ABFJ Podcast: The Coming Waves of Bankruptcy and Restructuring

Even as some states force open the U.S. economy, the economic ramifications of the COVID-19 pandemic will continue to be felt, particularly in the area of bankruptcy and restructuring. With companies across most sectors feeling some degree of damage from the pandemic, bankruptcy filings will continue to increase.  In the 10th episode of the ABF Journal’s COVID-19-focused podcast series, Cynthia Romano and Kevin P. Clancy, who are both global directors of the restructuring and dispute resolution practice at CohnReznick, gave a deep dive on bankruptcy and restructuring in the age of COVID-19.  They described how the “frantic activity” of the first few weeks of the pandemic has shifted to a more contemplative approach, with companies assessing their situation and determining what options and opportunities are available. They also said they expect even more upticks in bankruptcy and restructuring activity, although in waves across sectors, and that such waves will put a strain on the bankruptcy court system, which is being forced to adapt in a challenging environment.  From the lender perspective, Romano and Clancy outlined how cash, communication and control are the three most important factors for the borrower/lender relationship in this environment. They advised lenders to take stock of their portfolios and make assessments based on historical performance and projections to avoid “knee jerk” reactions. They also explained why lenders should be looking more closely at the supply chain of borrowers and why companies who are innovating and adapting based on this disruption may be the best lending prospects.