Dechert

The firm saw a few changes at the top, including the departure of one of its co-chairs

History of the practice

Dechert began life as MacVeagh & Bispham in Philadelphia, Pennsylvania in 1875. After undergoing several name changes and working on key projects such as defending the Pennsylvania Railroad against homeowners in 1877, the firm became Dechert Price & Rhoads in 1962.

The financial restructuring practice was launched more than three decades ago and initially focused on US debtor and trustee representations. With the additions of practice head Allan Brilliant in 2010 and now-former head Michael Sage in 2009, it expanded to include representations of ad hoc and official committees of creditors, lenders and noteholders globally – with an especially strong focus on Latin America, despite its lack of an office in the region. To this end, the firm acted on the restructuring of telecoms giant Oi – Brazil’s largest-ever bankruptcy filing – as well as that of Brazilian construction firm OAS in 2016. Dechert estimates that about 75% of its restructuring and insolvency work is cross-border.

Co-chair Sage left in February 2020 to become general counsel at Sozo Investment Partners in New York, leaving Brilliant as sole chair of the financial restructuring division.

Network

Dechert’s financial restructuring practice is mostly concentrated in New York and London, where the firm has a significant presence, with some names on the ground in Philadelphia too.

Outside of the financial restructuring practice, it has an international and insolvency litigation team satbased within its litigation division and led by partners Adam Silver in London and Gary Mennitt in New York.

Silver and partner Giles Belsey in London, as well as of counsel Camille Abousleiman in Dubai, have helped the firm expand to pick up emerging markets restructuring work in Eastern Europe, the Middle East and Asia. Abousleiman used to head Dechert’s London office, but left the firm’s partnership in 2019 to join Lebanon’s government as minister for labour.

Who uses it?

Lenders, individual creditors and creditors’ committees are frequent clients, while the firm also advises a host of distressed companies and acquisition groups. Russia’s VTB is a client; as is the holding company of US insurer State Farm and several US asset management firms and distressed investors, such as Aurelius Capital Management, Contrarian Capital Management and Greywolf Capital Partners.

Dechert is advising funds managed by Argentem Creek Partners on defaulted bonds issued by companies in Indonesia’s Berau Coal Group; is counsel to rig-owning entities in the Mexican concurso proceedings of oil extraction group Oro Negro, as well as in its Chapter 15 application in New York and in litigation in Singapore; and is advising creditors of Brazilian miner Samarco Mineração in a US$3.8 million restructuring brought on by its disastrous 2015 dam collapse.

Historic track record

Dechert represented debtors-in-possession in the 2006 Bayou Hedge Funds ruling in New York – a landmark Chapter 11 decision in which a bankruptcy court defined the legal standards for asserting claims of actual and constructive fraudulent conveyance under the US Bankruptcy Code in the context of hedge fund fraud.

Fast-forward eight years and it was counsel to an ad hoc group of noteholders in the major US$3.6 billion cross-border restructuring of Mexican glass manufacturer Vitro, representing them in Mexico, Dallas, Texas and New York.

At around the same time, the firm acted for Standard Chartered Bank as a secured creditor under two murabaha facilities worth US$100 million extended to the shariah-compliant investment bank Arcapita, whose US$1.3 billion restructuring in the Southern District of New York was the first successful Chapter 11 of a Middle Eastern financial institution.

In London, partner Silver advised funds managed by Franklin Templeton in challenging the International Bank of Azerbaijan’s (IBA) US$500 million restructuring. The IBA wrote down English law-governed debts in an Azeri restructuring, which some creditors objected to in England under the Gibbs rule after failing to participate in Azerbaijan. Dechert helped to block arguments by the IBA that an indefinite moratorium applied to creditors’ claims against it, first in December 2017 and then on appeal the following October in a decision described as raising “important questions” on the scope of courts’ powers under the UK Cross-Border Insolvency Rules.

As mentioned in the intro, a team led by Brilliant acted for an ad hoc group of international bondholders owed more than US$2.6 billion in bonds issued by Brazilian telecoms company Oi and its affiliates. In 2018, a Rio de Janeiro court approved a US$20 billion plan for Oi to raise 4 billion reais in capital, and bondholders swapped their debt for about 75% of the restructured company’s equity the following year in what was the largest-ever private sector reorganisation in Brazil’s history.

For the Argentem funds which are noteholders of Indonesia’s Berau Coal – and which opposed a planned restructuring being arranged by Berau affiliate guarantor Empire Capital Resources – a team including Brilliant and Silver helped to get Singaporean schemes of arrangement and related Chapter 15 proceedings dismissed. The team simultaneously pursued litigation in New York against the debtors and enforcement action all over the world in respect of US$1 billion in defaulted bonds.

