, and this time around it will be interesting in that it hasn't been clear the airlines will be able to get any more concessions out of their employees."
Airlines also have to deal with troubles related to older planes they relied upon during the earlier round of industry restructurings. "One of the first things United did, for example, was look to its older fleet because they were cheap planes five years ago, but the older planes tend to be the most fuel-inefficient," says D'Aversa. "[Airlines] are probably looking much more closely at fuel efficiency, and they'll probably look for many more concessions from financing parties than they did the last time around."
As for SIVs, D'Aversa also predicts more demand from note holders and liquidity providers due to insecurity related to the value of SIVs' underlying portfolios. "[SIVs] rely on short-term liquidity, and there's just no short-term liquidity in the market, so a lot of these structured vehicles are going to have trouble," he says. "Commercial paper vehicles have to be refinanced every 90 days or so, and if the market disappears they won't be able to keep going."
D'Aversa represented several Canadian issuers that defaulted on third-party commercial paper last year.
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