U.S. restructuring wave to come over 18 months: GE
An “avalanche” of large U.S. businesses will need to be restructured over the next 12 to18 months, said Rob McMahon, head of General Electric Corp’s (GE.N: Quote, Profile,Research, Stock Buzz) Restructuring Finance Group.
McMahon told the Reuters Restructuring Summit in New York on Thursday that the recent slowdown in bankruptcies and restructurings was partly due to the easy terms of loans extended prior to the credit crisis.
“The only thing keeping more companies from filing right now is all the convenant-lite deals,” said McMahon, whose unit is one of the leading providers of debtor-in-possession or DIP loans to bankrupt companies, “We’re still heading for an avalanche of deals over the next 12 to 18 months that will keep the restructuring world quite busy.”
Some restructuring professionals have blamed the lack of DIP loans for out-of-court restructurings, liquidations and quick sales in bankruptcy court. McMahon said that explanation misses the larger issue of companies that have used all their assets to secure existing debt, leaving nothing to provide as security for a DIP loan.
original post @ Reuters