Other household-name restructurings that Dechert has had a hand in include acting for the Bank of New York Mellon as trustee counsel in the 2009 Chapter 11 of Lyondell Chemical Company, one of the largest chemical companies in the world; advising PwC in its role as administrators of Lehman Brothers Limited – the service company for the European group of collapsed global finances firm Lehman Brothers – in the Waterfall III proceedings in the UK; and acting as counsel to hedge fund Elliott Management and its affiliate NML Capital in their 13-year legal battle trigged by Argentina’s 2001 sovereign debt default. Argentina finally reached a US$4.6 billion settlement with the holdout creditors in 2016, agreeing to pay 75% of what they were claiming, plus interest and years of legal fees.

Recent events

The past year has seen a fair few changes to Dechert’s personnel at the top. In addition to Sage’s move in-house, partner Ethan Fogel – who flew the flag for the restructuring practice in Philadelphia, where the firm was founded – retired, though he still appears prominently as a retired partner on Dechert’s website. Partner Dennis Hranitzky, who led Dechert’s work for NML Capital against Argentina, and counsel Debra O’Gorman also left in January 2020 to form a new sovereign disputes group at Quinn Emmanuel Urquhart & Sullivan; while partner Brian Greer in New York, who worked on the Toys “R” Us, Arcapita and Lehman bankruptcies, left for Dentons in May. In London, partner Paul Fleming also left for Addleshaw Goddard in 2019.

But in early 2020, Dechert added a duo of partners in London from Shearman & Sterling: Solomon Noh and Alastair Goldrein. In 2019, the firm also added John McGrath from Sidley Austin in June and Sarah Smith from Akin Gump in April.

Partner Shmuel Vasser and Brilliant are representing State Farm, one of the largest property and casualty insurers in California holding in excess of US$2.5 billion in insurance subrogation claims against PG&E Corporation in connection with the destructive 2018 wildfires that swept California, destroying assets. State Farm is a member of the ad hoc group of subrogation claims holders in PG&E’s Chapter 11 bankruptcy, which reached a US$11 billion restructuring support agreement (RSA) with the debtors that the court approved in December 2019. It also entered into a US$13.5 billion RSA with an official committee representing fire victims. Both RSAs were rolled into PG&E’s Chapter 11 plan.  

Dechert also represented bondholders from Elliott Advisors in the New York Chapter 15 proceedings of the Irish Bank Resolution Corporation (IBRC), which was formed by the Irish government to liquidate a pair of Irish banks in the wake of the 2008 global financial recession. Dechert’s team helped clients to reach a global resolution and settlement of their claims, including post-liquidation interest and currency exchange. It also acted in New York litigation and arbitral claims arising from payment default on subordinated notes issued by IBRC’s predecessor, Allied Irish Bank, and on its liquidation.

The firm helped funds managed by PIMCO object to the enforcement of Brazilian oil and gas drilling company Servicos de Petroleo Constellation’s judicial reorganisation in the US, within its Chapter 15 case in August 2019. The Manhattan bankruptcy court stayed enforcement of Constellation’s plan  until an appeal in Brazil was resolved, at least at the first stage. A Brazilian appellate court ruled partially in favour of the PIMCO entities in October 2019, but upheld confirmation of the plan. PIMCO and Constellation later settled in November 2019, and the oil and gas company was able to close its restructuring in 2020 after more than two years of disputed proceedings and jurisdictional challenges in Brazil, the US and the BVI.

In September 2019, the firm acted for an ad hoc group of senior secured bondholders of Gildermeister, the main importer and distributer of Hyundai vehicles in Chile, which also has operations across Latin America, when the company launched an exchange offer. The offer envisaged swapping existing notes for new ones due in 2025 and warrants that were convertible into common stock.

More recently, Brilliant and partner Hranitzy (before he departed) represented bondholder and investor Citadel in the late 2019 restructuring of Colombian airline Avianca Holdings. Citadel agreed to an exchange of US$500 million in bonds due in May 2020 for new securities due in 2023, conditioned on it providing a portion of a new financing in the form of a convertible secured loan. Despite entering into the out-of-court debt agreement in December, Avianca suffered (like other airlines) from the impact of the covid-19 pandemic and entered Chapter 11 the following May.

Client references

Marcelo Carpenter, a senior partner at Sergio Bermudes Advogados in Rio de Janeiro, describes Dechert as an “outstanding law firm with deep knowledge of insolvency law and a great capacity to deal with international insolvency cases”.

“Allan Brilliant has as a unique knowledge of insolvency law and a great capacity to lead relevant international insolvency cases,” he added.